The chief executive of BHP Billiton has seen his pay cut by more than 40% due to shareholder losses and the death of five workers.
The Anglo-Australian mining company said in its annual report that Andrew Mackenzie was paid $4.6m (£3m) last year, down from $8m the previous year. Mackenzie’s salary was unchanged at $1.7m but he received no payout of performance-related shares awarded in 2010 compared with a $2.6m payment last year.
Carolyn Hewson, who chairs the remuneration committee, said BHP Billiton’s total shareholder return was -15.2% in the past five years. That performance was worse than its peer group and far worse than the 78.6% positive return of the MSCI World index of companies in developed countries.
“This level of performance results in zero vesting for the 2010 Ltip [long-term incentive plan] awards, and accordingly the awards have lapsed,” Hewson wrote in the iron ore producer’s report.
The non-payment of Mackenzie’s long-term bonus reflects the dire state of the mining industry, which has been hammered by plunging commodity prices as China’s manufacturing growth has slowed. BHP Billiton’s profits more than halved last year to $6.4bn and it has slashed investment and costs to cope with the downturn. Its shares have been down by about 60% since late 2010.
Mackenzie’s annual bonus fell to $2.3m from $3.1m, reflecting no payment for health and safety after five workers were killed doing their jobs. The company said the deaths were unacceptable and increased the health and safety component of Mackenzie’s annual bonus from 20% to 25%. No employees were killed at work the year before.
Hewson said: “This outcome was primarily due to the CEO’s overarching accountability for the five fatalities that occurred during 2015. The committee takes the group’s safety record very seriously and concluded, after taking advice from the sustainability committee, that a zero outcome was appropriate for the CEO’s 2015 [short-term incentive health and safety] component, with the decision supported by Mr Mackenzie.”
BHP Billiton has cut the pay of its chairman, Jacques Nasser, to $960,000 from $1.1m and the basic salary for non-executive directors by $10,000 to $160,000. It said the reductions reflected difficult external conditions and a comparison with similar companies.
Shriti Vadera, the former UK government minister and adviser to Gordon Brown, was made BHP Billiton’s senior independent director last month. Vadera, who was already a non-executive director, will earn $208,000, the company said.
