BHP (NYSE: BHP; LSE: BHP) has frozen the salaries of its key executives for the coming financial year, while paying chief executive officer Mike Henry US$6.1 million for the first six months on the job.
In its remuneration policy section of its annual report, the world’s largest miner said that Henry, who replaced former boss Andrew Mackenzie in January, owed most of its salary to short- and long-term incentives.
Canadian born Henry received a US$1.87 million salary for the year — a US$1.7 million base and a 10% pension contribution. The additional US$4 million-plus was a result of the chief executive’s contribution to BHP’s long-term sustainability and shareholder wealth creation, the company said.
Susan Kilsby, chair of BHP’s remuneration committee said the figure represented “an appropriate alignment between pay and performance during the year.” She added it was also fair “in terms of the global context in which decisions have been made.”
Companies big and small have faced cost pressures as some mines have shut down and new safety measures have been adopted due to the coronavirus pandemic. Those unexpected decisions are expected to affect executive salaries.
BHP noted that Henry’s total target remuneration remained unchanged at US$7.5 million, 12% lower than that of Mackenzie. The former chief executive took home US$2.4 million for the first half of the 2020 financial year and another US$5.3 million as his 2015 long-term incentive.
Henry’s pay package, which places him toward the bottom of Australia’s top ten paid CEOs, also reflects the growing trend to simplify top executives’ pay.
His long-term incentive plan includes a maximum US$3.4 million pay-out, while short-term bonuses include two tranches of shares over two and five years, worth up to US$2.55 million, rather than an annual bonus.
In addition to longer-term remuneration, Henry is expected to hold BHP shares worth up to five times his base salary, another good sign for investors.
The Melbourne-based company reported last month a 4% drop in annual profit that missed analysts’ estimates. Underlying profit attributable from continuing operations for the year ended June 30 fell to US$9.06 billion, below estimates of US$9.42 billion, according to Refinitiv IBES data.
BHP said at the time the risk of new virus outbreaks around the world threatened to undermine growth, and it was already weighing on the demand outlook for 2021.