Page 147 - Annual Report 2020

Remuneration component
and link to strategy Operation and performance framework Maximum (1)
Benefits • Benefits may be provided, as determined by the Committee, and currently Benefits as determined
Provides personal insurances, include costs of private family health insurance, death and disability insurance, by the Committee but Strategic Report
relocation benefits and tax assistance car parking and personal tax return preparation in the required countries to a limit not exceeding
where BHP’s structure gives rise where BHP has requested the CEO relocate internationally, or where BHP’s 10% of base salary
and (if applicable)
to tax obligations across multiple DLC structure requires personal tax returns in multiple jurisdictions.
jurisdictions, and a market-competitive • Costs associated with business-related travel for the CEO’s spouse/partner, a one-off taxable
relocation allowance
level of benefits to attract and retain including for Board meetings, may be covered. Where these costs are deemed up to US$700,000.
a high-quality and experienced CEO. to be taxable benefits for the CEO, BHP may reimburse the CEO for these
tax costs.
• The CEO is eligible to participate in Shareplus, BHP’s all-employee share
purchase plan.
• A relocation allowance and assistance is provided only where a change
of location is made at BHP’s request. The Group’s mobility policies generally
provide for ‘one-off’ payments with no material trailing entitlements. Governance at BHP
CDP Setting performance measures and targets Maximum award
The purpose of the CDP is to • The Committee sets a balanced scorecard of short, medium and long-term A cash award of 120%
encourage and focus the CEO’s elements including HSEC, financial and individual performance measures, with of base salary plus two
efforts on the delivery of the targets and relative weightings at the beginning of the financial year in order awards of deferred shares
Group’s strategic priorities for the to appropriately motivate the CEO to achieve outperformance that contributes each of equivalent value
relevant financial year to deliver to the long-term sustainability of the Group and shareholder wealth creation. to the cash award,
short, medium and long-term • Specific financial measures will constitute the largest weighting and are derived vesting in two and five
success, and to motivate the from the annual budget as approved by the Board for the relevant financial year. years respectively.
CEO to strive to achieve stretch Target performance 3
performance objectives. • Appropriate HSEC measures that are consistent with the Group’s long-term A cash award of 80%
five-year public HSEC targets, and their weightings, are determined by the
The performance measures Remuneration Committee with the assistance of the Sustainability Committee. of base salary plus two
for each year are chosen on • Individual measures are an important element of effective performance awards of deferred
the basis that they are expected management, and are a combination of quantitative and qualitative targets. shares each of equivalent
to have a significant short, They are aligned with medium and long-term strategy aspirations that are value to the cash award,
medium and long-term impact intended to drive long-term value for shareholders and other stakeholders. vesting in two and
on the success of the Group. five years respectively, Remuneration Report
for target performance
Delivery of two-thirds of CDP • For HSEC and for individual measures the target is ordinarily expressed on all measures.
in narrative form and will be disclosed near the beginning of the performance
awards in deferred shares period. However, the target for each financial measure will be disclosed Threshold
encourages a longer-term focus retrospectively. In the rare instances where this may not be prudent on grounds performance
aligned to that of shareholders. of commercial sensitivity, we will seek to explain why and give an indication
of when the target may be disclosed. A cash award of 40%
of base salary plus two
• Should any other performance measures be added at the discretion of the awards of deferred
Committee, we will determine the timing of disclosure of the relevant target shares each of equivalent
with due consideration of commercial sensitivity. value to the cash award, Directors’ Report
Assessment of performance vesting in two and five
years respectively, for
• At the conclusion of the financial year, the CEO’s achievement against each threshold performance
measure is assessed by the Remuneration Committee and the Board, with on all measures.
guidance provided by other relevant Board Committees in respect of HSEC Minimum award
and other measures, and a CDP award determined. If performance is below Zero.
the threshold level for any measure, no CDP award will be provided in respect
of that portion of the CDP award opportunity.
• The Board believes this method of assessment is transparent, rigorous and
balanced, and provides an appropriate, objective and comprehensive
assessment of performance.
• In the event that the Remuneration Committee does not consider the outcome
that would otherwise apply to be a true reflection of the performance of the
Group or should it consider that individual performance or other circumstances Financial Statements
makes this an inappropriate outcome, it retains the discretion to not provide
all or a part of any CDP award. This is an important mitigation against the risk
of unintended award outcomes.
Delivery of award
• CDP awards are provided under the CDP as cash and two awards of deferred
shares, each of equivalent value to the cash award, vesting in two and five
years respectively.
• The awards of deferred shares comprise rights to receive ordinary BHP shares
in the future at the end of the deferral periods. Before the awards vest (or are
exercised), these rights are not ordinary shares and do not carry entitlements
to ordinary dividends or other shareholder rights; however, a DEP is provided
on vested awards. The Committee also has a discretion to settle CDP awards
in cash. Additional information
Underpin, malus and clawback
• To ensure any vesting of five-year deferred shares under the CDP is underpinned
by satisfactory performance post-grant, the vesting will be subject to an underpin.
This will encompass a holistic review of performance at the end of the five-year
vesting period, including a five-year view on HSEC performance, profitability,
cash flow, balance sheet health, returns to shareholders, corporate governance
and conduct.
• Both cash and deferred share CDP awards are subject to malus and clawback
as described on in section 3.2.2. Shareholder information

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