New CEO sets frugal agenda for BHP

BHP Billiton executives will work under a more frugal pay regime, after new chief executive Andrew Mackenzie reshuffled and redesigned the company's leadership ranks.

The BHP board has used the management reshuffle - which included the demotion of petroleum chief Mike Yeager, ferrous boss Marcus Randolph and aluminium's Alberto Calderon from the company's top ranks - as an opportunity to wind back the level of remuneration being paid to top brass.

Mr Mackenzie is himself expected to earn about 25 per cent less than his predecessor, Marius Kloppers, in a reflection of the tougher times being felt across the mining industry and the broader economy.

Mr Mackenzie will also be paid a lower pension benefit, have a tighter cap on short-term bonuses, and his minimum shareholding requirements will also be tougher than those imposed on Mr Kloppers.

BHP said a higher proportion of Mr Mackenzie's package was linked to performance, and the company expects him to earn $US7.6 million a year if his targets are met.

When asked if the members of the reshuffled group management committee would also earn less than before, a BHP spokesman said: ''You would expect to see a not dissimilar reduction … the same concepts and philosophies that have gone into Andrew's package have gone into their packages, too.''

But remuneration for BHP's board of directors remains unchanged at this time.

Pru Bennett, a remuneration expert from BlackRock, said BHP's pay changes were part of a trend that had been under way for two years.

''There is definitely a trend around reducing executive remuneration and we are likely to see more of it, particularly when there is a change of CEO,'' Ms Bennett said.

''It's a combination of shareholder pressure, community pressure and also the general trend for companies to be reducing cost structures.'' The three departing executives, particularly Mr Randolph, were seen as Mr Mackenzie's main rivals for the top job at BHP.

Mr Randolph is unwell and not expected to return to work for several months, while Mr Calderon will briefly serve as an adviser to Mr Mackenzie but is expected to leave the company within coming years.

Herbert Smith Freehills lawyer Geoff Healy was the only hiring from outside the company, and will become BHP's chief legal counsel.