Orica boss bows out early for new arrival

THE chief executive of explosives and chemical company Orica, Graeme Liebelt, is to bring forward his retirement date to March next year to accommodate the arrival of former Newcrest boss Ian Smith as its new CEO.

By InvestSMART · 25 Oct 2011

By InvestSMART ·
25 Oct 2011

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Mr Liebelt's contract was due to expire at the end of September but will now end at the end of March following a one-month changeover with Mr Smith.

Mr Smith was Newcrest's CEO for five years until June this year. With the help of bumper gold prices, he presided over a six-fold increase in the gold company's market capitalisation to $30 billion.

During his tenure at Newcrest Mr Smith orchestrated the $4.5 billion takeover of Lihir Gold and overhauled Newcrest's operating procedures and finances, most notably ridding the company of its problematic hedge book.

His appointment to Melbourne-based Orica follows speculation that Rio Tinto was keen to have him join its board as part of its effort to increase Australian representation. But Mr Smith is believed to have tired of the extensive travel required as Newcrest's CEO and what would have been required to attend Rio's board meetings.

A critic of the federal government's mining tax and former chairman of the mining industry lobby group, Minerals Council of Australia, Mr Smith faces a number of challenges at Orica.

Not the least of those is re-establishing its environmental credentials after criticism of its handling of a chemical spill on August 8 at its Kooragang Island plant.

Mr Smith's fixed annual remuneration is $2.5 million compared with Mr Liebelt's $2.31 million. Mr Smith can also earn 60-120 per cent of his fixed salary for achieving annual performance measures. Mr Liebelt's total remuneration in the September year was $7.16 million.

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Frequently Asked Questions about this Article…

What is the Orica CEO change and when will it happen?

Orica's chief executive Graeme Liebelt has brought forward his retirement so he will leave at the end of March next year. The earlier departure allows a one‑month changeover with incoming CEO Ian Smith; Liebelt's contract had originally been due to expire at the end of September.

Who is Ian Smith and what experience does he bring to Orica?

Ian Smith is the former CEO of Newcrest, where he led the company for five years until June this year. At Newcrest he presided over a six‑fold increase in market capitalisation to about $30 billion, orchestrated the $4.5 billion takeover of Lihir Gold and overhauled the company’s operating procedures and finances, including removing a problematic hedge book.

Why did Graeme Liebelt bring forward his retirement from Orica?

According to the announcement, Liebelt brought forward his retirement to the end of March to accommodate a one‑month handover period with incoming CEO Ian Smith. His original contract expiry had been scheduled for the end of September.

What major challenges will Ian Smith face as the new Orica CEO?

A primary challenge highlighted in the announcement is re‑establishing Orica’s environmental credentials after criticism of its handling of a chemical spill on August 8 at the company’s Kooragang Island plant. Restoring community and regulator confidence will be a key task.

How might the leadership change affect everyday investors in Orica?

For investors, a change of CEO matters because leadership can influence strategy, operational focus and reputation. Ian Smith brings a track record of value creation at Newcrest, but he also inherits Orica’s immediate environmental and operational issues—factors investors will likely watch closely during the transition.

What will Ian Smith be paid as Orica’s new CEO compared with Graeme Liebelt?

Ian Smith’s fixed annual remuneration at Orica is $2.5 million, compared with Graeme Liebelt’s fixed pay of $2.31 million. Smith can also earn 60–120% of his fixed salary as variable pay for meeting annual performance measures. For context, Liebelt’s total remuneration in the September year was $7.16 million.

Was Ian Smith linked to Rio Tinto before joining Orica?

Yes. The article notes there had been speculation that Rio Tinto wanted Ian Smith to join its board as part of efforts to boost Australian representation. However, Smith is believed to have been put off by the extensive travel such roles would require.

What past actions at Newcrest might indicate how Ian Smith will lead Orica?

At Newcrest, Smith completed a major takeover (Lihir Gold), restructured operating procedures and finances, and removed a troublesome hedge book—actions that suggest he focuses on strategic deals, operational reform and financial cleanup. Investors may look for similar priorities at Orica, balanced with addressing environmental and community concerns.