TIDMBHP
RNS Number : 7443X
BHP Group PLC
22 December 2019
NEWS RELEASE
Release Time IMMEDIATE
Date 23 December 2019
Release Number 24/19
Andrew Mackenzie retirement date 31 March 2020
The Board of BHP today announced that Andrew Mackenzie's
retirement date will be 31 March 2020, three months earlier than
previously announced on 14 November 2019. The Board, Mr Mackenzie
and Mr Henry are confident that the CEO transition is proceeding
well and ahead of schedule, with Mike Henry assuming the role of
Chief Executive Officer from 1 January 2020, as previously
announced.
Mr Mackenzie's retirement arrangements are summarised in the
attached schedule.
Further information on BHP can be found at: bhp.com
Summary of revised terms of retirement for Andrew Mackenzie
1. Fixed remuneration
Andrew Mackenzie will continue to be employed by the Company
until 31 March 2020 under the terms of the 2019 remuneration
policy. The Company will pay him a salary, make pension
contributions and provide usual other minor benefits until then.
His base salary is US$1,700,000 per annum and pension contributions
are 25 per cent of salary for FY2020. Upon retiring, Mr Mackenzie
will be entitled to receive the accumulated value of funds under
relevant pension plans, together with the value of any accrued
leave.
2. Severance payment
Mr Mackenzie will receive no severance payment, and no payment
in lieu of notice.
3. Incentive arrangements
Mr Mackenzie's entitlements under the Cash and Deferred Plan
(CDP), Short Term Incentive Plan (STIP) and Long Term Incentive
Plan (LTIP) are governed by the shareholder-approved remuneration
policy, applicable plan rules and the Group's leaving entitlements
policy as approved by shareholders at the 2017 Annual General
Meetings.
CDP
In relation to the FY2020 year, Mr Mackenzie will serve as CEO
for six months. He will be considered for a bonus under the CDP at
the end of the year (i.e. for the year ended 30 June 2020). Whether
any bonus will be paid, and the amount, will be determined by the
Remuneration Committee after an assessment of the Company's and his
personal performance after the year end. Accordingly, the awards
made under the CDP are "at-risk". Any amount assessed as payable
will be reported in the Remuneration Report that will be published
in September. This is consistent with the remuneration policy as
approved by shareholders, and the established practice of the
Company.
Even though Mr Mackenzie will be serving as an employee for nine
months of the FY2020 financial year, he will not receive any
payment under the CDP for the last three months of that period.
While the CDP does allow the Remuneration Committee the discretion
to make such a payment, in this case the Remuneration Committee
will not be using that discretion.
STIP
Under the rules of the STIP, unvested deferred shares are
transferred to a retiring executive on the originally scheduled
vesting date.
LTIP
Mr Mackenzie is a participant in the LTIP approved by
shareholders. The LTIP requires BHP to materially outperform the
comparator groups' Total Shareholder Return (TSR) for all the
awards to vest. The performance hurdles are stretching and ensure
alignment with shareholders. Accordingly, the awards made under the
LTIP are "at-risk", and the actual value of any LTIP awards may
ultimately be zero. The Remuneration Committee reviews performance
and takes advice from its independent adviser before making any
decisions about vesting. Importantly, even if the performance
hurdle is met the Committee conducts a holistic performance review
at vesting time and has an overriding discretion under the plan
rules to reduce the amount of shares that vest.
Under the terms of the LTIP, employees who retire are entitled
to hold awards granted previously. However, the number of awards is
reduced to reflect the period of service in relation to each grant.
They will vest only if the performance hurdle is met, and the
Remuneration Committee confirms vesting, at the expiration of the
term. The actual value of the LTIP awards may ultimately be
zero.
Mr Mackenzie's awards from 2015, 2016, 2017, 2018 and 2019 will
therefore be pro-rated according to the rules of the plan and in
each case must be held for the full five years from the date of
grant (see the table below).
4. Outstanding Share Awards
A. STIP awards
The table below provides details of the STIP awards which will
be unvested at the time of Mr Mackenzie's departure. These shares
represent half of the bonus paid under the STIP for FY2018 and
FY2019 as approved by shareholders. They must be held for two
years, which expire in 2020 and 2021, respectively.
Award Original Estimated Vesting Outcome Awards to
No of Awards Vesting Date Vest
STIP FY2018 52,061 Aug-20 100% 52,061
-------------- -------------- ---------------- ----------
STIP FY2019 25,845 Aug-21 100% 25,845
-------------- -------------- ---------------- ----------
Total 77,906 100% 77,906
-------------- -------------- ---------------- ----------
B. LTIP awards
The table below provides details of the LTIP awards that may
vest in the five years after Mr Mackenzie's departure.
As noted above, under the terms of the LTIP employees who retire
are entitled to hold awards granted prior to retirement. However,
the number of awards is reduced to reflect the period of elapsed
employment service in relation to each grant. The pro-rata rule of
the LTIP will thus impact the number of awards Mr Mackenzie retains
on departure. To determine the award Mr Mackenzie will retain on
departure, each individual award needs to be calculated on a
pro-rata basis according to the time worked over the five year
performance period (e.g. if Mr Mackenzie had been employed for half
of the five year performance period then he would retain half the
awards). The details of the awards Mr Mackenzie will retain are set
out below.
Whether the awards vest will depend on BHP's relative TSR
performance over the five-year periods to 30 June 2020, 2021, 2022,
2023 and 2024, respectively. In addition, even if the performance
hurdle is met the Committee conducts a holistic performance review
at vesting time and has an overriding discretion under the plan
rules to reduce the amount of awards that vest. Accordingly, the
vesting outcome and the number of LTIP awards that will vest is
unknown at this time.
Award Original Awards Pro-Rated Estimated Estimated Estimated
No of Awards to Lapse Awards Vesting Vesting Awards
on Retirement Retained Date Outcome to Vest
on Retirement
LTIP 2015 339,753 16,988 322,765 Aug-20 Unknown Unknown
LTIP 2016 339,753 84,938 254,815 Aug-21 Unknown Unknown
LTIP 2017 385,075 173,284 211,791 Aug-22 Unknown Unknown
LTIP 2018 304,523 197,940 106,583 Aug-23 Unknown Unknown
LTIP 2019 271,348 230,646 40,702 Aug-24 Unknown Unknown
-------------- --------------- --------------- ---------- ---------- ----------
Total 1,640,452 703,796 936,656
-------------- --------------- --------------- ----------
Authorised for lodgement by:
Rachel Agnew
Company Secretary
Media Relations Investor Relations
Email: media.relations@bhp.com Email: investor.relations@bhp.com
Australia and Asia Australia and Asia
Gabrielle Notley Tara Dines
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Tel: +44 20 7802 7484 Mobile: Tel: +44 20 7802 7611 Mobile:
+44 7786 661 683 +44 7825 926 646
Americas Americas
Judy Dane Brian Massey
Tel: +1 713 961 8283 Mobile: Tel: +1 713 296 7919 Mobile:
+1 713 299 5342 +1 832 870 7677
BHP Group Limited ABN 49 004 BHP Group plc Registration
028 077 number 3196209
LEI WZE1WSENV6JSZFK0JC28 LEI 549300C116EOWV835768
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END
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