Chip W. Goodyear
1958–



Chief executive officer, BHP Billiton

Nationality: American.

Born: January 18, 1958, in Hartford, Connecticut.

Education: Yale University, BS, 1980; Wharton School of Finance, University of Pennsylvania, MBA, 1983.

Family: Son of Charles Goodyear (marketing director); married Elizabeth Dabezies; children: two.

Career: Kidder, Peabody, 1983–1985, associate; 1985–1986, assistant vice president; 1986–1989, vice president; Freeport-McMoRan, 1989–1993, vice president, corporate finance; 1993–1995, senior vice president and chief investment officer; 1995–1997, executive vice president and chief financial officer; Goodyear Capital Corporation, 1997–1999, president; BHP, 1999–2001, chief financial officer; BHP Billiton, 2001–2003, chief development officer; 2003–, chief executive officer.

Address: BHP Billiton, 180 Lonsdale Street, Melbourne 3000, Victoria, Australia; http://www.bhpbilliton.com.

■ When Charles (Chip) Waterhouse Goodyear was unexpectedly tossed into the CEO position at Australia's gigantic mining and oil conglomerate BHP, people wondered whether his "blue-chip" management style could make up for the loss of his more aggressive and entrepreneurial predecessor. However, behind the scenes first as BHP's chief financial officer, then as the merged BHP Billiton's executive director and chief development officer, Goodyear had already contributed significantly to the successful turnaround of the previously ailing corporation. By 2004, after a year at the helm, things were looking good for both Goodyear and BHP Billiton: At the end of fiscal year 2003 the company ranked among the world's top producers of coal and iron ore, was a major producer of crude oil and natural gas, and was a prolific producer of silver, lead, gold, zinc, nickel, aluminum, and copper, with operations on six continents. It employed 34,800 people, posted revenues of $10.26 billion, and showed a net income of $1.39 billion.

THERE'S ORE IN BROKEN HILL!

BHP began in 1883 when a sheep-station boundary rider in New South Wales, Australia, gathered some young speculators to search for ore that he felt sure existed in Broken Hill. The consortium, named the Broken Hill Proprietary Company (BHP), immediately found rich deposits of silver, lead, and zinc. In 1915 BHP entered the steel industry to become Australia's largest producer, and it entered the oil business in the 1960s when it partnered with Esso Standard in offshore oil exploration. The 1960s and 1970s saw a major expansion of its iron ore, manganese, and coal interests, and BHP made further acquisitions in the 1980s in oil and steel. In 1996 it acquired Magma Copper, but a steep decline in copper prices created a $420 million write-down (reduction) in the book value of this asset. The turmoil in Asia's economic market in the late 1990s caused further economic difficulties, and in 1997 BHP posted record losses. John Prescott, the CEO for the previous 40 years, was heavily criticized, and he was forced to resign in 1998 as BHP's blue-chip stocks plunged and shareholders' funds were depleted by $12 billion. Prescott was succeeded by an American, Paul Anderson of Duke Energy, who was hired to stop the bleeding; in 1999 Don R. Argus took over as chairman.

Goodyear joined BHP in 1999 as chief financial officer. He was named for his paternal ancestor, Charles Waterhouse Goodyear, a highly successful U.S. lumber baron, and his father was a Texas oil man who worked for Exxon. After working for the Wall Street investment bank Kidder-Peabody, Goodyear went to Freeport-McMoRan, a natural-resources group. In 2001 BHP acquired Billiton, the London-based but predominantly South African-focused mineral-mining company, to become BHP Billiton. Anderson became CEO of the new venture, Brian Gilbertson was slated to become his successor, and Goodyear became the chief development officer to be stationed in London. The new corporation soon posted sales of almost $20 billion and had close to $30 billion in market capitalization. Also in 2001 BHP acquired Dia Met Minerals, with its 29 percent stake in Canada's only producing diamond mine; combined with Alcoa's North American metals-distribution business in a joint venture called Integris Metals; and spun off its remaining steel business as BHP Steel to focus on minerals, oil, and gas operations.

GOODYEAR INSTRUMENTAL IN TURNAROUND

Goodyear was responsible for the group's worldwide portfolio and entire strategy development and corporate activities, and he contributed significantly to transactions that further refined BHP Billiton's asset portfolio. Due to his extensive financial, corporate restructuring, and merger and acquisition experience, he—along with Anderson—was widely credited with reversing the downward spiral of BHP's fortunes. He was made executive director in November 2001.

