BHP Cuts CEO, Management Bonus After Shareholder Returns Fall

BHP Billiton Ltd., the world’s biggest mining company, said long-term bonus pay-outs to its chief executive officer and management committee will be cut by 35 percent after shareholder returns fell.

CEO Andrew Mackenzie will receive 243,126 of the 450,964 bonus awards originally granted to him, the Melbourne-based company said today in a statement. He elected to forgo 50,000 awards on top of the 35 percent cut, BHP said.

According to the performance rules of a five-year incentive plan, members of the group management including CEO, would have received the award in full. Under the bonus plan granted in 2008, BHP had to deliver a shareholder return that exceeded a group of peer companies by an average of 5.5 percent for the five years ended June 30. BHP declined 9.4 percent in the period, compared with the 44 percent slump of its peers.

“While the committee recognized that total shareholder return performance was delivered in a difficult business environment, it also felt that more closely aligning the experience of shareholders and executives was important,” BHP said. The bonuses also “reflect a more modest approach to renumeration befitting the times,” it said.

BHP in April said Mackenzie will receive less pay than his predecessor Marius Kloppers at a time of declining commodity prices and revenue for the industry. Mackenzie, who took over in May, will be paid a base salary of $1.7 million during fiscal 2014. Kloppers’ base salary in 2007, when he became CEO, was $1.85 million, according to BHP’s annual report.

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