BHP chief executive Andrew Mackenzie had his compensation slashed last year following the death of a coalminer in Queensland last December.
Mr Mackenzie received $US1.7 million ($A2.5 million) in base salary, with bonuses that brought his compensation package to $US3.5 million ($A5.1 million) – down 24 per cent from FY18.
“While shareholders have benefited during FY2019 from positive share price growth and significant shareholder returns, the year was a challenging one operationally for BHP, and the remuneration outcomes for FY2019 for our senior executives reflect this,” renumeration committee chairwoman Carolyn Hewson wrote in BHP’s 2019 annual report, released on Tuesday.
The committee scored Mackenzie’s performance for the year at 48 out of 100, Ms Hewson wrote.
“This outcome took into account HSEC [Health, Safety, Environment and Community] performance, which primarily reflected the tragic fatality that occurred at the Saraji coal mine in Queensland, Australia in December 2018,” she wrote.
“The committee took advice from the sustainability committee, giving the group’s safety performance the greatest weighting in the HSEC category.”
Coalminer Allan Houston, 49, died at the Saraji mine when his bulldozer rolled from an elevated position.
BHP said an extensive investigation was unable to determine a cause for the accident although it did find several areas for improvement.
Mr Mackenzie addressed the death in the annual report, writing that Mr Houston “remains in our thoughts as do his colleagues, family and friends”.
The compensation committee also said that the operational issues led to below target production performance across the company.
But other company goals were ahead of targets, including improved returns from major capital projects in development, and the committee noted that shareholders benefited from positive share price growth during the year.
The panel also gave Mr Mackenzie a vote of confidence in his overall leadership since he became CEO in 2013.
Going forward Ms Hewson said the committee was recommending tweaks to the formula it uses to allocate CEO bonuses to reduce “all or nothing” outcomes under the long-term incentive plan.
If shareholders approve the plan, Mr Mackenzie’s base salary will remain unchanged but his total possible compensation – if he hits all performance targets – will be reduced 12 per cent to $US11.5 million.
Ms Hewson said, had the new policy been in place, Mr Mackenzie would have earned $US1 million more over previous years.
His predecessor, Marius Kloppers, who was forced out, would have received $US19 million less.
“The renumeration committee considers that these remuneration outcomes would have been more appropriate, given the performance of the Group and the experience of shareholders over the period,” Ms Hewson wrote.
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