BHP CEO’s pay cut by almost 25% after worker’s death, runaway train

BHP CEO Andrew Mackenzie. (Image by Philipivanov | Wikimedia Commons.)

BHP’s chief executive, Andrew Mackenzie, saw his annual pay shrink by almost a quarter after an unexplained death at one of the company’s Queensland mines and a runaway iron ore train cost him a portion of his short-term bonus.

Mackenzie, 62, had his short-term bonus reduced by more than $1 million from 2018 to $1.3 million. His base salary was kept at $1.7 million, taking his total earnings, including other benefits, to $3.5 million, from $4.6 million in 2018.

According to BHP’s 2019 annual report, the death of a 49-year-old worker at its Saraji coal mine on New Year’s Eve last year, the cause of which it was unable to determine, was the main reason for the pay-cut. It was the first time in more than 15 years that the company had failed to pinpoint the cause of a fatal accident, BHP said. 

While BHP returned a record dividend to shareholders, Andrew Mackenzie received no long-term bonus payment in the financial year ended in June 2019

The forced derailment of a fully-laden iron ore train in the Pilbara, which destroyed two locomotives, 245 cars and 2 km (1.2 miles) of track, also weighed on Mackenzie’s bonus size. 

Other issues mentioned in the report were equipment failures at BHP’s Olympic Dam in South Australia and Escondida mines in Chile. 

While BHP returned a record dividend to shareholders, Mackenzie — at helm of the world’s largest mining company since 2013 — received no long-term bonus payment in the financial year ended in June 2019.

The news comes as the Melbourne, Australia-based mining giant is mulling a change to the CEO’s  remuneration policy.

Changes proposed by the company, the world’s biggest miner by market value, include a reduction in Mackenzie’s long-term incentive plan as a proportion of his base salary and a cash award with a longer-term focus than current short term incentives, BHP said. Those changes would result in a 12% cut to maximum annual remuneration, it said.

Other modifications planned include a cut to the CEO’s pension contribution rate and the introduction of a two-year post-retirement shareholding requirement.

BHP plans to present the remuneration policy changes to investors at annual shareholder meetings in the U.K. and Australia later this year.

Falling short on female target

The diversified miner fell short of its target of boosting female employees 3% a year, which is part of an ambitious goal of achieving gender equality within its ranks by 2025.

BHP increased its proportion of female employees 2.1% in the 2018-19 financial year, which resulted in the company having 1,156 more women employees on July 1 than at the same time last year.

The hiring efforts bring the female proportion of the company’s total workforce to 24.5%, up from 22.4% last year.

In its sustainability report, released in conjunction with the annual and economic contribution reports, BHP said 37.7% of the people it hired this year were women. The figure represents an improvement from the 10.4% it welcomed on board in 2015, yet is lower than the 39.8% it registered last year.

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