BHP Billiton’s (ASX: BHP) outgoing chief executive Marius Kloppers will leave the mining giant this week with a very healthy paycheck of US$16 million for his final year’s work.
Kloppers stepped aside from the position in May and handed it over to Andrew Mackenzie, but stayed on as a consultant to assist with the transition until the end of September, in which time he was still paid his US$2.2 million base annual salary.
In addition to this, it is said that based on the miner’s current share price, 51-year-old Kloppers could still earn up to another AU$18 million in long-term bonuses through to the year 2017 whilst he still maintains around $35.5 million worth of privately owned shares in the company.
However, it would seem that times have changed for the company’s executives. The sector is faced with heavy volatility and strong headwinds. There is also a downwards pressure on commodity prices as growing supply is coinciding with weakening demand.
Whilst Mr. Kloppers and his management team were paid handsomely throughout his six years as boss, Mr. Mackenzie and the remainder of the company’s executives will be paid 25% less despite taking on additional responsibilities. This is due to the layer of management that has been removed from the business to save on costs.
Meanwhile, long-term bonuses have also been cut by 35% in light of weak shareholder returns over the last five years. As reported by The Australian, the group’s management elite will miss out on a collective $26 million in long-term share grant entitlements due to the company’s negative shareholder return of 9.4% in that time.
The focus of the group will change substantially as it transitions from Kloppers’ leadership to Mackenzie’s, with the focus now on increasing productivity and reducing unnecessary spending. BHP is not the only miner taking this approach, with other companies such as Fortescue Metals Group (ASX: FMG) and Rio Tinto (ASX: RIO) also focused on long-term sustainability.
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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.