New CEO Of BHP Will Take A Big Haircut On Bonuses

Andrew Mackenzie will take the reins of the world’s biggest diversified mining company, Australia-based BHP Billiton, on May 10.

He gets a half-a-million dollar pay rise to $1.7 million, but some of his performance incentives have actually been reduced compared to his previous role.

The company says Mackenzie supports its view that it’s appropriate for a “downward rebasing” — or a bit of a haircut — to his performance scheme.

We have details on other BHP management changes here.

One major change – Mackenzie will have to claim his dividend payments in shares where previously he had to take them in cash.

And his shareholding will have to be FIVE TIMES his base salary, where it was just three in his previous role.

The context is that BHP is currently seeking to manage costs and protect profit margins, so extravagant bonus schemes would send the wrong signal. In the resources sector, restraint is so hot right now.

Here’s what the company told the market a short time ago:

His pension will be 25% of base salary – down from 36%
Maximum short term incentive will be reduced from 320% of base salary to 240%
Long-term incentive award will be up to 400 per cent of base salary
Dividend equivalent payments on vested shares made in the form of shares – previously cash
Minimum shareholding requirement is 5x base salary – previously 3x

The KPIs mentioned in the statement are health and safety measures and the budget.

For the short-term performance incentive payment, half the bonus will be in cash and the other half in deferred equity.

Still, he’s the boss of BHP.

NOW READ: BHP Billiton just announced its new management team

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