21/09/2011 - 10:25

Twiggy tones down ‘Hollywood’ touch

21/09/2011 - 10:25


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Twiggy tones down ‘Hollywood’ touch

ANDREW Forrest is much more than just one of Australia’s richest people, he’s a showman who adds a little bit of Hollywood to what would normally be the dry and dusty world of iron ore.

Who could forget the hype surrounding a flouro-attired Mr Forrest out the front of his first shipment of ore when it arrived at port in May 2008? There was more than a bit of Hollywood in the occasion.

His detractors said he’d never make it, but Mr Forrest had proved them wrong; and he knew exactly how to make sure everyone knew about it.

And who was centre stage during the mining tax furore last year, emerging from closed-door meetings with then prime minister Kevin Rudd and Treasurer Wayne Swan? Mr Forrest, of course.

That came after his very public push to bring attention to his plan to make more indigenous people work-ready with the Australian Employment Covenant.

It all helped that, at one stage in 2008, he had briefly become Australia’s richest man, valued at around $9.4 billion due to his stock holdings in Fortescue Metals Group, the iron ore miner he founded.

This past year, however, there seems to have been a little less ‘Hollywood’ from the man who was once Western Australia’s star attraction, despite his wealth rebounding to more than $5 billion after being hammered in the GFC.

Mr Forrest has been decidedly low key.

At the seat of his power, FMG, he has systematically restructured the operation, bringing a series of new executives to manage the business through its next phase – a tripling of production to 150 million tonnes per year. While that might seem ambitious by the standards of normal businessmen, it requires a different type of management than the entrepreneurial flair that got FMG off the ground and raised billions from the US before the GFC hit.

Of the original crew, just Mr Forrest and Graeme Rowley remain on the board, while Herb Elliott, who signed up when FMG was still immature, is another who remains a director with a formidable stake.

Former directors Russell Scrimshaw and Chris Catlow still hold big shareholdings in FMG despite moving on to other things.

In their place is a host of newcomers whose holdings don’t bring them anywhere near this list.

They are executive directors Nev Power, who took over as CEO from Mr Forrest in July, and Stephen Pearce, along with well-regarded non-executive director Mark Barnaba, who is wealthy in his own right from two decades of management consulting and investment banking.

It is not just a sensible succession plan. Mr Forrest has a cloud hanging over him in the form of legal action by the Australian Securities and Investments Commission, which could result in him being banned as a director.

However Mr Forrest clearly believes executives need to have so-called ‘skin in the game’ and is trying to establish this with an innovative and entrepreneurial touch, one that only the richest of the rich would have the financial wherewithal to carry out.

In recent weeks, private entities controlled by Mr Forrest have bought about $100 million worth of stock. 

FMG stated that an entity controlled by Mr Forrest has: “Provided financial assistance to allow certain senior executives of Fortescue to purchase the company’s shares on market”.

The unusual nature of the arrangement has already been highlighted because it appears to leave unknown executives beholden to their chairman and major shareholder without the kind of disclosure typical of remuneration packages.  

Mr Forrest is, of course, acting just as he is typecast – willing to break with convention and happy to deal with the resulting sideshow. Among Australia’s wealthy, it is unusual indeed.



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