Wrap Text
Andrew Mackenzie retirement date 31 March 2020
BHP Group Plc
Registration number 3196209
Registered in England and Wales
Share code: BHP
ISIN: GB00BH0P3Z91
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.
Original No of Estimated Vesting
Award Awards to Vest
Awards Vesting Date Outcome
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.
Pro-Rated
Awards to Estimated Estimated Estimated
Original No Awards
Award Lapse on Vesting Vesting Awards to
of Awards Retained on
Retirement Date Outcome Vest
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
Sponsor: UBS South Africa (Pty) Limited
Authorised for lodgement by:
Rachel Agnew
Company Secretary
Media Relations Investor Relations
Email: media.relations@bhp.com Email: investor.relations@bhp.com
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Tel: +1 713 961 8283 Mobile: +1 713 299 5342 Tel: +1 713 296 7919 Mobile: +1 832 870 7677
BHP Group Limited ABN 49 004 028 077 BHP Group plc Registration number 3196209
LEI WZE1WSENV6JSZFK0JC28 LEI 549300C116EOWV835768
Registered in Australia Registered in England and Wales
Registered Office: Level 18, 171 Collins Street Registered Office: Nova South, 160 Victoria Street
Melbourne Victoria 3000 Australia London SW1E 5LB United Kingdom
Tel +61 1300 55 4757 Fax +61 3 9609 3015 Tel +44 20 7802 4000 Fax +44 20 7802 4111
Members of the BHP Group which is
headquartered in Australia
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Date: 23-12-2019 07:05:00
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