BHP Slashes Incentive Payments After Falling Short on Performance Goals

Global mining behemoth BHP has announced a significant reduction in incentive pay for its employees worldwide, as reported by the Australian Financial Review (AFR). This decision arrives in the wake of the company's inability to achieve set performance objectives, leaving tens of thousands of its workers with a stark cut in their expected bonuses.

In the fiscal year 2023-24, workers at BHP were geared up to receive short-term incentive payouts pegged to their performance. However, the AFR noted that the miner has now decided to limit these to just 80% of the projected sums. This reduction translates into a tangible decrease in earnings, as for many BHP employees, incentives contribute about 15% of their yearly salaries.

The discontentment among the workforce was palpable as some reached out to the AFR, voicing concerns over continued hiring freezes across various company divisions. Such measures, they suggest, have made it difficult to deliver on targets, further complicated by what is perceived as excessively ambitious internal benchmarks.

The gravity of the cut is more pronounced in BHP's Queensland coal division. Employees in this sector will bear the brunt with a more severe cutback, receiving a mere 70% of the slated incentives. This comes on the heels of two successive downgrades in production forecasts and the tragic event of a worker's fatality at the Saraji coal mine earlier in January.

Financial pressures on BHP are heightened by legal challenges from Australia's Mining and Energy Union, which is pushing for equal pay for labour-hire workers in BHP's Queensland coal operations. Should the union's efforts be triumphant, BHP would face mounting costs.

In an earlier February statement, BHP disclosed that its half-year profit suffered due to a $2.5 billion impairment tied to its nickel operations in Western Australia. Concurrently, the company has been executing cost-reduction initiatives including the disbanding of some global corporate structures.

BHP's internal diversity goals, particularly its intention to achieve gender balance by 2025, have also stumbled. Despite not meeting its yearly 3% growth in female workforce participation, it's not all dire; BHP celebrated surpassing 40% female representation in its Chilean mining operations, significantly overtaking the national industry average.

As of yet, BHP has not responded to requests for comment regarding the reduction in employee incentives.