Page 160 - Annual Report 2020

LTIP Equity awards provided for pre-KMP service
LTIP awards granted to other Executive KMP for FY2021 Other Executive KMP who were promoted from executive roles
will be calculated in accordance with the remuneration policy within BHP may hold GSTIP and MAP awards that were granted
approved by shareholders in 2019. Awards for other Executive to them in respect of their service in non-KMP roles.
KMP will have a maximum face value of 175 per cent of base Shareplus
salary, which is a fair value of 72 per cent of base salary under
the current plan design (with a fair value of 41 per cent, Other Executive KMP are eligible to participate in Shareplus. For
taking into account the performance condition: administrative simplicity, Executive KMP, including the CEO, do not
175 per cent x 41 per cent = 72 per cent). currently participate in Shareplus. No Executive KMP, including the
CEO, had any holdings under the Shareplus program during FY2020.
3.3.11 Remuneration mix
A significant portion of other Executive KMP remuneration is at-risk, in order to provide strong alignment between remuneration outcomes
and the interests of BHP shareholders.
The diagram below sets out the relative mix of each remuneration component for the other Executive KMP for FY2020. Each component
is determined as a percentage of base salary (at the minimum, target and maximum levels of performance-based remuneration).

Remuneration mix for other Executive KMP

Minimum 74% 19% 7%

Target 22% 6% 2% 18% 36% 16%

Maximum 15% 4% 1% 18% 36% 26%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
% share of total remuneration
Base salary (1) Retirement benefits (2) Other benefits (3)
CDP (cash) (4) CDP (deferred shares) (4) LTIP (5)

(1) Base salary earned by each Executive KMP is set out in section 3.3.18.
(2) Retirement benefits are 25 per cent of base salary. From FY2021 contribution rates will reduce in accordance with the remuneration policy approved by shareholders at
the 2019 AGMs (progressive reduction to 10 per cent of base salary as follows: 20 per cent of base salary from 1 July 2020; 15 per cent of base salary from 1 July 2021; and
10 per cent of base salary from 1 July 2022 onwards. For a new Executive KMP appointment, the pension contribution rate will be 10 per cent of base salary immediately).
(3) Other benefits is based on a notional 10 per cent of base salary.
(4) As for the CEO, the minimum CDP award is zero, with a cash award of 80 per cent of base salary plus two awards of deferred shares each of equivalent value to the cash
award, vesting in two and five years respectively, for target performance on all measures, and a maximum cash award of 120 per cent base salary plus two awards
of deferred shares each of equivalent value to the cash award, vesting in two and five years respectively.
(5) Other Executive KMP have a maximum LTIP award with a face value of 175 per cent of base salary.
3.3.12 Employment contracts Andrew would receive a prorated FY2020 CDP award for his time as
CEO, covering both the cash and two-year deferred equity portion,
The terms of employment for other Executive KMP are formalised based on his performance, and paid in the form of cash. No deferral
in employment contracts, which have no fixed term. They typically period will apply in respect of this cash CDP award.
outline the components of remuneration paid to the individual, but No payment or award was or will be made in respect of the CDP
do not prescribe how remuneration levels are to be modified from five-year deferred share component for FY2020.
year to year. Other Executive KMP’s employment contracts may be All unvested FY2018 and FY2019 STIP awards allocated to Andrew
terminated by BHP on up to 12 months’ notice or can be terminated remained on foot on termination. FY2018 STIP vested in August
immediately by BHP making a payment of up to 12 months’ base salary 2020, and FY2019 STIP will vest in August 2021. Andrew’s unvested
plus pension contributions for the relevant period. Other Executive LTIP awards were prorated to reflect the percentage of service
KMP must give up to 12 months’ notice for voluntary resignation.
during the relevant performance period to 31 March 2020. The
3.3.13 Arrangements for KMP leaving the Group outcomes in respect of Andrew’s 2015 LTIP award are set out in
section 3.3.24. The vesting of the remaining retained prorated LTIP
awards will be determined by the Committee at the relevant time
The arrangements for Executive KMP leaving the Group are within in future years and will only vest if the performance conditions are
the approval provided by shareholders at the 2017 AGMs in regard met at the end of each five-year performance period, subject to
to Australian termination benefits legislation, including the provision the Committee’s ability to reduce vesting through its overarching
of performance-based remuneration in accordance with the rules discretion under the plan rules.
of the relevant incentive plans.
Andrew Mackenzie stepped down from his role as CEO and
Executive Director on 31 December 2019, and retired from BHP on
31 March 2020. Andrew received base salary, pension contributions,
statutory leave entitlements and applicable benefits up to the date
of his retirement from BHP. Andrew will receive in the future the
value of pension funds that he has accumulated during his service
with the Group and certain employment-related taxation return
preparation services. When determining the Executive KMP CDP
awards for FY2020, the Remuneration Committee resolved that

158 BHP Annual Report 2020