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"Ultimately, it is up to the board to choose the course"

BHP chairman Ken Mackenzie has been quick to address reports that Andrew Mackenzie’s job was on the line, using his speech at the company’s AGM in London to talk up his CEO’s achievements.
"Ultimately, it is up to the board to choose the course" "Ultimately, it is up to the board to choose the course" "Ultimately, it is up to the board to choose the course" "Ultimately, it is up to the board to choose the course" "Ultimately, it is up to the board to choose the course"

Ken MacKenzie said he heard positive feedback, but was also challenged by investors during his tour

Kristie Batten*

The reports emerged after activist investor Elliott launched its campaign against BHP, putting pressure on the board.

Addressing BHP's London annual general meeting overnight, MacKenzie said in July and August he held a "listening tour", meeting over 100 shareholders across eight countries.

"During the tour, I heard investors' perspectives on BHP across a broad range of topics - from the company's portfolio through to our capital allocation approach and our culture," he said.

"I heard positive feedback, but I was also challenged by investors and heard their ideas and opportunities."

MacKenzie said the purpose of the tour was to listen and that it was not a polling exercise.

"It is the role of the board as the company's stewards to listen and be responsive to our stakeholders," he said.

"That is the approach I believe in. But ultimately, it is up to the board to choose the course it believes will best benefit shareholders."

MacKenzie said while the listening tour gave him the confidence that the foundations of the company were strong, there was room for improvement.

The new chairman also outlined the achievements of Mackenzie during his five years as CEO which "set BHP up for success", including the simplification of the portfolio and the 40% reduction in unit costs.

"Andrew, I look forward to working with you and your management team as you drive these outcomes even further," MacKenzie said.

MacKenzie said his five focus areas would be safety, assessing the portfolio, capital discipline, capability and culture, and social license to operate.

On capital discipline, MacKenzie noted the pro-cyclical nature of the resources sector, and that the company's track record over the past decade on capital allocation and value creation had "not been perfect".

"The board and management team have been working together to learn from the lessons of the past and to continuously enhance our capital allocation processes," he said.

"The framework established at the beginning of 2016 was an important step towards these objectives.

"The framework is a core process for everyone in the leadership of BHP and how we create value."

MacKenzie said he had agreed with the CEO to form a working group made up of representatives of management and the board to focus on strengthening the application of the framework.

"This will help us to further review and improve our capital allocation activities and metrics, as well as how we communicate our decisions transparently to the market," he said.

MacKenzie said culture was a genuine differentiator and BHP was taking steps at board level to ensure the company had the right capability and culture.

To ensure that the board was "fit-for-purpose", a review of board skills and experience requirements would be undertaken this financial year.

"We know that a mix of skills, background, knowledge and experience is required. This needs to be supported by diversity of geographic location, nationality and gender in order to effectively govern the business," MacKenzie said, noting that board refreshment was a hot topic on the listening tour.

"Investors, just like the board, believe regular renewal is important but are also aware of the value corporate memory brings to a board."

Wesfarmers finance director Terry Bowen and former BP executive John Mogford formally joined the BHP board at the start of this month, replacing controversial outgoing directors Malcolm Brinded and Grant King.

Elliott has not spoken publicly since MacKenzie took over as chairman on September 1, its longest period of silence since launching its campaign in April.

It has said in the past that it supports MacKenzie and his appointment provided an "opportunity for action".

*Kristie Batten is editor of