Page 217 - Annual Report 2020

24 Employee share ownership plans

Awards, in the form of the right to receive ordinary shares in either BHP Group Limited or BHP Group Plc, have been granted under the
following employee share ownership plans: Long-Term Incentive Plan (LTIP), Cash and Deferred Plan (CDP), Short-Term Incentive Plan (STIP), Strategic Report
Management Award Plan (MAP), Group Short-Term Incentive Plan (GSTIP) awards and the all-employee share plan, Shareplus.
Some awards are eligible to receive a cash payment, or the equivalent value in shares, equal to the dividend amount that would have been
earned on the underlying shares awarded to those participants (the Dividend Equivalent Payment, or DEP). The DEP is provided to the
participants once the underlying shares are allocated or transferred to them. Awards under the plans do not confer any rights to participate
in a share issue; however, there is discretion under each of the plans to adjust the awards in response to a variation in the share capital
of BHP Group Limited or BHP Group Plc.
The table below provides a description of each of the plans.
Plan CDP/STIP and GSTIP LTIP and MAP Shareplus
Type Short-term incentive Long-term incentive All-employee share
purchase plan Governance at BHP
Overview The CDP was implemented in FY2020 The LTIP is a plan for Executive KMP and awards Employees may contribute up
as a replacement of the STIP, both of which are granted annually. to US$5,000 to acquire shares
are generally plans for Executive KMP and The MAP is a plan for BHP senior management who in any plan year. On the third
the Executive Leadership Team who are are not KMP. The number of share rights awarded anniversary of the start of a
not Executive KMP. GSTIP is a plan for BHP is determined by a participant’s role and grade. plan year, the Group will match
senior management who are not KMP. the number of acquired shares.
Under the CDP, two thirds of the value of a
participant’s short-term incentive amount is
awarded as rights to receive BHP Group
Limited or BHP Group Plc shares at the end
of the vesting period (and the remaining one
third is delivered in cash). Two awards of
deferred shares are granted, each of the Remuneration Report
equivalent value to the cash award, vesting
in two and five years respectively.
Under STIP and GSTIP, half of the value of a
participant’s short-term incentive amount is
awarded as rights to receive BHP Group
Limited or BHP Group Plc shares at the end
of the two-year vesting period.
Vesting CDP: Service conditions and performance LTIP: Service and performance conditions. Service conditions only.
conditions conditions for the awards of five-year BHP’s Total Shareholder Return (TSR) performance
(1)
deferred shares only. Vesting of the relative to the Peer Group TSR over a five-year
five-year award is subject to a satisfactory performance period determines the vesting of Directors’ Report
performance underpin which encompasses 67 per cent of the awards, while performance relative
a holistic review of performance at the end to the Index TSR (being the index value where the
of the five-year vesting period, including comparator group is a market index) determines the
a five-year view on HSEC performance, vesting of 33 per cent of the awards. For the awards
profitability, cash flow, balance sheet to vest in full, BHP’s TSR must exceed the Peer Group
health, returns to shareholders, corporate TSR and Index TSR (if applicable) by a specified
governance and conduct. percentage per year, determined for each grant by
STIP and GSTIP: Service conditions only. the Remuneration Committee. From the establishment
of the LTIP in 2004 until the awards granted in
December 2016, this percentage was set at 5
5.5 per cent per year.
For awards granted from December 2017 onwards,
25 per cent of the award will vest where BHP’s TSR is
equal to the median TSR of the relevant comparator
group(s), as measured over the performance period.
Where TSR is below the median, awards will not vest. Financial Statements
Vesting occurs on a sliding scale when BHP’s TSR
measured over the performance period is between
the median TSR of the relevant comparator group(s)
up to a nominated level of TSR outperformance over
the relevant comparator group(s), as determined
by the Committee, above which 100 per cent of the
award will vest.
MAP: Service conditions only.
Vesting CDP – 2 and 5 years LTIP – 5 years 3 years
period STIP and GSTIP – 2 years MAP – 1 to 5 years Additional information
Dividend CDP – Yes LTIP – Yes No
Equivalent STIP – Yes MAP – No
Payment
GSTIP – No
Exercise None None None
period
(1) BHP’s TSR is the weighted average of the TSRs of BHP Group Limited and BHP Group Plc. Shareholder information

BHP Annual Report 2020 215