Temasek last week annced a new president and portfolio team head. We shld be glad that Temasek did not succumb to its flagship bank’s “FTs are best whether they perform or not”.
But let’s get serious. Let’s use this annc of personnel changes to reflect on why the departure of one Goodyear Chips could affect us.
Many moons ago (February I think) BT carried an article that backhandedly criticised Chip Goodyear saying that despite his sudden, unexplained departure from Temasek, he is still in demand from the corporate worl. (Can you see the spin for Temasek in this SPH publication, whose chairman is executive director of GIC?)
And well he should be in demand.
When he was hired to be CFO of Melbourne-based miner BHP in 1999, the “Big Australian” had lost its way. In the 1990s, it made a series of ill-conceived acquisitions and failed projects (err sounds like you-know whom’s recent record of Shin, Merrill Lynch, ABC Learning and Barclays), amid historically low commodity prices.
The then former investment banker (he was a CFO at another miner) was one half of an all-American dynamic duo (Sorry, I’m a Batman fan). The other was CEO Paul Anderson, who came from Duke Energy.
In their first two years, BHP got rid of 2,000 employees and A$6.9bn worth of assets. They then merged BHP with Billiton, creating the world’s biggest miner. And best of all the merger worked, a rarity in M&A.
A key legacy of his stint as CEO, analysts say, is the financial discipline he brought to BHP. He ensured it grew fast enough to capitalise on the commodities boom while avoiding the ill-conceived spending of the past; and all the while, returning cash to shareholders. A tradition that has continued.
Shortly after he took charge as CEO, it was announced that BHP would increase its capital management programme by more than four times to US$13bn, beginning with a US$2.5bn off-market return in Australia.
With the Singapore government tapping the reserves, someone with a track record of returning cash to shareholders while growing the portfolio is needed.
There is no Singaporean with these skills.
And as to the disagreement with the board, maybe he wanted to do big deals, while the board had already decided Temasek should become a hedgie.
And maybe his deals would have been in the extractive industry (mining and oil & gas). Remember MM had said GIC would not invest in mining ventures, because he didn’t understand mining? Though now that Temasek is dipping its toes in mining and oil & gas, Chips and the recently departed Michael Dee (ex-Morgan Stanley’s MD in oil town Houston) would be missed.