BHP CEO Mackenzie’s Bonus Axed After Fatal Samarco Dam Failure

Andrew Mackenzie.

Photographer: Simon Dawson/Bloomberg

BHP Billiton Ltd.’s Chief Executive Officer Andrew Mackenzie won’t get his 2016 bonus following last year’s fatal dam collapse at the Samarco iron ore mine in Brazil.

“The tailings dam failure at Samarco in November 2015 was a key consideration, along with the ongoing decline in commodity markets,” a BHP spokeswoman said in an e-mailed statement Wednesday. The board’s decision came after Mackenzie had indicated this was an appropriate move, she said. Bonuses for other senior executives will also be discounted.

Mackenzie, who is paid an annual base salary of $1.7 million, could have earned a maximum of $4 million as a short-term bonus, according to the company’s most recent remuneration report. He was awarded 85 percent of his short term incentive plan in the year to June 30, 2015, after five fatalities during the year.

brazil mine disaster

A fireman rescues a dog in Paracatu de Baixo, Minas Gerais, Brazil in 2015.

Photographer: Douglas Magno/AFP via Getty Images

A report this week found the collapse at the mine, a joint venture with Brazil’s Vale SA, was caused by part of the structure liquefying after a series of misguided efforts to fix structural defects hindered drainage. Brazilian prosecutors are finalizing a criminal investigation into the disaster and expect to ask a judge by the end of September to charge employees.

No Evidence

BHP’s Chief Commercial Director Dean Dalla Valle said after the release of the report that there was no evidence that anyone put production over safety or reason to believe anyone at BHP had any information that indicated the dam was in danger. Samarco and its owners declined to comment on the criminal case.

The probe indicates that there was evidence that the risk of a dam breach rose in the years prior to the accident, Prosecutor Eduardo Aguiar said Tuesday in an interview in Belo Horizonte. Samarco’s decision to continue increasing output, rather than halting operations to properly address the growing dam issues, was one of the major causes of the rupture, he said.

Samarco, a venture owned by Vale SA and BHP, denies wrongdoing. While the criminal investigation is focusing on the role of Samarco employees, it may eventually shift to Vale and BHP, whose representatives are on the venture’s board of directors.

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