Rio Tinto shareholders reject former CEOâ€™s departure packagePublished by MAC on 2021-05-11
Source: Mining.com, The Guardian
In bid to stem anger.
A majority of Rio Tinto’s shareholders opposed the exit package handed to former chief executive Jean-Sébastien Jacques, ousted after the destruction of sacred rock shelters in Western Australia last year, Mining.com reported.
Executives at the company will now earn part of their pay based on the company’s compliance with environmental, social and governance issues.
Rio Tinto shareholders reject former CEO’s exit package
May 6, 2021
A majority of Rio Tinto’s (ASX, LON, NYSE: RIO) shareholders opposed on Thursday the exit package handed to former chief executive Jean-Sébastien Jacques, ousted after the destruction of sacred rock shelters in Western Australia last year.
More than 60% of the votes cast at the company’s annual meetings in London and Sydney were against its remuneration report, which showed Jacques received £7.2 million ($10m) in 2020, 20% more than a year earlier.
The sum was the highest earnings of his tenure, even without a bonus worth about £2.7 million ($3.8m) Jacques was denied as a punishment. In addition, the former CEO was allowed to keep shares awarded under a long-term incentive program worth an estimated £27 million ($38m).
The revolt on pay, though significant, is more of a statement than a verdict, as resolutions put before shareholders are advisory and not binding. In Australia, however, if a remuneration report draws more than 25% opposition for two years, the board in question has to put itself up for re-election.
Proxy advisers CGI Glass Lewis, Institutional Shareholder Services (ISS) and the Australian Council of Superannuation Investors (ACSI) were among the investors that voted against the pay report.
Time to “reflect” on “new input”
Rio shareholders also opposed the re-election of Megan Clark, chair of its sustainability committee, who the miner said would remain on the board to “provide stability” at a crucial time for the company.
In response to the failed resolutions, Rio said it would engage with shareholders and “reflect” on any “new input” while implementing the remuneration policy.
“The Board acknowledges that the executive pay outcomes in relation to the tragic events at Juukan Gorge are sensitive and contentious issues,” the company said in a statement with the vote results.
Chairman Simon Thompson, who is stepping down in 2022 over the caves blast scandal, 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.
Australia is currently considering new legislation to protect Aboriginal heritage sites.
The Australian Aboriginal group whose sacred rock shelters Rio Tinto destroyed last year recently rejected a plan by Andrew Forrest, the founder Fortescue Metals Group (ASX: FMG) to build dams along a river in the same region, citing the cultural damage it would cause.
Rio Tinto defends not stripping bonuses from executives who left amid Juukan Gorge outcry
In bid to stem shareholder anger, executive pay will now be partly based on compliance with environmental, social and governance issues.
6 May 2021
Rio Tinto has defended its decision not to strip long-term bonuses from three executives, including the chief executive, who left the company following a community and shareholder backlash after the miner blew up 46,00-year-old rock shelters at Juukan Gorge in the Pilbara.
In a bid to stem shareholder anger, executives at the company will now earn part of their pay based on the company’s compliance with environmental, social and governance issues.
The then chief executive, Jean-Sebastien Jacques, iron ore head, Chris Salisbury, and corporate affairs boss, Simone Niven, left the company in September.
On Thursday, Rio senior independent director Sam Laidlaw told a meeting of shareholders it was clear many stakeholders felt the financial penalties imposed on the three “were insufficient and that to rebuild relationships with traditional owners and other stakeholders, changes of leadership were required to move the company forward”.
He said the board had to balance a number of factors including that there “was no deliberate act or omission to act by the three executives” or “fraud, malfeasance or cover-up” against “a critical risk assessment failure going back many years” that could “be partially attributed to the three executives, who failed to recognise and remediate systemic weaknesses in the heritage risk management process” and “failed to apologise unconditionally, and respond with sufficient empathy towards the [traditional owners] PKKP and to recognise the gravity of what had happened within the wider societal context”.
The three executives forfeited their short-term bonuses – worth more than £1.7m in Jacques’s case – and an additional £1m was stripped from Jacques’s long-term bonus, Laidlaw said.
