Lower Pay for New BHP CEO Andrew Mackenzie as Miner Puts in Place Austerity Measures
BHP Billiton (ASX: BHP) heeded the call of its global shareholders to put in place austerity measures for executive remuneration. Unfortunately for incoming Chief Executive Andrew Mackenzie, it would be during his term beginning May 2013 that the pay cuts would start.
As a result, his package would be smaller at $7.6 million compared to the average compensation package of outgoing BHP Chief Executive Marius Kloppers of $10 million. It translates into a lower base salary of $1.6 million versus Mr Kloppers's $2.2 million.
When Mr Kloppers was began his term as chief executive five years ago, his starting pay was $1.85 million, but if reckoned at today's dollars, it is $2.1 million which means Mr Mackenzie starts his term with a lower base pay.
It is not only executive pay that is on a southward trajectory, but also BHP's 2013 profit forecast, project to go down by over 22 per cent to $13.4 billion from $17.1 billion, justifying the CEO pay rebasing to which Mr Andrew is agreeable.
"The package announced today supports our evolving strategic priorities and does not compromise on our need to motivate a high level of performance and ensures alignment with our shareholders' expectations," The Australian quoted BHP Chairman Jac Nasser.
Along with the salary rebasing, BHP also announced some management changes. Mike Yeager, who was behind the $20-billion push of BHP into the U.S. shale oil/gas business, had quit from the company. He was with BHP for seven years. He will be replaced by Tim Cutt, an American petroleum engineer who used to head BHP's diamond business in Canada which was recently sold.
Alberto Calderon, the chief executive for aluminium, nickel and corporate development, will also leave the group management committee (GMC) but stay as advisor to the new chief executive until mid-2014.
Part of the reorganisation is that the head of five key business units in BHP, namely petroleum and potash, copper, iron ore, coal, aluminium manganese and nickel will report directly to Mr Mackenzie and are part of the GMC.
