Shareholder groups warned mining group BHP Billiton last night against making a huge payoff to outgoing chief executive Brian Gilbertson.
The National Asssociation of Pension Funds has been a bitter critic of BHP’s remuneration policy, which gave Gilbertson $5-million a year and lines him up for a possible $2,4-million golden goodbye.
A company representative refused to comment on the scale of any final payment saying it would be ”a matter of agreement” between the two sides.
Shares in the group, which was formed 18 months ago through a merger, fell 3,5% to 324p as the London stock market reacted to the changes which mean executive director Chip Goodyear taking over with immediate effect.
BHP blamed ”irreconcilable differences” between the board and its 59-year-old chief executive for the management change but stressed he had resigned yesterday and not been pushed.
Gilbertson, who was paid $5-million last year and deemed by critics to be abrasive, was understood to be on a walking holiday in Australia and unable to give his side of the story or outline his plans.
The NAPF protested against Gilbertson’s re-election at last November’s annual meeting because of the contract arrangements. Yesterday it expressed alarm that a huge payout might be on the way. ”We would never recommend a company renege on a contract because that could lead to legal action and cost them even more but we would expect BHP Billiton to look at ways of mitigating any payout just as Amey did recently with Brian Staples, via phased payments or providing money only until another job was found,” an NAPF representative said.
The mining group said, in a statement, that, although Gilbertson had been an architect of the successful tie-up between BHP of Australia and Billiton of South Africa, he had ended up at odds with the board. ”In order to resolve this situation, and in the best interest of the company and its shareholders, Gilbertson decided to resign.”
There was speculation that the dispute arose from Gilbertson’s aggressive and expansionist aims for the group compared with the more conservative views of the board led by Australian chairman Don Argus.
There were also suggestions that the South African-born chief executive wanted to switch headquarters from Melbourne to London where he has a home.
The company refused to comment on this while mining analysts thought it likely there were a combination of factors leading to the bust-up. ”It’s unlikely he would resign over an issue as trivial as where the headquarters was located, especially when the Australian government had made this a requirement of it agreeing to the merger,” explained Martin Potts, mining analyst with Williams de Broe.
The 44-year old Goodyear is regarded by the City as a sound replacement but not one with the global experience or reputation of Gilbertson.
Goodyear is a man whose more cautious style might be more in keeping with that of Argus, however. In a short statement, he said he would support targets to build on existing businesses where there were opportunities to become industry leader. BHP has a portfolio of oil, coal, iron ore, industrial metals and diamond interests.
A former Kidder executive, Goodyear joined BHP in 1999 as chief financial officer and has been chief redevelopment officer since June 2001.
There was surprise that BHP had rushed into his appointment instead of considering outside appointments. Goodyear comes in as the group enjoys some stock market success having outpaced the wider Australian stock market by 12% since the merger. But profits were hit by the downturn in commodity markets, falling 12% to $1,93-billion in the last financial year. – Guardian Unlimited Â