2nd UPDATE: BHP Billiton Says CEO Succession Planning Ongoing

Date : 11/07/2012 @ 12:15AM
Source : Dow Jones News
Stock : Bhp Billiton Limited (BHP)
Quote : 41.27  -0.29 (-0.70%) @ 4:03PM
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2nd UPDATE: BHP Billiton Says CEO Succession Planning Ongoing

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-- BHP says hunt for the next chief executive ongoing

-- Spokesperson declines to comment on time frame

(Adds investment adviser comment from ninth paragraph; details throughout.)

By Rhiannon Hoyle

SYDNEY-BHP Billiton Ltd. (BHP) said Wednesday that it is planning for a successor to its chief executive, Marius Kloppers, but the mining giant gave no timeline for when this change may happen.

A spokesperson for the company in Australia said the hunt for a replacement for Mr. Kloppers was "an ongoing process," describing it as "one of the most critical tasks of any board."

Investors have urged BHP, the world's largest mining company by market value, to articulate a succession plan as Mr. Kloppers enters his sixth year as chief executive. But his tenure at the head of the company has been complicated by a sharp fall in industrial commodity prices, which prompted the company into shelving several mine expansions and developments valued at about US$50 billion.

"BHP Billiton's board has always ensured that it has a well-integrated, continual succession process in place for our most senior executives," the BHP Billiton spokesperson said in an emailed statement. "This well-established planning process has worked effectively for many years and delivered a track record of smooth succession at the group management committee level," the person added.

The response from BHP follows a report in the Financial Times newspaper that the company was actively seeking to replace Mr. Kloppers within a year to two years.

The spokesperson from BHP declined to comment on the time frame for replacing Mr. Kloppers.

South Africa-born Mr. Kloppers assumed the role of chief executive in October 2007, succeeding Charles "Chip" Goodyear. He had previously been president of the company's nonferrous materials division, and from the formation of BHP Billiton in 2001 was chief marketing officer and chief commercial officer.

But Mr. Kloppers has attracted criticism from some investors, in particular for not returning what they said was enough cash to shareholders during the commodity price boom and instead pushing ahead with acquisitions, several of which were derailed. Although publicly backing Mr. Kloppers, 50, as chief executive, Chairman Jacques Nasser recently said the board gives a lot of thought to succession. He hasn't commented on possible contenders for the job, though.

"The process is something that needs to be well flagged to the market, but I imagine there won't be any serious talk about likely successors and the timing of that until we see a recovery in commodity prices," says RBS Morgans investment adviser Christopher Macdonald. BHP's shares recently up 0.2% at 34.88 Australian dollars (US$36.39) a share.

Less than two months ago, Chairman Mr. Nasser had praised the chief executive's record and said that he and the senior management team were suited to guiding the company through tough times as mining companies are forced to retrench.

"We are very fortunate to have Marius as the chief executive of the company. He has been there for five years, and they've been five very, very successful years," said Mr. Nasser.

Still, analysts say this is a perilous time for the chief executives of major mining companies, whose stock values have been plummeting along with commodity prices.

"Any leader of a natural resource company whose stock has fallen is going to be in trouble," says Charles Bradford, an analyst with Bradford Research Inc. "But BHP, and Kloppers, is looking better than most, thanks in part to its exposure to oil."

BHP's stock is down 30% compared to its peak in the spring of 2011, slightly below the falls registered by other mining firms. Anglo American PLC (AAL.LN), whose CEO Cynthia Carroll resigned almost two weeks ago under shareholder pressure, has seen its share price drop over 40% from its 2011 summit.

- John W. Miller, David Rogers and Robb M. Stewart contributed to this article.

Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com

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