Mackenzie received US$1.7 million in base salary, with bonuses that brought his compensation package to US$3.5 million – down 24% from the previous year.
BHP CEO Andrew Mackenzie, the Scotsman who joined the world’s largest mining company in 2013, scored 48 out of 100 for his performance in the past 12 months and had his total pay cut by 24 per cent.
“While shareholders have benefitted 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,” 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 coalmine in Queensland, Australia, in December 2018.
“The committee took advice from the sustainability committee, giving the group’s safety performance the greatest weighting in the HSEC category.”
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Mackenzie, one of the world’s most influential applied earth scientists, received US$1.7 million ($2.5 million) in base salary, with bonuses that brought his compensation package to US$3.5 million ($5.1 million) — down 24% from the previous year.
Coal miner Allan Houston, 49, died when his bulldozer rolled from an elevated position. BHP, which employs more than 72,000 employees and contractors across 90 locations worldwide, said an extensive investigation was unable to determine a cause for the accident, though it found several areas for improvement.
CEO Mackenzie addressed the death in the annual report, writing that 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.
Other company goals were ahead of targets, including improved returns from major capital projects in development, and the committee noted that shareholders benefitted from positive share price growth during the year.
The committee also gave the BHP CEO a vote of confidence in his overall leadership.
Hewson said the committee was recommending changes 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, 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 US$11.5 million.
Ms Hewson said, had the new policy been in place, Mr Mackenzie would have earned US$1 million more over previous years.
The current BHP CEO’s predecessor, Marius Kloppers, who had to leave, would have received US$19 million less.
“The remuneration 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,” Hewson wrote.
BHP’s objective is to achieve workforce gender balance by 2025 and it was “marginally below” its 3% target last year, having lifted female representation by 2.1 percentage points to 24.5 per cent of BHP’s workforce.
BHP’s annual report also valued its contributions to the wider economy at US$29.65 billion, following a strong financial year boosted by a boom in the price of its key commodity, iron ore.
Among the contributions were $US7.9 billion to suppliers, goods and services; US$7.1 billion in government taxes and royalties; and US$2.7 billion in employee wages.