Mackenzie forgoes part of bonus

BHP Billiton CEO Andrew Mackenzie has given up part of his sign-on bonus, considering it to be excessive.
Mackenzie forgoes part of bonus Mackenzie forgoes part of bonus Mackenzie forgoes part of bonus Mackenzie forgoes part of bonus Mackenzie forgoes part of bonus

Andrew Mackenzie

Kristie Batten

The company reduced vesting of awards under the 2008 long-term incentive plan (LTIP) by 35% after testing.

For awards to vest in full, BHP Billiton must deliver a US dollar total shareholder return (TSR) that exceeds the TSR of a group of peer companies by an average of 5.5% per year for five years, or 30.7% in total compounded over the five-year performance period, which ended June 30.

BHP said the weighted average TSR for peer companies was negative 44%, which compared to the company’s TSR of negative 9.4%.

As a result, BHP Billiton outperformed its peer companies by 34.6%, meeting the performance hurdle for full vesting.

The remuneration committee had the discretion to reduce the number of awards that would vest and exercised it, with 35% to lapse, due to the negative TSR.

“While the committee recognised that the TSR performance was delivered in a difficult business environment, it also felt that more closely aligning the experience of shareholders and executives was important,” BHP said.

Mackenzie was granted 450,964 sign-on awards when he joined the miner in 2008 under LTIP and all were subject to the 35% reduction.

“In addition, Andrew has concluded, and the committee agrees, that despite the outperformance of BHP Billiton compared to its peer group, the value delivered through vesting of the sign-on awards would be excessive,” BHP said.

“Accordingly, Andrew has elected to voluntarily relinquish a further 50,000 of the sign-on awards, on top of the 35% reduction.”

The 243,126 vested awards would be delivered to Mackenzie via 211,795 shares and a cash payment representing 31,331 phantom LTIP awards.

The company said the measures “reflect a more modest approach to remuneration befitting the times”.

Mackenzie was appointed CEO earlier this year with a base salary of $US1.7 million ($A1.9 million), up from his previous pay of $1.2 million, but below his predecessor Marius Kloppers’ $2.2 million base pay.

Incentives comprise 72% of Mackenzie’s remuneration.

BHP shares last traded 0.7% higher at $A35.65.

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