Another one down at FMG as CEO Fiona Hick quits after six months
Fortescue Metals Group’s results have been overshadowed by the departure of yet another senior executive, with mining boss Fiona Hick quitting after less than six months in the job.
Andrew Forrest has lost yet another senior executive, with Fortescue Metals chief executive Fiona Hick quitting the company after less than six months in the job, the latest high profile exit from the billionaire’s mining empire.
Ms Hick joined Fortescue in February, after a year-long search for a replacement for former chief executive Elizabeth Gaines, resulted in her appointment as the boss of Fortescue’s mining operations.
Fortescue shares closed down $1.06, or more than 5 per cent on the latest signs of executive turmoil within the company’s leadership, finishing at $19.87 – on a day when the market value of its chief rivals, BHP and Rio Tinto, both made slight gains.
Fortescue said on Monday, just ahead of the release of the company’s annual accounts, that Ms Hick had “made a joint decision with the Fortescue board” to depart and that her resignation had been both “friendly and mutual”.
Her role will be taken by chief operating officer Dino Otranto.
Only Mr Otranto and Mark Hutchinson, chief executive of Fortescue’s green energy arm, fronted analysts and the media on Monday, and both declined to comment further on the reasons behind Ms Hick’s departure.
Mr Hutchinson said Ms Hick’s departure – and Mr Otranto’s promotion – was agreed between the outgoing Fortescue mining boss and the company’s board on August 27, immediately after Ms Hick attended the company’s lavish 20th anniversary celebrations at the company’s Solomon mine in the Pilbara on Saturday.
The Australian understands that was only the formal board sign-off on the decision.
Each year, in the lead-up to delivery of the company’s annual accounts, Fortescue’s board and most senior management attend a three to four-day lock-in strategy meeting at executive chairman Andrew Forrest’s Minderoo cattle station in the Pilbara.
The Australian understands an informal agreement was reached over Ms Hick’s departure at that event, with the board’s formal ratification left until Sunday.
Sources close to both camps insist Ms Hick was not terminated from her role, with the decision described by all as “mutual”.
Ms Hick’s tenure at Fortescue lasted exactly six months, according to the company’s accounts, from February 27 to August 27.
But the decision sparked further analyst questions on Monday, with Citi’s Paul McTaggart noting the latest senior executive departure had the potential to unsettle the market in Fortescue shares.
Even ratings agency Moody’s Investors Service sounded a warning note on the scale of the turnover at Fortescue on Monday.
“We view the uncertainty created by multiple changes at the executive levels over the past several years as credit negative,” Moody’s analyst Sean Williams said in a note on Monday.
Fortescue also flagged a major shift in the way it will fund its green energy ambitions on Monday, saying it has ditched its earlier policy of assigning 10 per cent of the company’s net profit to Mr Hutchinson’s Fortescue Energy division – previously known as Fortescue Future Industries.
Instead Fortescue Energy project funding will compete with the company’s mining division for capital.
“There is no preconceived idea about how much we spend on the energy business going forward. This just makes sure that we actually compete for the best projects to make sure that they have the right returns for shareholders here,” Mr Hutchinson told analysts.
Mr Hutchinson confirmed Fortescue still planned to make final investment decisions on five green energy projects in 2023, saying the expectation would be that they would deliver internal rates of return (IRR) close to 10 per cent.
Fortescue has previously flagged it expects an IRR of at least 20 per cent from mining projects, but Mr Hutchinson told analysts green energy options would be measured differently to mining projects.
“You have to look at the difference of the risk and the returns for different projects – energy projects are different than mining projects. And that’s our job to offer up to the board the best possible opportunities on both the mining and on the energy side, and it’ll be up to the board to decide,” he said.
Fortescue released its annual financial results on Monday, saying it had taken a $US1.03bn impairment to the value of its newly opened Iron Bridge magnetite mine, as the company booked a $US4.8bn net profit for the year.
Fortescue will pay a $1 a share dividend on the back of the result, with the payout 65 per cent of the company’s underlying $US5.5bn underlying net profit, the midpoint of the company’s policy of paying 50 to 80 per cent of underlying NPAT.
The iron ore major booked $US16.87bn in revenue for the year, down 3 per cent, and underlying EBITDA of $US9.96bn – down 6 per cent.
Fortescue’s net profit was 23 per cent below the $US6.2bn the company booked last financial year.
But Ms Hicks’ departure overshadows Fortescue’s annual financial results, and is the latest in a long line of senior departures at the iron ore major and green energy would-be.
The finance chief of Fortescue’s green energy arm, and long term Forrest family company executive, Felicity Gooding left the company in July.
Fortescue finance boss Ian Wells quit in January, two months after the abrupt exit of former deputy Reserve Bank governor Guy Debelle, who was also chief financial officer of Fortescue Future Industries, then the name of the iron ore major’s green projects arm.
Fortescue also said on Monday it has appointed former CSIRO boss Larry Marshall to the company’s board, as the company flagged out its intention to change out its lead independent director.
Fortescue said on Monday deputy board chairman Mark Barnaba will give up the role as the company’s lead independent director at some point in 2024, but will remain as the company’s deputy chairman.
Dr Marshall joins the Fortescue board after finishing up as CSIRO’s chief executive in June. He ran the government research body from 2015. Dr Marshall replaces Jenn Morris, who quit as a director of the company in June.
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