New BHP boss Mike Henry’s mantra: adapt, innovate and improve
Incoming BHP boss Mike Henry vows to put technology and data at the centre of the company’s future.
Incoming BHP boss Mike Henry has vowed to put technology and data at the centre of the company’s future, saying his mantra at the top of the world’s biggest miner will be “adapt, innovate and improve”.
Any suggestion that a change in leadership means that BHP will back away from the company’s current direction on climate change, relationships with traditional owners and its other “social value” rhetoric, was quickly rejected by the miner’s chairman.
Even if Mr Henry hadn’t already clearly demonstrated his willingness to follow in his predecessor’s footsteps when he fronted the media on Thursday, BHP chairman Ken MacKenzie left no room for doubt.
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“It’s in the company’s interest that we consider much more broadly than perhaps we have in the past who our key stakeholders are. And there will be times when social issues and business issues intersect for the company, and when that happens then it’s appropriate for us to talk about those,” he said.
“But they will have to be linked back to our business case. Whether it’s diversity, climate or indigenous recognition – all of those things in the case of BHP are always tightly linked back to our business case.”
The message from the CEO-elect was similar – steady as she goes, with no change in fundamental strategy.
“I have the luxury of being able to lead a company that is in really good shape. We’ve got a great strategy and I see my job as the next CEO is to build on that foundation we’ve created to accelerate on our performance, first of all on safety and then on productivity,” he said.
While management change at the most senior levels is inevitable after a change at the top, as unsuccessful contenders depart and the new boss reshapes his team to his liking, Mr Henry said he wouldn’t be looking to make major changes in the near term.
“The company is in great shape. I’m going to spend the next 45 days engaging with our global operations, listening to our people, and I’ll come forward at our February half-year results with some initial impressions,” he said.
“I need to get my feet under the desk. I want to spend time out engaging with our global operations hearing from our people before I make any decisions about the leadership team and people.”
A Canadian, Mr Henry has been the boss of BHP’s Australian operations boss since 2016, having joined BHP in 2001, initially on secondment from Japanese corporate giant Mitsubishi to help bed down the pair’s metallurgical coal joint-venture.
He replaces Andrew Mackenzie, credited with slimming down the mining giant through asset sales and the spin-out of its lesser projects into South32, capitalising on the massive build-out of BHP’s iron ore infrastructure during the boom years and transforming its approach to technology and productivity.
Mr Mackenzie will step down as CEO and as an executive director on New Year’s Eve and work out his notice period until he retires at the end of the financial year – meaning he won’t take a golden handshake, outside of previously accrued leave, pension payments and share-based bonuses.
The outgoing BHP boss has also agreed to conform to the company’s new executive share ownership policy and hang onto the $14.4m of stock he currently holds, as he waits to see whether his next round of short- and long-term incentive shares vest.
BHP said Mr Henry’s pay package will be roughly in line with his predecessor, with its new boss to take home a base salary of $US1.7m ($2.5m) a year, plus a 10 per cent pension contribution.
Hitting performance hurdles could take his total package to up to $US7.3m.
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Mr Henry will take over BHP on the back of a strong financial performance. BHP reported a net profit of $US8.31bn last financial year, on the back of strong iron ore prices, its best result in five years. It also declared a record dividend payout for the year.
Analysts welcomed the appointment on Thursday, suggesting it indicated a “business as usual” stance by the BHP board. After initial weakness, BHP shares closed Thursday up 2c to $36.81.
JPMorgan resources analyst Lyndon Fagan told clients the fact BHP had opted for an internal appointment suggested “minimal changes to BHP’s strategy”.
“Mike will bring his own leadership style, but we don’t envisage much change to BHP’s strategy under his leadership,” he said.
Mr Fagan said an external appointment could have heralded a shift to BHP’s approach on structural issues, including a potential spin-out of its petroleum division, and possibly a signal it could abandon a long-planned move into potash production through the approval of the Jansen project in Canada.
“Given Mike's pre-existing involvement in BHP’s executive committee, we believe it’s almost a sure thing that Jansen gets sanctioned (versus bringing in an external candidate to take a fresh look and potentially walk away),” he said.
“An external candidate may have revisited the petroleum demerger scenario, and/or partial trade sale. This can’t be ruled out under Mike, but we believe the likely scenario going forward is a minor portfolio change (eg Scarborough sale) versus complete exit of the product group.”
RBC Capital Markets’ London-based mining analyst Tyler Broda said Mr Henry was seen as a “pragmatic, operations focused manager”.
“We would expect that, in the near-term at least, that BHP's focus on disciplined capital allocation will remain largely unchanged,” he said.
“This said, future strategic decisions are likely to become more challenging and far-reaching than those faced by his predecessor as we enter into a decade with uncertain geopolitical prospects, rapid technological change, the climate challenge, and specifically relevant to BHP's largest revenue generator, (potentially) peak iron ore.
Credit Suisse analyst Sam Webb said BHP’s decision to look inside its own ranks could disappoint some investors looking for a change of direction.
“We note that while Mr Henry is well credentialed, he’s had a lower profile in recent years than other members of BHP management, particularly for UK and US investors,” he said.
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