Activists target BHP board
• Tribeca says directors lack operational experience
BHP’s board is being targeted for a sweeping overhaul by Tribeca Global Natural Resources Fund, opening a potential new front in the burgeoning activist campaign against the world’s biggest mining company.
BHP’s board is being targeted for a sweeping overhaul by Tribeca Global Natural Resources Fund, opening a potential new front in the burgeoning activist campaign against the world’s biggest mining company.
The Sydney-based hedge fund, which in May joined Elliott Management in calling for changes aimed at shifting strategy at BHP, believed about five or six members of the 11-member board needed to be replaced, portfolio manager Craig Evans said on Tuesday. BHP declined to comment. “It appears there has been no significant and sensible debate on issues at a board level and part of that is because there’s no one with substantial technical and operational experience that is challenging senior management on some of these issues,” Evans said.
Tribeca has said the fund held BHP’s London- and Sydney-traded shares, without disclosing the size of its holdings. Elliott spokesman Michael O’Looney declined to say if it planned to propose the replacement of existing directors.
In May, New York-based Elliott struck an agreement to name three directors to the board of metals manufacturer Arconic amid a campaign criticising underperformance.
Activist investors have gone public since April with attacks on BHP over what they regard as misjudged shale acquisitions, poorly timed share buybacks and disappointing exploration results. Elliott argues that BHP’s leadership has destroyed $40bn in value.
Tribeca would have sufficient support from fellow investors to seek a vote on the replacement of existing board members with alternative candidates, Evans said. “We’d prefer to not need to go down that path,” he said.
Potential alternative directors who were in discussions with Tribeca had experience in either the mining or petroleum sectors, or both industries. They included Australian and international candidates, said Evans.
“They are people with decades of experience in the sector and who’ve been extremely successful CEOs as well,” Evans said. “That’s our biggest focus at the moment, trying to get more commodities and technical experience on to that board with people who’ve done that in a savvy way within companies.”
Tribeca intends to approach BHP and its board to initiate a discussion about a process to replace some directors and would move to a public campaign only if the Melbournebased producer is unresponsive, according to Evans.
Members of the existing board have experience at companies including Newmont Mining, Royal Dutch Shell and mining sector explosives supplier Orica. BHP CEO Andrew Mackenzie, who serves on the board, has held previous roles at Rio Tinto Group and BP.
Shareholders with support of holders of 5% of voting rights are able to request a meeting to propose the appointment or removal of directors. They are also able to put forward resolutions to potentially be considered at planned annual meetings, according to Justin Mannolini, a Perth-based partner at law firm Gilbert & Tobin.
IT APPEARS THERE HAS BEEN NO SIGNIFICANT AND SENSIBLE DEBATE ON ISSUES AT BOARD LEVEL