By David Winning 
 

SYDNEY--BHP Group Ltd. said the coronavirus pandemic, which pushed up costs at key mines and disrupted production, had weighed on its chief executive's annual bonus.

BHP said its financial performance fell short of a target laid out its remuneration policy, partly due to the impact of the pandemic. The world's largest-listed mining company also said production missed expectations at several operations, including its Australian iron-ore and coal businesses and some of its petroleum assets.

BHP said Chief Executive Mike Henry's bonus totaled $1.96 million for the 12 months through June, 2020. That was on top of his base salary and benefits, including pension contributions, of $941,000. In addition, Mr. Henry received $3.17 million under the company's long-term incentive plan for an award set in 2015 when he headed up the coal business.

Last month, BHP said the impact of the Covid-19 pandemic on its operations totaled $348 million before tax. That figure included an exceptional charge of $183 million reflecting the cost of moving key staff closer to operations, implementing new screening measures and strengthening hygiene.

BHP's remuneration committee concluded that "while this was outside the control of management, the direct costs and volume impacts of Covid-19 should flow through" to its assessment of return on capital employed, a key benchmark of financial performance.

"The Committee considered this was appropriate in light of the global impacts of the Covid-19 pandemic," BHP said in its annual report. This adjustment reduced return on capital employed by 0.2%, it added.

When deciding executive remuneration, BHP used a return-on-capital-employed target of 19.9%. It said the outcome for fiscal 2020 was 18.2%.

BHP said that also reduced the bonus award to former chief executive Andrew Mackenzie, who stepped down midway through the year.

The company said Mr. Henry scored highly on health and safety, which accounts for 25% of its bonus, and achieved individual goals such as improving the value of BHP's asset portfolio.

 

Write to David Winning at david.winning@wsj.com

 

(END) Dow Jones Newswires

September 14, 2020 19:17 ET (23:17 GMT)

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