BHP names Mike Henry as CEO to replace Andrew Mackenzie

BHP has announced Mike Henry will take over as CEO, with Andrew Mackenzie set to retire.

Mike Henry is set to become BHP's next chief executive officer. Picture: Supplied

BHP has announced Mike Henry will take over from Andrew Mackenzie as CEO on December 31.

BHP said the announcement followed a “thorough succession process”.

A Canadian, Mr Henry has been BHP’s president operations minerals Australia since 2016, having joined BHP in 2003.

Mr Mackenzie has been the miner’s CEO since May 2013 and has announced plans to retire.

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“Mr Henry has 30 years’ experience in the global mining and petroleum industry, spanning operational, commercial, safety, technology and marketing roles,” BHP said in its announcement to the ASX on Thursday.

Mr Henry said technology would continue to be a focus for the company. “We will unlock even greater value from our ore bodies and petroleum basins by enabling our people with the capability, data and technology to innovate and improve,” he said.

While rumours of a looming transition at the top of BHP had been swirling for months, BHP’s chairman and the incumbent were at pains to play it down at last week’s annual shareholder meeting.

Only a week ago chairman Ken MacKenzie said “I hope so” when asked by a reporter whether he expected to be sitting next to Andrew Mackenzie at BHP’s 2020 annual meeting.

And Andrew Mackenzie said “there’s still a lot for me to do” when asked the same question.

Outgoing BHP CEO Andrew Mackenzie

Chairman Ken MacKenzie said Mr Henry had “deep operational and commercial experience, developed in a global career spanning the Americas, Europe, Asia and Australia”.

This was the “the perfect mix for our next CEO. I am confident his discipline and focus will deliver a culture of high performance and returns for BHP”, he said.

Mr MacKenzie also paid tribute to outgoing CEO Andrew Mackenzie.

“Under his leadership, BHP has transformed into a simpler and more productive company, financially strong and sharply focused on value for shareholders. We thank him for his vision and hard work, which has changed the way we operate and engage with the world.”

Outgoing CEO Mr Mackenzie said that choosing the right time retire had not been easy.

But “fresh leadership will deliver an acceleration in the enormous potential for value and returns that will come from BHP’s next wave of transformation. I am confident Mike and BHP will seize the many opportunities that lie ahead.”

Andrew Mackenzie will step down as CEO and as an executive director on New Year’s Eve, and will retire June 30 next year.

“Mr Mackenzie will work through the applicable notice period and accordingly no severance payment will be made. He will receive his base salary and pension entitlement to the date of his retirement,” chairman Mr MacKenzie said.

BHP also announced details of Mr henry’s remuneration agreements, saying they were broadly in line with Mr Mackenzie’s.

Mr Henry will receive a base salary of $US1.7m per year, and a pension contribution of 10 per cent of that salary per year. Other components of his total compensation include a “cash and deferred plan” of 80 per cent of base salary, under which two tranches of deferred shares can be awarded, each to the equivalent value of the actual cash bonus received, vesting in two and five years respectively. Also included is a long term incentive of 200 per cent face value of base salary, which is subject to shareholder approval.

Growth strategy

Mr Henry, a veteran BHP executive who has run the Australian minerals division for more than three years, succeeds Mr Mackenzie at a time when major resources companies are being pressed by investors to map out a clearer strategy for growth. The Australian minerals division includes most of BHP’s iron-ore operations and the Olympic Dam uranium-copper mine.

Under Mr Mackenzie’s leadership, BHP sold assets ranging from US shale gas deposits to South African coal mines and jettisoned a long-held pledge to increase its annual dividend. The result is a slimmed-down company, but one more reliant on swings in prices of just a handful of commodities such as iron ore and crude oil for profit growth.

Mr Henry’s range of experience had led many investors to speculate that he was a front-runner to be the next chief executive. He was also one of the few executives to keep a senior role when Mr Mackenzie took the helm in May 2013 and overhauled the management team.

Mr Henry will take over BHP at a time when its financial performance is healthier than for some time. BHP reported a net profit of US$8.31 billion for the 12 months through June-the best result in five years on the back of strong iron-ore prices. It also declared a record dividend payout to shareholders.

BHP’s recovery partly reflects the steps taken by Mr Mackenzie, which included delays to some major projects and a tight focus on cutting costs. Big deals mostly weren’t considered, while BHP carved out several mining operations that it no longer wanted into a new company, known as South32 Ltd., that was then listed in Australia, South Africa and London.

Mr Mackenzie, a Scottish-born geologist, also led the company through the sale of onshore US shale gas assets that were purchased by his predecessor for roughly $US20 billion. They were sold for US$10.8 billion in a deal agreed to last year.

with Dow Jones Newswires