BHP Billiton halves salary of CEO Andrew Mackenzie to $2.2 million, axes 15,000 jobs because of poor year
In late June, BHP Billiton (ASX: BHP) cut exploration spending allocation for 2017 by 70% to A$900 million (US$687 million) following forecast that Australia’s mining industry would experience a 10-year commodity gut. It was not the only thing that the mining giant eventually cut because it also halved the CEO’s pay and axed 15,000 jobs due to the poor year.
For 2016, Andrew Mackenzie’s pay was reduced to US$2.2 million (A$2.9 million) compared to his 2015 pay, which, in turn, was almost 50 percent of his 2014 compensation. It would place his current salary at about 100th ranked compared to other Australian CEO’s 2015 package. Mackenzie would not receive a short-term or long-term bonus for 2016.
Sydney Morning Herald notes it would be extremely difficult to justify a mega salary for Mackenzie after BHP logged a record US$6.4 million (A$8.3 billion) loss in 2016. It is the same year that 19 workers at its joint-venture iron ore operations in Brazil died after the tailings dam at Samarco mine burst and caused widespread environmental damage.
A better year would have boosted Mackenzie’s pay to almost US$5 million (A$6.5 million) or higher had he exceeded short-term targets. Besides Mackenzie’s salary cut, BHP’s board had also reduced director fees.
The cost-cutting measures did not spare workers as BHP axed more than 15,000 jobs in the current financial year, or equivalent to 19 percent of the giant miner’s workforce. Reckoned from the start of Mackenzie’s tenure, jobs slashed exceeded 30,000, reports The Australian.
BHP released on Wednesday its 2015-16 annual report which showed workforce is down to 65,263 employees and contractors from 80,368 a year ago. Most of the jobs slashed were in Chile and the US, but in Australia, 1,005 employees lost their jobs, bringing down the number of workers to 26,827 from 29,670.
Explaining the job cuts, BHP says in a statement, “Changes in market conditions and our business transformation programs focused on improving efficiencies and driving greater productivity have resulted in a decrease in our workforce requirements.”
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Source: BHP Billiton
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