BHP Billiton to face shareholder questions over strategy

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BHP is facing questions about its strategy (Source: Getty)

BHP Billiton will attempt to build bridges with investors after months of skirmishes about its strategy at its annual meeting in London this week.

The firm, one of the world’s biggest miners, has felt the heat from some shareholders including activist hedge fund Elliott over its cost-cutting in response to the tumbling oil price and uncertain demand from China.

New chairman Ken MacKenzie has been on a “listening tour” with investors since joining the firm last month, with several shareholders raising concerns about chief executive Andrew Mackenzie, no relation, who is approaching his fifth anniversary in charge.

He has presided over a cut to capital spending by more than half over the past two years, helping keep BHP on track to reduce its debts from $16bn to $12bn by next June while raising its dividend, but leaving some investors alarmed at underspending on potentially lucrative projects.

Read more: Activist investor Elliott criticises BHP's potash plans

Elliott, which has amassed a five per cent stake, is expected to send a representative to the meeting on Thursday. After pressure from Elliott and other investors, BHP hired advisers in August to sell its US shale and petroleum business. The hedge fund also wants to end BHP’s dual Anglo-Australian listing structure.

Elliott declined to comment, while BHP did not respond to a request on Sunday.

Another topic of debate at the meeting will be executive rewards. The investment advisory group Pirc has called for shareholders to oppose BHP’s remuneration report, which it said will pay bosses amounts “considered excessive”.

Chief executive Andrew Mackenzie was paid $4.6m, almost double last year’s total but just a fraction of the possible maximum of $13m, after the firm missed targets on long-term returns. Pirc also opposes KPMG’s reappointment as auditor.

Read more: Corporate governance experts slam executive pay ahead of shareholder votes

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