Page 150 - Annual Report 2020

3.2.5 Service contracts and policy on loss of office

The terms of employment for the CEO are formalised in his employment contract. Key terms of the current contract and relevant payments
on loss of office are shown below. If a new CEO or another Executive Director was appointed, similar contractual terms would apply, other
than where the Remuneration Committee determines that different terms should apply for reasons specific to the individual or circumstances.
The CEO’s current contract has no fixed term. It can be terminated by BHP on 12 months’ notice. BHP can terminate the contract immediately
by paying base salary plus pension contributions for the notice period. The CEO must give 12 months’ notice for voluntary resignation .
(1)
The table below sets out the basis on which payments on loss of office may be made.
Leaving reason (2) (3)
Death, serious injury, illness,
disability or total and Cessation of employment
Voluntary resignation Termination for cause permanent disablement as agreed with the Board (4)
Base salary • Paid as a lump sum • No payment will be made. • Paid for a period of up to six • Paid as a lump sum for the
for the notice period months, after which time notice period or progressively
or progressively over employment may cease. over the notice period.
the notice period.
Pension • Paid as a lump sum • No contributions will • Paid for a period of up to six • Paid as a lump sum for the
contributions for the notice period be provided. months, after which time notice period or progressively
or progressively over employment may cease. over the notice period.
the notice period.
Benefits • May continue to be • No benefits will be provided. • May continue to be provided • May continue to be
provided during the • Accumulated annual leave for a period of up to six provided for the year in which
notice period. entitlements and any months, after which time employment ceases.
• Accumulated annual statutory payments will employment may cease. • Accumulated annual leave
leave entitlements and be paid. • Accumulated annual leave entitlements and any statutory
any statutory payments • May pay repatriation entitlements and any payments will be paid.
will be paid. expenses to the home statutory payments will • May pay repatriation expenses
• May pay repatriation location where a relocation be paid. to the home location where
expenses to the home was at the request of BHP. • May pay repatriation a relocation was at the request
location where a relocation • Any unvested Shareplus expenses to the home of BHP.
was at the request of BHP. matched shares held location where a relocation • Any unvested Shareplus
• Any unvested Shareplus will lapse. was at the request of BHP. matched shares held will
matched shares held • Any unvested Shareplus vest in full.
will lapse. matched shares held will
vest in full.
CDP/STIP – • No cash award will be paid. • No cash award will be paid. • The Committee has • The Committee has discretion
cash and • Unvested CDP/STIP • Unvested CDP/STIP discretion to pay and/or to pay and/or award an amount
deferred shares deferred shares will lapse. deferred shares will lapse. award an amount in respect in respect of the CEO’s
Where the CEO • Vested but unexercised • Vested but unexercised of the CEO’s performance performance for that year.
leaves either CDP/STIP deferred shares CDP/STIP deferred shares for that year. • Unvested two-year CDP/STIP
during or after the will remain exercisable for will remain exercisable • Unvested CDP/STIP deferred shares and a pro rata
end of the financial the remaining exercise for the remaining exercise deferred shares will vest in portion (based on the
year, but before an period unless the period unless the full and, where applicable proportion of the vesting
award is provided. Committee determines Committee determines become exercisable. period served) of unvested
they will lapse. they will lapse. • Vested but unexercised five-year CDP deferred shares
• Vested but unexercised • Vested but unexercised CDP/STIP deferred shares continue to be held on the
CDP/STIP awards remain CDP/STIP awards remain will remain exercisable existing terms for the deferral
subject to malus subject to malus for the remaining period before vesting (subject
and clawback. and clawback. exercise period. to Committee discretion to
• Unvested and vested but lapse some or all of the award).
unexercised CDP/STIP • Vested but unexercised CDP/
awards remain subject STIP deferred shares remain
to malus and clawback. exercisable for the remaining
exercise period, or a reduced
period, or may lapse, as
determined by the Committee.
• Unvested and vested but
unexercised CDP/STIP awards
remain subject to malus
and clawback.
LTIP – • Unvested awards will lapse. • Unvested awards will lapse. • Unvested awards will • A pro rata portion of unvested
unvested and • Vested but unexercised • Vested but unexercised vest in full. awards (based on the
vested but awards will remain awards will remain • Vested but unexercised proportion of the performance
unexercised exercisable for the exercisable for the awards will remain period served) will continue
awards remaining exercise remaining exercise exercisable for remaining to be held subject to the
period, or for a reduced period, or for a reduced exercise period. LTIP rules and terms of grant.
period, or may lapse, period, or may lapse, • Unvested and vested The balance will lapse.
as determined as determined but unexercised awards • Vested but unexercised awards
by the Committee. by the Committee. remain subject to malus will remain exercisable for
• Vested but unexercised • Vested but unexercised and clawback. the remaining exercise period,
awards remain subject awards remain subject or for a reduced period,
to malus and clawback. to malus and clawback. or may lapse, as determined
by the Committee.
• Unvested and vested but
unexercised awards remain
subject to malus and clawback.
(1) Notice period for voluntary resignation updated to reflect the terms of the new Executive Director and CEO employment contract effective on 1 January 2020.
(2) If the Committee deems it necessary, BHP may enter into agreements with a CEO, which may include the settlement of liabilities in return for payment(s),
including reimbursement of legal fees subject to appropriate conditions; or to enter into new arrangements with the departing CEO (for example, entering
into consultancy arrangements).
(3) In the event of a change in control event (for example, takeover, compromise or arrangement, winding up of the Group) as defined in the CDP, STIP and LTIP rules:
• base salary, pension contributions and benefits will be paid until the date of the change of control event
• in relation to the CDP and STIP: the Committee may determine that a cash payment be made in respect of performance during the current financial year and all
unvested two-year deferred shares would vest in full and, in relation to the CDP, all unvested five-year deferred shares would vest pro rata (based on the proportion
of the vesting period served up to the date of the change of control event)
• the Committee may determine that unvested LTIP awards will either (i) be prorated (based on the proportion of the performance period served up to the date
of the change of control event) and vest to the extent the Committee determines appropriate (with reference to performance against the performance condition
up to the date of the change of control event and expectations regarding future performance) or (ii) be lapsed if the Committee determines the holders will
participate in an acceptable alternative employee equity plan as a term of the change of control event
(4) Defined as occurring when a participant leaves BHP due to forced early retirement, retrenchment or redundancy, termination by mutual agreement or retirement
with the agreement of the Group, or such other circumstances that do not constitute resignation or termination for cause.
148 BHP Annual Report 2020