On January 6, 2003, Gilbertson—having been CEO of BHP Billiton for just six months—stormed out of a board meeting and subsequently announced his retirement, citing irreconcilable differences with the board. Many analysts speculated that those differences were actually with the more conservative and dogmatic board chairman, Argus, "regarded as one of the toughest nuts in the industry" and whose initials and personality earned him the nickname "Don't Argue" ( Sunday Times , January 19, 2003). The Sunday Times reporter noted that Gilbertson had aggressively built up the Billiton business and handed it over to BHP; he had a loyal following. Goodyear was immediately named CEO—the fourth in the five years since Prescott's departure—and some analysts felt that his biggest challenge would be "keeping the loyalty of Gilbertson lieutenants so that BHP Billiton doesn't lose its entrepreneurial edge" ( Fortune , February 3, 2003).

In announcing Goodyear's appointment, however, Argus immediately confirmed that he had the board's full support in continuing the strategic approach announced the previous year. "Chip is an outstanding executive with solid resources industry experience. During his time at BHP Billiton he has shown real leadership skills, financial acumen and a great ability to get things done. He is widely respected throughout the company and is highly regarded by the investment community" (press release, January 6, 2003). Goodyear, already highly instrumental in turning the company around, expressed assurance that he would continue to work with the initiatives in place and build on the company's progress: "The Customer Sector Group business model and the company's strategy have been in place and effective for over 18 months. The financial success and the significant progress we have made demonstrate our business model and strategy are working well" ( Sunday Times , January 19, 2003).

During an interview with Malcolm Maiden of the Age , Goodyear indicated that the company's structure was designed to outlast even those who implemented it. He said the business model "wasn't one person's idea, I can assure you of that," and that while everybody was surprised at Gilbertson's sudden departure, once they got past it, the general attitude was to get back to business: "The platform we've created is a great one, the performance to date is all we would have hoped for. There are always people who wander off the reservation. Change happens—it's good. If it didn't, we would get run over" (April 12, 2003).

SAFEGUARDS AGAINST VOLATILITY

As part of his ongoing efforts, Goodyear worked on evening out the company's volatility in the marketplace. Over the previous two or three years he had implemented a strategy to better control risks, direct marketing, and capital management to create an organization that no longer had what he called a "traditional resource cycle." BHP Billiton's financial strength came not just from its cash flow and balance sheet, but through an extremely diverse range of products and customers, access to global capital markets, and excellent growth opportunities. Goodyear said that diversification helped keep earnings level, even during a crisis: If one business, perhaps copper, was on a downswing, another business, perhaps oil and gas, may be on an upswing. As an example of the company's stability, he pointed out that before tax, interest, and depreciation and amortization, BHP Billiton was "$US1.2 billion flat for the last six quarters—despite 9/11, Enron, Arthur Andersen, war, oil prices as low as $US18 a barrel and as high as $US38. Even people in the company are going, 'wow, maybe there's something to this stuff'" ( Age , April 12, 2003). He said he still found himself having to educate analysts as to how BHP Billiton's business model was a very different structure financially from other, less-diverse companies.

When Maiden noted that analysts expected fewer mergers under Goodyear's leadership, Goodyear responded that he expected to create value through management and expansion of existing assets, acquisitions to enhance those assets, and new projects. He indicated that because three huge corporations—BHP Billiton, Anglo American, and Rio Tinto—dominated the industry and could buy virtually anything they wanted, bargain takeovers were becoming more difficult. "We all look at everything, let's be honest about that," he told Maiden. "If the competition doesn't show up, that's because they aren't the best buyer for the asset. And when you buy, you will pay the highest price that anybody else would be willing to pay" ( Age , April 12, 2003).

