What do you pay the CEO in a year where your company has posted a loss of more than $8 billion and been involved in a very public disaster like the fatal Samarco dam collapse in Brazil?
The Jac Nasser-chaired BHP Billiton flagged its solution a few weeks back when it said chief executive Andrew Mackenzie would not be getting his short or long-term bonus for the financial year just ended.
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"The tailings dam failure at Samarco in November 2015 was a key consideration, along with the ongoing decline in commodity markets," said a spokesman at the time.
On Wednesday, BHP's annual report showed Mackenzie's "actual total remuneration" for the 2016 financial year was $US2.24 million – a fraction of the $US8 million he received just two years earlier.
![The Samarco disaster left several Brazilian towns in ruins.](/web/20161027024435im_/http://www.theage.com.au/content/dam/images/g/n/n/b/1/b/image.related.articleLeadwide.620x349.grky8b.png/1474462057551.jpg)
"The relatively lower actual pay for FY2016 is aligned with the company's performance," said the company's remuneration committee chairwoman, Carolyn Hewson.
"In summary, Mr Mackenzie did not receive any performance-related pay in FY2016 – short -term and long-term incentives were both zero."
Her report said that Mackenzie had recommended that a "zero" short-term bonus would be an "appropriate alignment of his short-term remuneration outcome ... with the shareholder experience and the interests of the company's other stakeholders".
But that is contradicted by the remuneration details BHP has to report to the sharemarket. These numbers state that the value of Mackenzie's stock incentives received in previous years – totalling $US2.8 million – pushed his total remuneration for the year to $US5.9 million.
![How much am I getting? BHP chief executive Andrew Mackenzie.](/web/20161027024435im_/http://www.theage.com.au/content/dam/images/g/i/r/j/5/9/image.related.articleLeadwide.620x349.grky8b.png/1474462057551.jpg)
This is just $US1 million less than what he received in 2015.
It's not BHP's preferred number for a few reasons. As the company would point out, the figure represents a theoretical calculation of what the incentive scheme is worth, at its inception, spread over the life of the scheme.
![Illustration: John Shakespeare](/web/20161027024435im_/http://www.theage.com.au/content/dam/images/g/r/l/h/4/x/image.related.articleLeadNarrow.300x0.grky8b.png/1474462057551.jpg)
In other words, it does not reflect whether these $US2.8 million will end up in Mackenzie's pocket. That would depend on whether he hits required performance hurdles, and what the share price will be when these shares vest.
But as shown by his predecessor, Marius Kloppers, this uncertainty is not always a disadvantage.
![Carolyn Hewson has released the company's remuneration report.](/web/20161027024435im_/http://www.theage.com.au/content/dam/images/g/k/6/v/f/m/image.related.articleLeadNarrow.300x0.grky8b.png/1474462057551.jpg)
According to reports from Kloppers' reign, he received remuneration totalling $US11.6 million in 2010, and $US9.8 million the following year. That was topped off by a $75 million departure in 2013.
The dust has obviously settled a bit since Kloppers' departure and the latest annual report reveals that he actually earned more than $US30 million over the two years – a gap of some $US10 million.
The pay irregularities did not go unnoticed by corporate governance group ISS, which reported that the way large companies calculated long-term bonuses was resulting in "materially higher payouts" to some executives than what was suggested by the "sticker price" of their award.
It singled out Kloppers and ANZ chief executive Mike Smith as benefiting the most from the system at that time.
"In some cases, the aggregate value of awards at the point of vesting are worth millions of dollars more than initially intended," ISS said.
Landed gents
There was no Bondi cigar for James Packer's sometime mate, property developer Theo Onisferou.
He lost out in the bidding for a prized Bondi beach site at 128 Campbell Parade at the Colliers auction on Wednesday, with the prize going to developer Allen Linz's Rebel Property Group for $19.1 million.
It will add to Linz's already large footprint in the area, which includes the Pacific Bondi apartments, formerly the Swiss Grand Hotel.
Onisferou fared no better on Saturday at a more modest auction for a single-bedroom flat on Queen Street, Woollahra – he was pictured elbow-to-elbow with Bruce McWilliam, who is one of Kerry Stokes' top lieutenants at Seven Group, and firm buddy of Malcolm Turnbull.
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