Svein Richard Brandtzæg, the highly respected chief executive of aluminum company Norsk Hydro, won’t be leaving Hydro and taking over as CEO at fertilizer firm Yara after all. He was clearly surprised to learn, after accepting the new CEO post at Yara, that Yara now is in merger talks with a US rival, and “that makes the situation different,” he told Dagens Næringsliv (DN) on Friday.
After rumours had started circulating in the market, both Oslo-based Yara and CF Industries of Deerfield, Illinois confirmed earlier this week that they were in the early stages of talks regarding a “merger of equals.” Brandtzæg, age 57, was supposed to take over as Yara’s CEO in February, but now he’ll be staying on at Hydro instead.
“I’ll be sitting here until the board carries me out,” he told DN. “The board has said that they want me to remain at least until I (qualify for) retirement, at age 65.” That means Brandtzæg will finish his career at the same company where he has spent nearly 30 years.
“We are very pleased that Brandtzæg has decided to continue as chief executive of Hydro,” stated Dag Mejdell, chairman of Norsk Hydro. “Brandtzæg has led the company in a firm and robust manner, and transformed Hydro into a leading aluminum company in the world. The board remains certain that he is the best chief executive to lead Hydro into the future.” Hydro stated in a press release that Brandtzæg’s compensation would remain unchanged, meaning he wasn’t enticed back to Hydro by more money.
Both Yara employees, analysts and shareholders had hailed the news just two months ago that Brandtzæg would be taking over for Yara’s current CEO, Jørgen Ole Haslestad. Brandtzæg was described as “one of the best” top executives among Norway’s biggest companies, and analysts also noted that he would help improve Yara’s reputation. Yara, which began as the fertilizer division of Hydro that was spun off as a stock-listed firm in 2004, is emerging from a major corruption scandal at which Haslestad must testify when the trials of former Yara executives begin early next year. Several major Yara shareholders sought top management changes at the company to help it move on unencumbered by the scandal, and its former board chairman was replaced last spring.
Haslestad, meanwhile, apparently was surprised he was to be replaced by Brandtzæg. He continued to downplay the after-effects of the corruption scandal in which he wasn’t directly involved but was slow to report to authorities. He stood by his record at Yara and then got involved in merger talks with CF Industries, a pending deal that many analysts have described as “a good match.”
Brandtzæg confirmed on Friday that he first was informed of the merger talks seven weeks after he’d accepted the offer by Yara’s board, led by new chairman Leif Teksum, to become CEO. Teksum told him about the talks on September 9, two weeks before they were publicly confirmed earlier this week. Haslestad reportedly has been leading the talks, which, if successful, have set off speculation over where the combined firm would be headquartered (Oslo or CF’s base in the Chicago area) and who would lead it (Brandtzæg, one of CF’s top executives or someone else, either American or Norwegian).
A combination of such uncertainty and, Brandtzæg says, his own fondness for Hydro and his colleagues prompted him to back out of his Yara agreement, which he claims was rendered invalid by the talks. He wouldn’t say how he was presented with CEO options in a combined Yara-CF company.
Brandtzæg said that he thus took contact with Yara’s chairman, Leif Teksum, Thursday night and delivered his “difficult” decision that he’d pondered for several days, probably since September 9. “There were several factors, and the thought of leaving Hydro can be described as worse than a divorce after 29 years in the company,” he told DN.
He said he was also urged by both colleagues and Hydro’s board to reevaluate his decision to leave last summer, after news of the pending Yara-CF merger broke. He now claims he also was tempted back to Hydro by the challenges that lie in a new phase for him there, after Hydro itself has been through some tough times.
Teksum, the chairman at Yara, told DN he was “disappointed” by Brandtzæg’s decision. Teksum, himself new in his position at Yara, will now need to find someone else to take over for Haslestad who, at age 63, had said he wanted to stay on as CEO at Yara until retirement. Any hopes he may have that he’ll now be asked to do so, or that the merger process may provide him with a means of keeping his job, seemed to be dashed when Teksum told DN that Haslestad “is not a candidate (as Yara CEO), because he’s going to retire.” Teksum said Yara’s board will resume its search for a replacement for Haslestad. Under terms of his severance deal, however, Haslestad can stay on as a “consultant” at Yara until he turns 65.