BHP’s Mackenzie forgoes shares

BHP Billiton’s (ASX: BHP) new chief executive Andrew Mackenzie has elected to forgo a large portion of the shares due to him as part of cuts to executive pay, which the company stated he had deemed to be excessive.

One of the key focuses across the mining sector has been to cut costs, with many in the industry struggling for growth amidst diminishing demand from China and falling commodity prices. Executive pay is one area that has been targeted as part of that cost cutting strategy.

For instance, when Mackenzie took over as CEO in February, he agreed to take a significant pay cut compared to what his predecessor Marius Kloppers was receiving. Furthermore, in order to be lured away from the company’s key rival Rio Tinto (ASX: RIO), he was offered a further 50,000 shares.

According to reports, 450,964 shares were originally made available to Mackenzie, however, he will now only collect 243,126 of them as the company aims to cut costs and boost shareholder returns. The company said that the move reflects “a more modest approach to remuneration befitting the times.”

The company’s full year report which was released earlier this week outlined that a total of $2.7 billion worth of costs had been stripped out for the year, with aims to cut them a “lot more”. It reported a 30% fall in net profit compared to the prior year.

Foolish takeaway

Whilst it has been a tough run for shareholders, it is pleasing to see the CEO putting the company before his own interests.

Are you interested in our #1 dividend-paying stock? Discover The Motley Fool’s favourite income idea for 2013-2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of “The Motley Fool’s Top Dividend Stock for 2013-2014.”

More reading

Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned in this article.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.