Posted by nyssa on August 19, 2012 in , , ,

Last week I had an extremely enjoyable and rewarding time in our Perth office. The team over there are really humming and there is a great feeling in the town in general. I always stay in a hotel at one end of the terrace and walk to our office down the other end. As much as anything, it means that I do some exercise but it gives me a feel as to what is going on in Perth.

The greatest change of recent times has been the finalisation of the large BHP tower. This is an impressive building and reaffirms BHP’s commitment Western Australia in general. The block surrounding the tower has also been re-developed and it certainly adds some culture to the terrace.

The opening of this building certainly had its share of press and media. It was officially opened by the Premier of Western Australia, Colin Barnett, and the CEO of BHP, Marius Kloppers. Life has certainly not been easy for Mr Kloppers in recent times. He has seen the share price of BHP, which makes up approximately 13% of the ASX, fall by 20%. He has been an active, and much maligned, participant in the entire debate over the carbon tax and emission trading schemes. He has seen his business in direct conflict with unions on BMA projects in Queensland. He has “failed” with aggressive acquisition targets of the Potash Corporation in Canada and Rio Tinto and is under relentless broker pressure to do more with the massive cash surpluses that BHP enjoys. To top it off, he has had to write down $2.84bn off the balance sheet for shale gas assets purchased by past management. He is certainly having a tough time of it.

However, even amongst such serious and difficult economic challenges, the one thing that has gathered the most press has been his clean desk policy. It has been described as “obsessive and controlling”. It has seen articles with headlines such as “Work for BHP: No Soup For You”. The media has highlighted the following components of his clean desk policy:

  • Hot soup is not allowed to be consumed at desks
  • Food with odours are not allowed to be consumed
  • Zero tolerance to messy work stations
  • No chocolate, fruit, nuts or any nibble food
  • No plants so as to avoid plant diseases
  • Only one single A5 photo frame or similar sized work award allowed

Now , while the policy may well reflect the CEO’s passion for neatness and a lack of clutter, it would be absolutely foolish to think that it actually came from the CEO himself. I have no inside knowledge on the fact, but I would assume that as CEO of Australia’s largest company he has some more pressing issues to deal with (as a shareholder, I hope that he is focusing on the key critical issues). However the media went to town on this policy and Kloppers had to defend it by saying that all BHP staff are proud of their premises and this policy was in line with it.

So, after defending himself against this policy, Mr Kloppers came out and announced the $2.84bn write down of shale gas assets. He did so directly and in a stoic manner. He was supported by the Chairman of the group, Jac Nasser who claimed that the US shale gas assets were part of a boardroom strategy and not a result of Kloppers’ leadership. Kloppers then made the remarkable decision to forgo his annual bonus (rumoured to have been $4.7m) in response to the group performance. While he was applauded for taking this stance, analysts still queried Nasser’s perceived support saying that it was “carefully crafted” rather than a “bald assertion of support”. They are continually speculating that Nasser is working on a “Plan B” in readiness for Kloppers to move aside.

So, no matter how tough your job is at the moment, I would guess that you are not under as much pressure as Marius Kloppers. Then again, I don’t know too many people that could afford to forgo $4.7m!!

Brad McMahon – Managing Director

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