“Some have suggested that the failure of the three executives to respond appropriately should have resulted in the forfeiture of all outstanding remuneration,” he said.
“The board understands this sensitivity and deeply regrets the destruction of the rock shelters and the slow and initially insufficiently sensitive response of the company.
“Given these considerations, as well as various market precedents, the board concluded that it was not in a position to legally terminate the three executives for cause and forfeit all outstanding remuneration.
Rio Tinto chairman to stand down amid Juukan Gorge outcry
“Instead, it was more appropriate that the three executives’ employment be terminated by mutual agreement (acknowledging the potential adverse effect that this may have on their longer-term careers).”
Laidlaw said under Rio’s new pay arrangements, compliance with policy, environmental, social and governance measures would make up 15% of short-term bonuses. This will be achieved by reducing the proportion of bonuses linked to individual performance from 30% to 15%.
“We have also importantly introduced a specific ability to apply malus and clawback if in the future there is a material impact on our social licence to operate,” Laidlaw said.
Rio’s chairman, Simon Thompson, who did not stand for re-election at the meeting due to the Juukan Gorge scandal, and the new chief executive, Jakob Stausholm, again apologised for the decision to blow up one of Australia’s most significant archeological sites.
“The work we have to do at Juukan Gorge is beyond the remediation of the site,” Thompson said.
“We must work in partnership with traditional owners in Australia, Native Americans in the United States, and indigenous people in Canada and elsewhere, to secure our shared future.”
The company is under fire in the US over a joint copper mining venture with BHP, Resolution Copper, that is opposed by Apache people because the proposed mine sits on land containing hundreds of indigenous archaeological sites dating back 1,500 years. Transfer of the land to the joint venture has been paused by the Biden administration.
At the meeting, Rio also endorsed resolutions on climate put forward by two activist shareholder groups, Market Forces and the Australasian Centre for Corporate Responsibility, calling for it to set emissions targets consistent with the Paris agreement and for it to suspend membership of industry organisations that don’t have global heating policies consistent with Rio’s.
Asked if the endorsement of Market Forces’ resolution meant that the company recognised its current approach was not adequate, Thompson said: “Do we need to be more ambitious? I think the whole world needs to be more ambitious in tackling climate change.”
Australian Aboriginal group opposes billionaire miner's plan to build dams
March 29, 2021
The Australian Aboriginal group whose sacred rock shelters Rio Tinto destroyed last year rejected a plan by mining company Fortescue's founder Andrew Forrest to build dams along a river in the same region, citing the cultural damage it would cause.
Australia is considering new legislation to protect Aboriginal heritage after Rio (RIO.AX), in the process of building an iron ore mine, destroyed the 46,000-year-old sites in Western Australia state that had been among the oldest evidence of global human habitation.
Australia's richest man, Forrest, who is chairman and the largest shareholder of iron ore miner Fortescue Metals Group (FMG.AX), has applied to the state government to build a series of weirs, or low dams, along a river that runs through his cattle property to control water flow.
The plan has met with opposition from the Thalanyji traditional owners and was rejected by the minister for Aboriginal Affairs, a decision that Forrest is now appealing.
"The Puutu Kunti Kurrama and Pinikura Peoples strongly oppose the plan by Andrew Forrest to construct 10 weirs along the Ashburton River on his pastoral lease of Minderoo Station," the PKKP said in a statement issued on Sunday.
"What is not widely understood outside of Aboriginal history and cultural knowledge, is that any impact on a river downstream will have a devastating effect all along the river and forever change the entire ecosystem for the traditional owners upstream."
A spokesman said Forrest's philanthropic Minderoo Foundation had a strong desire "to work in a cooperative manner with the Thalanyji People... to preserve heritage at Minderoo Station and the natural landscape, whilst developing sustainable agriculture in a challenging environment currently experiencing prolonged drought conditions."
The Ashburton river and its tributaries flow through the terrain of many language groups in the Pilbara and include sacred sites, the PKKP said.
"The creation of the river by the Warlu (snake) means that it must be free to flow, and the fish and eels can travel along it. The Creation stories must not be broken, and the water flow must not be blocked or the Spirit of the Warlu will affect all people along this river," the PKKP said, explaining their beliefs.