Mark Kleinman’s City column: Why BAE chief Woodburn could be a slick choice for BP and more
Mark Kleinman is Sky News’ City Editor and is the man who gets the City talking in his weekly Morning Wire column. This week he asks who might take the reins at BP, what next at Endeavour Mining, and a new retail platform
BP’s board might legitimately be accused of many things in its handling of the departure of former chief executive Bernard Looney. Being slovenly over the pace of recruiting his successor isn’t one of them.
It’s less than four months since Looney stepped down after acknowledging that he had been less than forthcoming over his personal relationships with colleagues. For context, if this had been an orderly succession prompted by a planned retirement, it would have taken place over a 12-month period.
The critical thing for BP’s workforce and its shareholders is that it gets the decision right, not that it makes it quickly. Anointing a successor – particularly from outside its own ranks – by this point would have risked looking unduly hasty.
Moreover, the circumstances of Looney’s exit have understandably complicated matters. As well as the usual factors involved in a decision as central to a company’s future as the selection of a new CEO, BP’s directors will have another layer of scrutiny to apply: do they risk being blindsided again by extraneous factors which raise questions about the next chief’s integrity, thereby risking their own reputations?
That question is most pertinent to the chairman, Helge Lund, who has been roundly criticised over the Looney fiasco. Like the Jes Staley affair at Barclays, though, I take a slightly different view: board members are entitled to have faith in the veracity of what their CEOs tell them; it does not seem especially naïve for the directors of a FTSE-10 company to trust that what Looney had disclosed about his personal life was all they needed to know.
In and of itself, that should not impair the chances of Murray Auchincloss, the finance chief who has become interim CEO, of landing the job on a permanent basis. Many shareholders have been lobbying for him as a safe pair of hands who knows BP inside out.
Nevertheless, another name on investors’ lips is Charles Woodburn, the BAE Systems chief executive. Woodburn’s CV is ideal: he spent 15 years at Schlumberger before becoming CEO of Expro, the oilfield services group. He joined BAE in 2016, and has overseen a stellar run for the company – aided, of course, by Russia’s invasion of Ukraine.
At £80bn or so, BP’s market capitalisation is more than double that of BAE’s, while Woodburn might relish a new challenge at the still-young age of 52.
Counting against it might be the fact that he is already earning north of £10m-a-year in his current berth, and BP will find it hard to materially exceed that sum. Additionally, the oil company would have to write a very large cheque to buy Woodburn out of his BAE stock options – although having saved more than £32m by slashing Looney’s severance package last month, there’s some loose change lying around at its St James’s Square headquarters.
RetailBook funding hints at new chapter
In the corporate world, as in life, timing is everything. So there are some who may argue that building a platform to connect retail investors with listed companies seeking to raise capital in the current market environment might be the definition of optimism.
Nevertheless, RetailBook, conceived by Peel Hunt and with the endorsement of investment banks including Deutsche Numis, Jefferies and Rothschild, is pressing ahead despite London’s moribund IPO market.
According to an investor presentation I’ve seen, RetailBook is raising £3m from external investors to fund regulatory, working and growth capital – complementing £2m of pre-seed funding already injected by Peel Hunt.
No doubt inspired by PrimaryBid’s success during the pandemic, when it secured roles on dozens of emergency corporate fundraisings, RetailBook’s timing might ultimately prove perceptive, with a retail offering of NatWest Group shares likely to form part of the Conservatives’ pre-election tactics.
A plethora of government-sponsored reviews in recent years have advocated greater retail inclusion in fundraising transactions. Steven Fine, the Peel Hunt chief, will doubtless have used this week’s opportunity of an audience with the chancellor, Jeremy Hunt, to press the case for swifter reforms. All he needs now is the pipeline of primary and secondary transactions to demonstrate growing demand from retail investors – but if it arrives, RetailBook will need to raise a lot more capital of its own to keep pace with a recovering market.
Gold man, sacked! Miner must Endeavour to fight big payoff
Gold man, sacked. The sudden defenestration of Sebastien de Montessus, chief executive of Endeavour Mining, over a near-$6m payment leaves one of the world’s leading gold producers with a major headache.
Granted, its board moved swiftly to name Ian Cockerill as de Montessus’s successor, but the affair raises numerous questions about governance and oversight at the group.
Even in early January, his self-proclaimed “lapse in judgement” – failing to notify the board of a payment that he says was made to provide security to workers in a conflict zone in West Africa – may become a contender for euphemism of the year. If the facts are as presented, Endeavour’s board was correct to dismiss him.
The major surprise was that its shares didn’t fall further than their 10% slide last Friday. That may be explained by the fact that Endeavour must now be vulnerable to a bid in an industry where sizeable targets present themselves infrequently.
As well as dusting off its defence documents, Endeavour shareholders will press hard for the company to claw back de Montessus’s previous bonuses given the sudden erosion of the company’s value. As the FTSE-100’s highest-paid chief executive in 2021, I doubt he’ll go down without a fight.