Andrew Mackenzie, the Shell chair renouncing its Royal Dutch roots
“Simplicity equals truth,” Andrew Mackenzie told the Financial Times in 2015.
Then chief executive of the world’s biggest miner BHP Group, he was about to embark on an ambitious overhaul, spinning off or selling various parts of the sprawling business.
Six years later and newly installed as chair of Royal Dutch Shell, the Scottish geologist is fronting another streamlining drive, one that has provoked dismay in the Netherlands where the oil and gas supermajor has had its headquarters for more than a century.
Next month, 114 years after the first amalgamation of Shell’s Dutch and British arms, shareholders will vote on a proposal by Mackenzie’s board to drop Royal Dutch from its name, move its chief executive and tax residence to the UK and end a complicated dual share structure.
Simplification “undoubtedly makes companies better”, Mackenzie told shareholders on Monday, explaining that the proposed changes would make Shell “faster”, “more agile” and better able to pivot to a greener future.
Shell said the restructuring, which some investors had demanded for years, was already under discussion and would have happened with or without Mackenzie. The pressures of the energy transition and the need for more flexibility to reward shareholders meant the dual shares — a legacy of a 2005 compromise — finally had to go.
But investors, former colleagues and some who work with him now said the cerebral Scot would have assessed Shell’s complicated structure and immediately supported what needed to be done.
“He will have looked at it and said . . . ‘it is the obvious thing to do, so let’s move on it’,” said one former colleague who worked closely with Mackenzie for years.
Born in 1956, Mackenzie grew up in a coal mining town near Glasgow and is described by friends and colleagues as a “passionate believer” in the power of the corporation to be a force for good.
A gifted scientist, Mackenzie attended the University of St Andrews with Alex Salmond, the former Scottish first minister, and later gained a PhD in chemistry at the University of Bristol, where his work attracted the attention of oil majors.
He began his career at Shell’s arch-rival BP in 1982, winning the prestigious Aberconway Medal in 2002 for his work on oil reservoirs. “Principled and clever . . . while also being a careerist,” said one former BP colleague who worked with him in the 1990s.
Leaving BP after 22 years to join Rio Tinto in 2004, he began a rapid ascent through the natural resources industry that one BHP executive described as ideal preparation for his challenge at Shell. “It’s the perfect spot for him, almost like everything in his career has led him to this role.”
Appointed to the Shell board in October 2020 and named chair seven months later, he has arrived at an existential moment for the energy major.
A Dutch court in May ruled that Shell’s new strategy did not do enough to cut emissions and ordered it to move faster. Investors, currently kept sweet by billions of dollars in quarterly share buybacks, still need convincing too. Activist hedge fund Third Point last month revealed it had built a stake in the company and urged it to split to deliver better value through the energy transition.
Those who have worked with Mackenzie say he will be relishing the challenge. “He likes to tackle really big issues that are important to the world,” said one former colleague. But his past experience, particularly with activists, has not always been positive.
During his seven years at the top of BHP, the miner was targeted by investor Elliott Advisors in a gruelling public campaign that cast a shadow over his reign. Elliott called on the company to sell or spin off its oil business and change its complex corporate structure, which included separately listed companies in the UK and Australia.
As Mackenzie resisted, Elliott paid for billboards in Australian cities urging shareholders to “Think Smart”. BHP this year finally said it would shift to a primary listing in Sydney.
“He was very personally upset with the Elliott stuff because they played him, not the issues,” said one senior fund manager in London, who described Mackenzie as “visibly shaken up” by the two-year confrontation.
More comfortable solving complex problems than courting staff or public opinion, he likes to rehearse his public appearances. But when a dam failed at a Brazilian joint venture in 2015, claiming the lives of 19 people, he flew straight there to face the disaster head-on. There was “never a question of whether or not to do the right thing”, said one BHP colleague.
Under his leadership, BHP became a slimmer, more efficient business. He set a target for women to make up half of the company’s workforce by 2025, a move that caused a stir in the macho world of mining, and to address the thorny issue of its scope 3 emissions — the greenhouse gases produced by its steelmaking products after they have been bought by customers.
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But there was also, according to some investors, a sense that he was never quite at home. “It always felt a bit like he was an energy chief executive in a mining job,” said one long-time mining observer.
Since Monday’s announcement, some in the Netherlands have suggested Mackenzie would naturally have supported the switch because of his ties to the UK. He was knighted in 2020 and in June was named chair of UK Research and Innovation, Britain’s main public science funding body. But history suggests his scientist’s approach leaves little room for outside influence.
If shareholders approve the proposal next month he will have ticked off a big item on Shell’s to-do list. But harder challenges lie ahead.
First, analysts say, may be a succession plan for chief executive Ben van Beurden, who enters his ninth year in the job in January. Then comes the task of decarbonising the business quickly enough to satisfy both the courts and the markets.
The simplification will help, but it is only the start.