Grant King bows out amid BHP Billiton investor backlash

Grant King has stepped down from the BHP Billiton board because of an investor backlash over his appointment.

Grant King has stepped down from the BHP Billiton board. Picture: Hollie Adams.

Business Council of Australia president and former Origin Energy chief Grant King has stepped down from the BHP Billiton board after six months because of an Australian investor backlash over his appointment.

The discontent with the appointment, revealed in The Australian earlier this month, was over Origin’s investment in the $US24.5 billion ($31bn) Australia Pacific LNG plant, which was responsible for a $2.5bn equity raising and $2bn of writedowns this year. It may not have culminated in more than a protest vote at BHP’s coming annual general meeting.

But Mr King is believed to have considered defending his legacy an unwelcome distraction to BHP and incoming chairman Ken MacKenzie at a time when activists have shone a spotlight on the board and the company.

The resignation, just a week before Mr MacKenzie takes the chair from Jac Nasser, came with an announcement that former Shell executive Malcolm Brinded would not seek re-election “because of ongoing legal proceedings in Italy in relation to his prior employment with Shell”.

The changes come after board meetings in Melbourne this week that, among other things, decided to start a sales process on the US shale oil and gas assets BHP has spent $US39bn buying and developing since 2011.

BHP says the shale decision was not driven by activist investor Elliott. But the decision, and the appointment of shale cleanskin Mr MacKenzie as chairman over more established candidates Lindsay Maxsted and Malcolm Broomhead, are being viewed through the prism of the recent push by activist fund Elliott to restructure the company following a period of shale-driven underperformance.

The campaign against Mr King, said to have the support of holders of 40 per cent of the Australian-listed shares, was not driven by Elliott, but it is another example of the increased impact shareholder opinion is having on the big miner.

Departing Wesfarmers fin­ance director Terry Bowen and former BP executive John Mogford have been appointed to the board.

Mr Nasser thanked Mr King and expressed regret the former Origin boss would not be remaining on the board.

“Grant brought a valuable set of skills to the board, having created significant long-term value as a long-time public company CEO,” Mr Nasser said. “His experience managing through challenging industry dynamics and a complex regulatory environment, as well as his deep understanding of oil and gas, were beneficial in board discussions, and will be missed.”

Mr King, whose long tenure at Origin saw him consistently ranked one of the world’s best CEOs before oil prices slumped at the end of 2014, came under fire because of equity raisings and writedowns spurred by Origin’s investment in APLNG. To be fair to Mr King, the writedowns do not take into account $8bn Origin raised selling coal-seam gas ground at the top of the market to ConocoPhillips and Sinopec.

Mr Brinded’s legal proceedings relate to a $US1.1bn bribery scandal over a Nigerian oilfield involving Shell and Italy’s Eni. But he may return to the board.

“He (Mr Brinded) has made an outstanding contribution to BHP during his tenure, and the board looks forward to the time when Malcolm will be able to recommence his service,” Mr Nasser said. The board and strategy changes are bound to drive speculation about whether management change is on the way.

Credit Suisse said it felt the incoming chairman’s influence was evident in the shale exit announcement this week. “The question is: will a new chair lead to management change?” it asked.

BHP chief executive Andrew Mackenzie gave no indication he was on the way out. “I think we’re going to be a great partnership, we have complementary skills and experience,” he told Sky Business’s Ticky program when asked if he saw his current position as a long-term one under the new chair.

“I’m very excited about Ken’s arrival. It’s given me a new lease of life. I love my job and I’m fresh as a daisy.”