Mining giant BHP Billiton Ltd (BHP, BBL, BLT.L, BHP.AX) announced the terms of employment for incoming Chief Executive Officer, Andrew Mackenzie. The contract will be effective from 10 May 2013 when Mackenzie commences as CEO.
As per the terms of contract, A base salary for Mackenzie will be US$1.70 million per annum, up from Mackenzie's current base salary of US$1.20 million per annum. A pension will be 25 per cent of base salary, a decrease from 36 per cent for Mackenzie.
A short term incentive target opportunity will be 160 per cent of base salary, with a maximum opportunity of 240 per cent of base salary, while previous maximum opportunity was 320 per cent of base salary.
The company announced long term incentive award for 2013 of 400 per cent face value of base salary.
Mackenzie's actual remuneration is linked substantially to business outcomes and shareholder returns with the "at-risk" component, which comprises short and long term incentives, set at 72 per cent of his total remuneration. Fixed remuneration, which is base salary and pension, comprises 28 per cent of the total.
As per the terms of contract, the performance period under the long term incentive plan remains at five years and vesting remains subject to the same performance requirements applied to previous awards.
Similarly, BHP Billiton also announced the terms of retirement for outgoing Chief Executive Officer, Marius Kloppers. Previously, the company announced Kloppers would step down as CEO, a member of the Group Management Committee and a Director of the Company on 10 May 2013, and would retire from the Group on 1 October 2013.
The company noted that Kloppers will work through the applicable notice period and accordingly no severance payment will be made. He will receive his base salary and pension entitlement to the date of his retirement, namely, 1 October 2013.
The company said that any short term incentive payment under the Group Incentive Scheme for the 2013 financial year can only be assessed by the Remuneration Committee after year end. That payment will be pro rated to reflect his period of service as CEO during the 2013 financial year.
The company noted that awards granted in previous years under the Long Term Incentive Plan will be pro-rated in accordance with the Company's usual practice. They will vest only if the performance hurdle is met at the end of each five year performance period; and Kloppers will be entitled to the value of the pension and superannuation funds that he has accumulated over his 20 years with the Company.
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