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MarketScreener Homepage  >  Equities  >  AUSTRALIAN SECURITIES EXCHANGE LIMITED  >  BHP Group    BHP   AU000000BHP4

BHP GROUP

(BHP)
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BHP Seeks Changes to CEO Pay Structure -- Update

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09/16/2019 | 10:02pm EDT

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

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Stocks mentioned in the article
ChangeLast1st jan.
BHP GROUP 1.42% 1642.6 Delayed Quote.-2.01%
BHP GROUP 0.03% 35.4 End-of-day quote.3.39%
LME COPPER CASH -0.45% 5794 End-of-day quote.-0.77%
WTI -0.52% 53.9 Delayed Quote.18.22%
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Financials (USD)
Sales 2020 45 148 M
EBIT 2020 18 017 M
Net income 2020 10 777 M
Debt 2020 10 194 M
Yield 2020 5,77%
P/E ratio 2020 11,4x
P/E ratio 2021 13,3x
EV / Sales2020 2,79x
EV / Sales2021 2,86x
Capitalization 116 B
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Mean consensus HOLD
Number of Analysts 16
Average target price 24,80  $
Last Close Price 24,28  $
Spread / Highest target 12,9%
Spread / Average Target 2,12%
Spread / Lowest Target -16,6%
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Managers
NameTitle
Andrew Mackenzie CEO & Non-Independent Executive Director
John Kenneth Norman MacKenzie Chairman
Daniel Malchuk President-Americas Minerals Operations
Mike Henry President-Minerals Australia Operations
Geraldine Ann Slattery President-Operations Petroleum
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