BHP BHP Group Limited

By Alex MacDonald 

LONDON -- BHP Billiton Ltd.'s board has scrapped Chief Executive Andrew Mackenzie's bonus after a mining-dam failure in Brazil killed 19 people and contributed to the company's worst annual loss ever, the company said Tuesday.

The bonuses of other senior BHP executives also will be cut by varying amounts, said a spokesman for the world's largest mining company by market value. The spokesman said Mr. Mackenzie won't be paid his short-term incentive bonus for the year ended June 30 but didn't specify whether Mr. Mackenzie's other benefits such as his pension would be affected.

The details of senior management's compensation package will be unveiled in full when BHP's annual report is published in a couple of weeks time.

Mr. Mackenzie earned a salary of $1.7 million last year, an amount that has been frozen since he took over as CEO in 2013. Last year BHP paid $2.3 million to Mr. Mackenzie as a bonus, half in cash and half in deferred shares due to vest in fiscal 2018.

The deadly dam burst on Nov. 5 ranks among Brazil's worst environmental disasters, destroying villages and polluting more than 400 miles of rivers. Brazilian federal prosecutors filed a civil case against Vale, BHP Billiton and Samarco Mineração SA in May calling for 155 billion reais ($48 billion) in damages, comparing the fallout from Fundao's collapse to that of BP PLC's Deepwater Horizon oil spill in 2010 in the Gulf of Mexico.

Mr. MacKenzie's bonus was scrapped after the company reported a net loss of $6.39 billion for the 12 months through June. This included $2.2 billion in impairments from the dam burst. The net loss also includes $4.9 billion in impairments related to its U.S. oil and gas business and slumping commodity prices.

"Having considered all these elements holistically, the board and committee determined that the [bonus] outcome for the CEO for FY2016 should be zero," said a company spokesman.

BHP said the decision is in keeping with Mr. Mackenzie's own recommendation and follows similar action taken by the board in previous years.

Executive compensation has been in the crosshairs at resources companies after two years of slumping commodity prices and shriveled profits.

At British oil giant BP PLC, shareholders in April rejected a roughly 20% increase in the compensation package of Chief Executive Bob Dudley for 2015, a period during which the company lost $5.2 billion. That vote was nonbinding.

Royal Dutch Shell PLC Chief Executive Ben van Beurden took an 8% pay cut in 2015, with his direct compensation dropping to $5.61 million.

Write to Alex MacDonald at alex.macdonald@wsj.com

(END) Dow Jones Newswires

August 30, 2016 14:22 ET (18:22 GMT)

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