BHP cuts employee incentives by 20% globally – report

BHP (LSE: BHP; NYSE: BHP; ASX: BHP), the world’s largest miner is reportedly reducing by 20% short-term incentives offered for the 2023-24 fiscal year to all employees, the Australian Financial Review reported on Thursday.

The move, according to the people quoted by AFR, comes as BHP failed to meet its internal performance targets.

The company’s management attributed the reduction to failures in meeting cost and production goals in certain divisions, along with an incident that cost the live of a worker at its Saraji coal mine in Queensland in January, according to the article.

“The docking of incentives has upset some BHP employees who contacted the Australian Financial Review pointing to hiring freezes in some divisions that impacted the ability to hit targets and what they see as unrealistic internal goals,” the report said.

This is not the first time BHP trims employee incentives across the globe. In 2019, the company reduced them by 20% due to a number of operational mishaps, such as a train derailment in Western Australia in November 2018 and a fatality that also happened at the Saraji coal mine a month later.

Then chief executive Andrew Mackenzie saw his annual pay shrink by almost a quarter by the end of 2019, after other issues, including equipment failures at the  Olympic Dam in South Australia and Escondida mines in Chile. 

Last year, CEO Mike Henry promised to step up safety measures across all operations following yet more fatalities.

BHP reported in February that profits for the first half of the year were impacted by a US$2.5-billion impairment charge associated with its nickel business in Western Australia and a further another US$3.2 billion in payments related to the Samarco dam disaster in Brazil. The company revealed that it was disbanding certain global corporate teams as part of its cost-cutting measures.