A majority of Rio Tinto’s shareholders rejected the global miner’s executive pay packages on Thursday, May 6, in a backlash over its destruction last year of ancient rock shelters in Western Australia.
Rio Tinto blasted 46,000-year-old rock shelters at Juukan Gorge last May to expand an iron ore mine, sparking condemnation from investors, politicians, its own staff, and the wider community.
Following the company’s Australian annual meeting, Rio Tinto said more than 60% of votes cast by investors in the Anglo-Australian dual-listed company were against its remuneration report.
Although shareholders rejected the proposed payouts, the vote was advisory only, and will not impact the $55 million earmarked in salary and bonuses for the company’s top 14 executives, as booked in the company’s annual report.
“This constitutes a ‘first strike,'” the company said.
In Australia, if a company’s executive pay package is rejected two years in a row, the board could face a vote to be removed.
“The Board acknowledges that the executive pay outcomes in relation to the tragic events at Juukan Gorge are sensitive and contentious issues,” it said in a statement with the vote results.
Widespread anger at the destruction of the caves cost the jobs of its chief executive Jean-Sébastien Jacques and two other senior leaders and led chairman Simon Thompson to flag he would step down in 2022.
Proxy advisers CGI Glass Lewis, Institutional Shareholder Services (ISS), and the Australian Council of Superannuation Investors (ACSI) recommended voting against the pay report, all raising concern about the long-term incentives Jacques was allowed to hold on to after the caves destruction.
Jacques kept 5.7 million pounds of his long-term incentive award, losing only 1 million pounds as a result of the cave blasts.
CGI Glass Lewis said it had “severe reservations with the size of the awards vesting” for Jacques under his 2016 long-term incentives plan.
Rio chairman Thompson told shareholders the company had withheld as much as the board considered “legally defensible” under the terms in place in 2016 when the incentives were set and also took into account that Jacques was losing his job.
Investors overwhelmingly approved a new policy which allows directors to claw back long-term awards for a situation like the Juukan Gorge disaster, where actions were not illegal or fraudulent but damaged the company’s reputation and its social license.
In a further sign of shareholder discontent, 26% of votes were against the reelection of Megan Clark, who heads the board’s sustainability committee. That compared with less than 5% opposition to other directors’ reelection. – Rappler.com