Part of Goodyear's strategic plan was expansion in China. In February 2004 his company closed its largest-ever deal in a joint venture with four Chinese steel mills. In the venture, named Wheelarra, the mills agreed to purchase more than $9 billion worth of ore over a 25-year period. Ore shipments would come from BHP Billiton's Jimblebar mine in Western Australia, and the mills would take a 40 percent stake in a sublease of the mines. "The Wheelarra Joint Venture will under-pin a major export agreement between Australia and China and will cement an ongoing economic partnership between BHP Billiton as a leading supplier of raw materials and China as a major industrial nation," said Goodyear ( CNN.com , February 29, 2004). He expected the relationship would open other opportunities in China, especially in manganese and metallurgical coal. As a result of surging sales in China, rising metal prices, and increased sales of base metals and stainless steel, BHP Billiton's 2003–2004 first-half profit jumped 30 percent to $1.2 billion.

DOWN-THE-LINE, DOWN-TO-EARTH, UP TO THE JOB

In a May 24, 2004, Times Online article following an interview with Goodyear, Jon Ashworth described him as an "impeccably groomed American former investment banker who works out at the gym and prefers Hildon mineral water to Foster's Lager." He said Goodyear brought a "down-the-line approach to the job," believing communication was of primary importance, followed by honesty. "You project an image of being straightforward … and you expect that in return. Thirdly, don't play politics. That will disrupt an organization faster than anything," he told Ashworth. Also high on his list was getting employees to focus on the real reason they went to work every day rather than worrying about who had the biggest or best office, who got the best deal, who got the better parking spot. "Who cares about all that stuff? Ultimately we're here to create value for shareholders, and everybody in the organization ought to have that objective in mind." Brett Olsher, global head of metals and mining at Deutsche Bank, worked closely with Goodyear for years. "He's a very down-to-earth guy whose heart is in the right place," he told Ashworth. "Chip, from day one, resonated very well with the market…. Australia is a very tough place. The Australian in stitutions are lethal, and it's good combat duty for the UK and the US."

Ashworth noted that Goodyear spent a great deal of time on the road, or in the air. Of the company's seven annual board meetings, four were in Melbourne and three in London. There were also executive committee meetings in Australia, the United Kingdom, and South Africa, and many visits to mines and smelters. Goodyear said he liked to "wander around and talk to people," but indicated that was becoming ever more difficult because people were so spread around. "But if you do," he added, "they appreciate that you understand who is doing the work." John Buchanan, a board member and former finance director, said that although employees were located all over the world, Goodyear seemed to be doing an excellent job of postmerger integration. "It's been very good for the company to find a team player pulling the old BP and the former Billiton together in a very constructive way. He took over in difficult circumstances and I think he's hit the right mark" ( Times Online, May 24, 2004).

When Ashworth addressed Goodyear with the executive-compensation issue—Goodyear stood to earn up to £2 million a year if targets were met—he said being paid for doing the job was perfectly reasonable. He pointed out that if targets were met, the executive's compensation would be miniscule in comparison to the "multiplier effect on the company's share price. Clearly there are excesses and nobody has a perfect system. But if they set the metrics and that's achieved, it ought to be, 'hey, job well done'" ( Times Online, May 24, 2004).

See also entry on Freeport-McMoRan Copper & Gold, Inc. in International Directory of Company Histories .

sources for further information

Ashworth, Jon, "Top Miner Keeps a Level Head over Key Merger: Chip Goodyear Is Quietly Making His Mark in Global Mining," Times Online , May 24, 2004, http://www.timesonline.co.uk/article/0,,630-1120899,00.html .

"Billiton's New Chip Faces the Aussie Bloc: Southerner Charles 'Chip' Goodyear Fobs Off the Threat of Australian Domination," Sunday Times (Zambia), January 19, 2003.

"Chip Goodyear Appointed BHP Billiton Chief Executive, Brian Gilbertson Resigns," press release, January 6, 2003, http://www.bhpbilliton.com/bb/newsCentre/newsReleaseDetail.jsp?id=News/2003/NR_BHPBilliton060103.html .

Hiscock, Geoff, "BHP Clinches $9bn China Deal, " CNN.com , February 29, 2004, http://www.cnn.com/2004/BUSINESS/02/29/china.bhpdeal .

Maiden, Malcolm, "Now Is a Goodyear for BHP," Age , April 12, 2003, http://www.theage.com.au/articles/2003/04/11/1049567876612.html?oneclick=true .

"People to Watch, Chip Goodyear," Fortune , February 3, 2003, http://www.fortune.com/fortune/peopletowatch/snapshot/0,16431,19,00.html .

—Marie L. Thompson



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