New BHP CEO Takes Pay Cut as Miners Suffer, Strips Out Top Jobs
BHP Billiton's new chief executive will take a pay cut as miners struggle with tougher market conditions, and has stripped out a layer of top executives who were overlooked for the top job and brought operations heads into his management team.
Incoming Chief Executive Andrew Mackenzie has previously said there would be no major change in the world's biggest miner's strategy but has pledged to focus on slashing costs, improving operations and boosting returns as miners grapple with slower growth in China and volatile commodities prices.
"It looks like there's a reduction in the tiers of the hierarchy, which is a positive given the intensive focus on costs. I think that should be well received by the market," said Ben Lyons, an analyst at ATI Asset Management, which owns BHP shares.
BHP said on Thursday petroleum boss Michael Yeager, 59, would leave the company next month, as Mackenzie, who takes over on May 10, stamped his authority on the company.
Yeager, who had been touted as a potential successor to outgoing CEO Marius Kloppers before Mackenzie was tapped for the job in February, will retire on July 2.
Yeager will be replaced by Tim Cutt, who will lead petroleum as well as potash, one of the key products the company is targeting for growth.
Aluminium and nickel boss Alberto Calderon, 52, who had been another contender for the top job, will leave the group's management committee but will remain as an adviser to Mackenzie until 2014, BHP said.
(Read More: Aussie Mining Loses Its Lure for China Investors)
Ferrous and coal head Marcus Randolph, a third internal CEO candidate, will leave the management committee on May 10. Randolph, 56, is on sick leave and not expected to return until the middle of the year.
His role has been eliminated, with the head of iron ore, Jimmy Wilson, and new head of coal, Dean Dalla Valle, to report directly to Mackenzie.
"The composition and structure of the team reflects my commitment to a relentless focus on the safe execution of BHP Billiton's strategy," Mackenzie said in a statement.
Fund managers said the departure of Yeager, the architect of BHP's pricey expansion into shale gas in the United States which spawned writedowns last year, was the main surprise.
The chief executive's base salary has been cut to $1.7 million a year with a maximum short-term incentive opportunity of 240 percent of the base. The long-term incentive award for 2013 is pegged at 400 percent of the base value.
Mackenzie's base salary is $150,000 less than outgoing boss Marius Kloppers earned, and the maximum short-term incentive is down from 320 percent. The company has also slashed his pension contribution to 25 percent from 40 percent of his salary.
The reshuffle comes a day after BHP, the world's No. 3 iron ore miner behind Vale and Rio Tinto, said production rates were nearing 200 million tonnes a year, and maintained its guidance for fiscal 2013 output of 183 million tons.
Marketing and technology head Mike Henry, chief financial officer Graham Kerr, and people and public affairs president Karen Wood, remain on the management committee, which BHP said would ensure a good balance of existing and new team members.
They will be joined by copper president Peter Beaven, new aluminium, manganese and nickel boss Daniel Malchuk, chief legal counsel Geoff Healy and group company secretary Jane McAloon, along with Wilson in iron ore and Dalla Valle in coal.
BHP's shares fell 3 percent in early trade, in line with other miners under pressure after the International Monetary Fund cut its forecasts for global economic growth.
The major miners' shares have fallen more than 13 percent so far this year in a broader market that has risen nearly 8 percent.