Elliott renews attack on BHP Billiton board

BHP Billiton's new chairman should "review" and "upgrade" the mining group's board of directors, activist investor Elliott Management has demanded, citing the backing of several other major shareholders.

With chairman Jac Nasser retiring and a new chairman expected to be announced imminently, the activist investor, which blamed management for "destroying tens of billions of dollars in shareholder wealth" from its expansion into the US petroleum business and share buybacks "at inflated prices", said the new appointee should "reconstitute and refresh the BHP board of directors".

“BHP has an entrenched board, with long-tenured directors having approved the disastrous acquisitions and poorly timed share buybacks that are at the root of much of today’s underperformance,” the New York hedge fund said in an open letter. "A significant upgrade in directors is needed."

Although chief executive Andrew Mackenzie, who held talks with Elliott last month, has stressed his confidence in boosting the value of the company by up to 50% and near-doubling the return on capital through cutting costs and carefully managing assets, Elliott remains unsatisfied and has continued to keep up the pressure.

The letter cited soundbites from other major shareholders in recent weeks, including Australia's AMP Capital calling for an “independent assessment” on the decision unify BHP’s legacy dual-listed company structure, Aberdeen Asset Management calling for a "refreshing of the board", and Tribeca for the new chairman to "reset the culture to one that covets capital efficiency and earnings per share growth".

Elliott wants the new appointment to have the mandate to initiate an independent review of the petroleum business and explore a potential sale of the US oil and gas operations; "unlock" BHP’s $10bn franking credit balance through a unification of the dual-listing while maintaining BHP’s Australian domicile, listing and headquarters; and develop a new capital return plan that prioritises shareholder returns.