BHP Seeks Changes to CEO Pay Structure -- Update
September 16 2019 - 9:16PM
Dow Jones News
By Rhiannon Hoyle
SYDNEY--BHP Group Ltd. (BHP.AU) proposed changes to the way it
pays Chief Executive Andrew Mackenzie that it said will lessen
spikes in remuneration and better reward sustained good
performance.
Under the new structure, which is expected to be voted on by
investors at annual shareholder meetings in the U.K. and Australia
later in 2019, BHP would cut Mr. Mackenzie's long-term incentive
plan in relation to his base salary and introduce five-year
deferred shares to his cash and deferred plan.
Those changes would reduce the maximum annual package of pay and
bonuses by 12%, the world's biggest miner by market value said.
The existing long term incentive plan, or LTIP, "rewards
volatility in performance rather than sustained outperformance,
which is an aspiration for BHP," the miner said in its annual
report.
Miners have come under increased scrutiny for plowing billions
of dollars into mega projects or deals at the peak of cycles that
years later sparked massive write downs as commodity markets
cooled.
"There are material time lags between key long-dated decisions
and their LTIP outcomes, leading to a discrepancy between
participants who are the decision-makers, and those who eventually
experience the positive or negative remuneration outcomes," the
company said.
Other changes planned include a cut to Mr. Mackenzie's pension
contribution rate and the introduction of a two-year
post-retirement shareholding requirement.
Mr. Mackenzie earned US$3.5 million for fiscal 2019, down from
US$4.7 million the year prior and below a target of US$7.7 million,
said the company. The minimum available package was US$2.2 million
and maximum was US$13.1 million.
His annual payout was weakened by a train derailment in western
Australia late in 2018, where four locomotives and 268 loaded
wagons ran loose for more than 50 miles without a driver before
being forcibly derailed. BHP also faced operational problems at a
number of mines and processing facilities, and the death of a
worker at a coal mine in Queensland in December.
"From a performance perspective, while shareholders have
benefited during fiscal 2019 from positive share price growth and
significant shareholder returns, the year was a challenging one
operationally for BHP, and the remuneration outcomes for fiscal
2019 for our senior executives reflect this," the company said.
BHP said Mr. Mackenzie's base salary will remain unchanged in
fiscal 2020, at US$1.7 million. There will also be no change to
annual fees for Chairman Ken MacKenzie or nonexecutive
directors.
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com
-0-
(END) Dow Jones Newswires
September 16, 2019 22:01 ET (02:01 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
BHP (NYSE:BHP)
Historical Stock Chart
From Apr 2024 to May 2024
BHP (NYSE:BHP)
Historical Stock Chart
From May 2023 to May 2024