By Barry FitzGerald
REMUNERATION for BHP Billiton chief executive Marius Kloppers soared 51 per cent to $US10.39 million ($A12.08 million) in the June year, despite broad-based government and community pressure for executive pay restraint in the wake of the global financial crisis.
BHP has defended the increase in its CEO's pay packet from $US6.87 million in 2008. It pointed to the group's ability to emerge from the crisis with a solid credit rating, a pristine balance sheet and its outperformance on a total shareholder return basis (220 per cent growth compared with 72 per cent growth achieved by an index of peer companies).
It also argued that a big component of the pay increase was due to the first-time allotment of shareholder-approved incentives related to the 2004 financial year, along with the increase in base salary and other benefits Mr Kloppers received on his elevation to the chief executive position in October 2007.
But while BHP's five-year total shareholder return (share price changes plus dividends reinvested) was impressive, its total shareholder return for the crisis-affected 2009 financial year was a sobering 35 per cent decline. Profit for the year tumbled from $US15.36 billion to $US10.72 billion as commodity prices collapsed, forcing several mine closures.
As a result, Mr Kloppers did not escape pay-packet pain altogether. His annual cash award, which can be 160 per cent of base salary, was $US1.73 million, representing only 53 per cent of the $US3.2 million possible, reflecting the judgment that BHP's safety performance and adjusted earnings were below target.
In his last annual report before retirement, BHP chairman Don Argus said uncertainty remained about the rate of global economic growth.
His cautious outlook was echoed by Mr Kloppers. ''We do not expect a return to the same buoyant conditions that prevailed before the global financial crisis, or a return to record global growth rates within our forecasting horizon,'' he said.