In the aftermath of a tragic workplace death a multinational mining company will give a major pay cut to the responsible chief executive.
BHP confirmed CEO Andrew Mackenzie will receive a 24 per cent pay cut this financial year to US$3.5 million (A$5.1M) compared to the previous 2018 financial year (FY2018). This includes his base salary of US$1.7M (A$2.5M) plus a variety of performance related bonuses, according to the Australian Associated Press (AAP).
“While shareholders have benefited 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,” renumeration committee chairwoman Carolyn Hewson said in BHP’s 2019 annual report according to AAP.
Fatality taken into account
The committee rated Mackenzie’s performance as 48 out of 100. The decision follows the December 2018 death of coal miner Allan Houston, 49, whose bulldozer rolled from an elevated position with disastrous consequences at the Saraji Coal Mine, 231 km southwest of Mackay.
“This outcome took into account health, safety, environment and community (HSEC) performance, which primarily reflected the tragic fatality that occurred at the Saraji coal mine in Queensland, Australia in December 2018,” Hewson said. “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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Sorry for their loss
BHP confirmed an extensive investigation failed to find what caused the accident but found several areas for improvement.
Mackenzie expressed his condolences to the deceased employee’s coworkers and loved ones.
“[Houston] remains in our thoughts as do his colleagues, family and friends,” he said in the annual report according to AAP.
The committee is recommending changes to the formula it uses to allocate CEO bonuses to reduce “all or nothing” outcomes under the long-term incentive plan, Hewson said.
If shareholders approve the plan, Mackenzie’s base salary could stay unchanged but his total possible compensation could be reduced by 12 per cent to US$11.5 million (A$16.8 million).