Rio Tinto rocked by revolt over disgraced former boss’s £7.2m pay as boardrooms feel the full force of a new shareholder spring
Rio Tinto was rocked by a massive revolt over the pay handed to its disgraced former boss as boardrooms felt the full force of a new shareholder spring.
On a day of investor anger, more than 60 per cent of votes at the mining giant’s AGM were cast against the remuneration report in the biggest rebellion of the year so far.
The backlash was echoed elsewhere – including in votes at BAE Systems and Indivior – amid a wave of criticism over corporate excess in the wake of the Covid-19 pandemic that has devastated lives and livelihoods.
Disgraced: Rio Tinto ousted boss Jean-Sebastien Jacques last year amid an outcry over the destruction of a sacred Aboriginal site in Western Australia
It has prompted talk of a new ‘shareholder spring’ of bruising encounters similar to those in 2012.
Russ Mould, investment director at AJ Bell, said: ‘Shareholders, public and private, continue to take a tougher line on boardroom behaviour.’
And now backlash is spreading
Astrazeneca, Cineworld and Ocado look likely to be caught up in the shareholder spring as the backlash over fat cat pay intensifies.
The companies are due to hold their annual general meetings next week, with Astra first on Tuesday.
The drugs giant has been praised for rolling out a Covid-19 vaccine at no profit but it is under fire for a ‘wrong and ill-judged’ increase in pay to chief executive Pascal Soriot.
Under a long-term bonus plan, the Frenchman, 61, could soon get up to 650 per cent of his £1.3million salary, rather than 550 per cent – taking the maximum payout from £7.2million to £8.5million.
Neville White, of Astra shareholder EdenTree Investment Management, said the package ‘tarnished’ the company’s pandemic achievements.
City stalwart Legal & General, meanwhile, waded into the pay row at Cineworld, saying it would vote against the re-election of board members including chairman Alicja Kornasiewicz because of its concerns.
And advisory group Pirc has branded Ocado boss Tim Steiner’s £7million pay packet ‘excessive and unacceptable’ and urged shareholders to rebel. Fellow adviser Glass Lewis also said executives would receive ‘extremely large payouts’ regardless of performance.
Rio Tinto ousted boss Jean-Sebastien Jacques last year amid an outcry over the destruction of a sacred Aboriginal site in Western Australia.
He was stripped of bonuses worth £2.7million before leaving but still saw his total pay rise 20 per cent to £7.2million – the biggest package he received as chief executive.
The 49-year-old is in line to collect a further £1.1million ‘golden goodbye’ this year after leaving the company on January 1.
And he was allowed to keep shares awarded under a long-term bonus plan worth £27million.
The pay deal prompted outrage among investors, with less than 40 per cent of votes in favour of the pay report at its twin AGMs in London and Perth.
The scale of the rebellion suggested big battalion investors had joined forces with private shareholders to voice their anger.
Although to vote was non-binding, analysts said it was a wake-up call for the board, as well as for other firms facing growing demands for action on issues including pay, climate change and corporate governance.
Justin Urquhart Stewart, co-founder of investment manager 7IM, said: ‘Previously you would find it was just private investors who are the ones to rebel, while institutions wanted a quiet life.
‘But that theme is changing and now environmental, social and governance (ESG) issues have moved from being a nice-to-have to something that clients are looking for.’
Rio provoked outrage when it blew up two 46,000-year-old rock shelters in Juukan Gorge to expand an iron ore mine last May.
The disaster, which earned it the nickname ‘Rio TNT’, prompted an Australian parliamentary inquiry.
Jacques stepped down ‘by mutual consent’ while chairman Simon Thompson is due to depart within the next year.
Head of corporate relations Simone Niven and head of iron ore Chris Salisbury were also ousted. Shareholders in Perth, who stood up to question Thompson and the board, referred to the Juukan blast as a ‘mess’ and a ‘disaster’.
Thompson told investors at the AGM that he was ‘ultimately accountable’ for the rock shelter scandal.
He defended the company’s decision not to strip the executives of more pay and insisted it was ‘appropriate’ given they were also ‘forfeiting their jobs’.
Bloody noses for Indivior and BAE
BAE Systems and Indivior were given bloody noses by investors yesterday.
Pharma group Indivior suffered a 38.3 per cent vote against its pay report at its annual general meeting, while the defence giant’s was opposed by 23.4 per cent.
Indivior was criticised for letting disgraced former boss Shaun Thaxter keep 1.1m shares potentially worth £1.7million.
The 53-year-old was handed a six-month jail sentence last year after pleading guilty to sharing misleading safety information about anti-opioid addiction drug Suboxone.
Meanwhile, BAE has attracted criticism for handing a £2million share award and pay rise to boss Charles Woodburn, to stop the 50-year-old being poached.
He can receive the award if he stays at BAE for three years. But advisory group ISS said Woodburn’s award was ‘well outside market norms’.