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Albert Manifold by BP via X

Elliott Investment Management, which is one of BP Plc’s largest shareholders, wants the energy giant’s incoming chairman to urgently improve the firm’s cost base and capital allocation, citing a weak turnaround plan.

BP on July 21 appointed��Albert Manifold as its new chairman, replacing Helge Lund amid pressure for a change in the company’s direction from the activist shareholder. Manifold, previously the boss of building materials company CRH Plc, will join BP as a non-executive director and chair-elect on Sept. 1.

“As one of BP’s largest shareholders, Elliott believes the company requires decisive and effective leadership to overcome its chronic operational under-performance,” its spokesperson said in a statement. A representative for BP declined to comment.

Shares of BP rose 0.3% as of 4:52p.m. in London, giving the company a market value of about 64 billion pounds ($86 billion).

Manifold is stepping into the role at a pivotal time for BP. After years of underperformance, BP Chief Executive Officer Murray Auchincloss reset its strategy in February by promising to refocus on oil and gas after years of failed low-carbon investments. With a plan that features portfolio divestments to shrink debt and improve the balance sheet, BP has so far announced only small asset sales.

We’re pleased to announce that Albert Manifold has been appointed chair.
Albert will join the company’s board on 1 Sept as non-executive director and chair-elect, and take over as chair on 1 Oct. At that point, Helge Lund will step down as chair and as a director of the bp board. — bp (@bp_plc)

Elliott, which has built up a stake of about 5% in BP as one of its largest bets globally, has been demanding that the energy firm make drastic cost cuts and divestments to strengthen its future as a stand-alone company. It has said BP’s turnaround plan��lacks urgency��and ambitions. The activist investor wants BP to reshape its business to be more like other oil majors such as Shell Plc by cutting spending in areas such as renewable energy, as well as making sizable non-core asset divestments.

Manifold’s leadership of CRH was notable for a decision in 2023 to switch the company’s primary listing from London to New York. Its U.S. shares rose more than 70% since the change in September 2023. While Manifold lacks oil and gas experience, he oversaw a more than fourfold in the shares of CRH during his 11 years as CEO.

Elliott made note of Manifold’s track record of delivering shareholder value at CRH, and said it looks forward “to working with him to urgently address BP’s shortcomings.” The activist investor is pushing for improvements around BP’s “cost base, capital allocation and poorly received turnaround plan.”

“His impressive track record of shareholder value creation at CRH demonstrates he is the ideal candidate to oversee BP’s next chapter,” Amanda Blanc, the senior independent director who led the search for BP’s new chairman, said in the statement.

Aberdeen Asset Management, a BP investor, said it “looks forward to engaging” with Manifold at a “pivotal time” for the firm. A second top-30 BP investor, who asked not to be identified because they’re not authorized to speak to the media, said CRH’s share-price performance under his leadership was encouraging and that the speed of the recruitment process has helped eliminate uncertainty.

The European oil majors have improved their performance this year in comparison to American counterparts as they’ve retreated from their net-zero strategies, improved their balance sheets and have become more disciplined with spending. U.S. giants Exxon Mobil Corp. and Chevron Corp. have been in growth mode as they’ve been swallowing massive upstream acquisitions.

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“Manifold played a crucial role in CRH’s turnaround,” said Allen Good, an analyst at Morningstar. “Mostly through large acquisitions and divestments, he reshaped its portfolio to focus on heavy materials. This experience should serve him and BP well as they are embarking on a similar journey.”

The key issue for BP is where it’s ultimately headed and whether investors will remain committed as it works through its reset, he said. It may fall to Manifold to press the current leadership for additional moves, such as more asset sales, expense reductions, and scaling back capital spending, to satisfy shareholders, he said.

Manifold is also a non-executive director at Houston-based chemicals producer LyondellBasell Industries NV, and a non-executive director at Mercury Engineering, a closely held consultant.

“I look forward to working with the BP board, Murray and the leadership team to accelerate delivery of BP’s strategy and drive compelling and sustainable shareholder value creation,” he said in the statement.

The move solidifies the new makeup of BP’s board of directors. As well as Henry, the company appointed Dave Hager to the board at the end of May. Hager has been in the sector for more than 40 years, recently leading U.S. shale producer Devon Energy Corp. as chief executive and then executive chairman.

Manifold may have to navigate takeover speculation. BP’s yearslong financial fall has left it as a possible takeover target for rivals, which have been running the numbers on the beleaguered British giant. Shell Plc recently said it has no intention of bidding for BP, contradicting reports that it might.

Activist investor Elliott went public with a 5% stake in BP in April after the energy giant’s new strategy fell short of its expectations. The aggressive hedge fund is seeking transformative measures to turn around BP’s fortunes, including deep cost cuts, major divestments and significantly higher free cash flow.

Recently, BP showed the first sign of a turnaround, HSBC analyst Kim Fustier said. BP said it expects to report rising production, declining debt and a strong result from its oil traders for the second quarter while rivals forecasted dimmer quarterly results.

By Mitchell Ferman and Leonard Kehnscherper