Page 151 - Annual Report 2020

Remuneration policy for Non-executive Directors

Our Non-executive Directors are paid in line with the UK Corporate Governance Code (2018 edition) and the Australian Securities
Exchange Corporate Governance Council’s Principles and Recommendations (3rd Edition). Strategic Report

3.2.6 Components of remuneration
The following table shows the components of total remuneration, the link to strategy, the applicable operation and performance
frameworks, and the maximum opportunity for each component.
Remuneration component
and link to strategy Operation and performance framework Maximum (1)
Fees • The Chair is paid a single fee for all responsibilities. 8% increase per annum
Competitive base fees are • Non-executive Directors are paid a base fee and relevant committee membership fees. (annualised), or inflation
paid in order to attract • Committee Chairs and the Senior Independent Director are paid an additional fee to reflect if higher in the location
and retain high-quality their extra responsibilities. in which duties are primarily Governance at BHP
individuals, and to provide • All fee levels are reviewed annually and any changes are effective from 1 July. performed, on a per fee basis.
appropriate remuneration
for the role undertaken. • Fees are set at a competitive level based on benchmarks and advice provided by external
advisers. Fee levels reflect the size and complexity of the Group, the multi-jurisdictional
Committee fees are provided environment arising from the DLC structure, the multiple stock exchange listings and the
to recognise the additional geographies in which the Group operates. The economic environment and the financial
responsibilities, time and performance of the Group are taken into account. Consideration is also given to salary
commitment required. reviews across the rest of the Group.
• Where the payment of pension contributions is required by law, these contributions are
deducted from the Director’s overall fee entitlements. 3
Benefits • Travel allowances are paid on a per-trip basis reflecting the considerable travel burden 8% increase per annum
Competitive benefits are imposed on members of the Board as a consequence of the global nature of the organisation (annualised), or inflation
paid in order to attract and and apply when a Director needs to travel internationally to attend a Board meeting or site if higher in the location
retain high-quality individuals visits at our multiple geographic locations. in which duties are primarily
and adequately remunerate performed, on a per-trip basis.
them for the role undertaken, • As a consequence of the DLC structure, Non-executive Directors are required to prepare Up to a limit not exceeding Remuneration Report
including the considerable personal tax returns in Australia and the UK, regardless of whether they reside in one 20% of fees.
travel burden. or neither of those countries. They are accordingly reimbursed for the costs of personal tax
return preparation in whichever of the UK and/or Australia is not their place of residence
(including payment of the tax cost associated with the provision of the benefit).
Variable pay (CDP and LTIP) • Non-executive Directors are not eligible to participate in any CDP or LTIP
award arrangements.
Payments on early termination • There are no provisions in any of the Non-executive Directors’ appointment arrangements
for compensation payable on early termination of their directorship.
(1) UK regulations require the disclosure of the maximum that may be paid in respect of each remuneration component. Where that is expressed as a maximum annual Directors’ Report
percentage increase that is annualised it should not be interpreted that it is BHP’s current intention to award an increase of that size in total in any one year, or in each
year, and instead it is a maximum required to be disclosed under the regulations.
Approach to recruitment remuneration

The ongoing remuneration arrangements for a newly recruited Non-executive Director will reflect the remuneration policy in place for
other Non-executive Directors, comprising fees and benefits as set out in the table above. No variable remuneration (CDP and LTIP award
arrangements) will be provided to newly recruited Non-executive Directors.
Letters of appointment and policy on loss of office
The standard letter of appointment for Non-executive Directors is available at bhp.com. The Board has adopted a policy consistent with
the UK Corporate Governance Code, under which all Non-executive Directors must seek re-election by shareholders annually if they wish Financial Statements
to remain on the Board. As such, no Non-executive Directors seeking re-election have an unexpired term in their letter of appointment.
A Non-executive Director may resign on reasonable notice. No payments are made to Non-executive Directors on loss of office.

3.2.7 How remuneration policy is set
The Remuneration Committee sets the remuneration policy for the and therefore have the opportunity to vote on AGM resolutions.
CEO and other Executive KMP. The Committee is briefed on and In addition, in line with changes to the UK Corporate Governance
considers prevailing market conditions, the competitive environment Code, the Remuneration Committee is considering additional
and the positioning and relativities of pay and employment conditions means of engaging with the workforce to explain how executive
across the wider BHP workforce. The Committee takes into account remuneration aligns with wider Group pay policy. Additional information
the annual base salary increases for our employee population when As part of the Board’s commitment to good governance, the
determining any change in the CEO’s base salary. Salary increases Committee also considers shareholder views, together with those
in Australia, where the CEO is located, are particularly relevant of the wider community, when setting the remuneration policy
as they reflect the local economic conditions. for the CEO and other Executive KMP. We are committed to
The principles that underpin the remuneration policy for the CEO engaging and communicating with shareholders regularly and,
are the same as those that apply to other employees, although as our shareholders are spread across the globe, we are proactive
the CEO’s arrangements have a greater emphasis on and a higher with our engagement on remuneration and governance matters
proportion of remuneration in the form of performance-related with institutional shareholders and investor representative
variable pay. Similarly, the performance measures used to determine organisations. Feedback from shareholders and investors is shared
variable pay outcomes for the CEO and all other employees are with and used as input into decision-making by the Board and
linked to the delivery of our strategy and behaviours that are aligned Remuneration Committee in respect of our remuneration policy Shareholder information
to the values in Our Charter. and its application. The Committee considers that this approach
Although BHP does not consult directly with employees on provides a robust mechanism to ensure Directors are aware of
CEO and other Executive KMP remuneration, the Group conducts matters raised, have a good understanding of current shareholder
views, and can formulate policy and make decisions as appropriate.
regular employee engagement surveys that give employees an
opportunity to provide feedback on a wide range of employee We encourage shareholders to always make their views known
to us by directly contacting our Investor Relations team (contact
matters. Further, many employees are ordinary shareholders
through our all-employee share purchase plan, Shareplus, details available at bhp.com).

BHP Annual Report 2020 149