BHP Billiton Boss Sees Bonus Axed After Accident And Record Loss

The chief executive of BHP Billiton (NYSE: BBL - news) , one of the world's biggest natural resources groups, is to have his bonus scrapped after a fatal accident at a Brazilian iron-ore mine it jointly owns led to the company's biggest-ever annual loss.

Sky News has learnt that Andrew Mackenzie will receive no bonus for 2015-16, while other top executives will have their discretionary pay awards slashed by varying amounts depending upon their seniority.

Leading shareholders in BHP Billiton have been briefed on the company's pay plans by the chair of its boardroom remuneration committee, with the full details due to be published in its annual report next month, according to City sources.

One institutional investor said they expected the decision to be broadly welcomed by BHP's shareholders following a torrid year in which it had recorded a $6.4bn (£4.9bn) loss .

"They are doing what's necessary, but without a public row, for which they should be commended."

Mr Mackenzie is paid a basic salary of $1.7m (£1.3m), which has remained static since he took the job in 2013 and which insiders pointed out is 25% lower than that of his predecessor, Marius Kloppers.

In 2014-15, he earned a bonus of $2.3m (£1.76m), down from $3.1m (£2.37m) the year before, a reduction which reflected the fact that five workers were killed doing their jobs.

Last November, 19 miners were killed when a dam collapsed at Samarco, a mine jointly operated by BHP Billiton and Vale, a Brazilian company.

The accident, which was Brazil's worst-ever environmental disaster, has left BHP facing tens of billions of dollars in clean-up and compensation costs, with a $1.3bn (£994m) charge absorbed into last year's results.

On Monday, a report commissioned by the two operators of the Samarco mine largely blamed drainage and design issues for the tragedy.

The disclosure of Mr Mackenzie's zero bonus comes at a time of growing pressure on executive pay levels, which Theresa May, the new Prime Minister, has signalled is in her crosshairs as she targets a clampdown on egregious corporate behaviour.

The High Pay Centre, a research group, recently published data showing that the average pay package of FTSE-100 chief executives hit £5.5m last year, a rise of 10% on 2014.

Mining groups have been wrestling with a sustained downturn in commodity prices, leading to low or even negative shareholder returns, but some have angered investors by continuing to pay substantial sums to top executives.

Anglo American (LSE: AAL.L - news) , the FTSE-100 miner which is shrinking through a string of asset sales, saw 42% of investors vote against its remuneration report earlier this year.

BHP, which last year cut non-executive directors' fees and in 2013 slashed the value of long-term share awards by 35%, declined to comment on Mr Mackenzie's bonus.

The company now has a market capitalisation of £61.75bn after seeing its share price fall by more than 7% over the last year.

The publication of its report on the Samarco accident led to a 2.8% decline in its London-listed shares on Tuesday morning.