OREANDA-NEWS. August 29, 2013. BHP Billiton announced the vesting outcomes for the five year Long Term Incentive Plan (LTIP) awards granted in 2008. The LTIP applies to members of the Group Management Committee (GMC).

For awards to vest in full, BHP Billiton must deliver a US dollar total shareholder return (TSR) that exceeds the TSR of a group of peer companies by an average of 5.5 per cent per year for five years, or 30.7 per cent in total compounded over the five year performance period. The performance period ended on 30 June 2013.

The weighted average TSR for peer companies was negative 44.0 per cent which compared to BHP Billiton’s TSR of negative 9.4 per cent. As a result, BHP Billiton outperformed its peer companies by 34.6 per cent, and therefore met the requisite performance hurdle for full vesting.

The rules of the LTIP give the Remuneration Committee of the Board discretion to reduce the number of awards that will vest, notwithstanding the fact that the performance hurdle for full vesting has been met.

This year the Committee, with the support of the Board, exercised that discretion and reduced vesting by 35 per cent for all current and former participating GMC members. Accordingly, 35 per cent of awards will not vest and will instead lapse.

In doing so, the Committee took into account a range of factors, including the negative TSR over the five year performance period which shareholders have experienced. While the Committee recognised that the TSR performance was delivered in a difficult business environment, it also felt that more closely aligning the experience of shareholders and executives was important. As always, the Committee also looked at the total remuneration for executives.

The approach adopted by the Committee is consistent with the downwards re-basing of executive remuneration that was undertaken when Andrew Mackenzie was appointed Chief Executive Officer earlier this year, the outcome of which was reported at that time.