BHP Billiton’s new chief executive is likely to earn about 25 per cent less per year compared to his predecessor Marius Kloppers.
The move comes after the company seeks to make adjustments with the rougher times across both the mining industry and the wider economy.
But according to the SMH new boss Andrew Mackenzie could still earn up to $US12.58 million ($12.2 million) per year if the company’s performance is outstanding.
This is a salary that is 419 times better than a full-time Australian worker on a minimum wage.
While BHP confirms the maximum salary, it expects Mackenzie’s earnings to be closer to $7.6 million per year on condition he meets his targets for the company.
His salary includes a complex mix of fixed and incentive payments. He will have about 28 per cent of his remuneration package fixed with a base salary of $US1.7 million per year, plus $US425 000 in pension payments.
He received $US1.2 million per year as one of Kloppers chief lieutenants.
Kloppers received a base salary of $US2.21 million every year.
On top of this, he can also earn millions more in long and short-term incentives based on his performance and the company’s performance compared to other mining companies.
Kloppers’ pension payments were 40 per cent of base salary, while Mackenzies’ will be 25 per cent.
Mackenzie will also be forced to own BHP shares five times his pre-tax fixed salary. Kloppers was required to own only three times his fixed base salary.
BHP chairman Jac Nasser said he believed “some downward rebasing at this time is appropriate”, and said Mackenzie concurred.
Similar austerity measures are expected for the collection of top managers – known as the ‘Group Management Committee’, BHP said yesterday.
But BHP’s board of directors will not undergo changes to their remuneration at this point.
The changes come after a period of scrutiny on escalating pay for corporate executives, and come after many companies, including BHP, did not pay bonuses to their executives in recent years.
The pay changes were announced on the same day BHP altered its executive structure after Mackenzie’s appointment in February.
He moved to Melbourne last week, where BHP is based, and will live there during his tenure as chief executive.