Rio Tinto addresses executive pay structure

Simon Thompson (Image: Rio Tinto)

Rio Tinto plc has held its annual general meeting (AGM) at its London headquarters, with chief executive Jean-Sébastien Jacques and chairman Simon Thompson delivering speeches to attendees.

The Rio Tinto Ltd AGM will take place in Melbourne on May 2.

Topics broached by the speakers included impressive year-over-year earnings boost of 69 per cent to $US8.6 billion (with shareholder returns of $US9.7 billion); the successes of Rio’s ‘value-over-volume’ business model; an internal safety award for the Oyu Tolgoi project in Mongolia; the company’s 145th anniversary; and an important elaboration on the workings of the company’s executive pay structure, particularly in light of the deaths of two employees in 2017 — Albert Lozano in the US and Paul Fogarty in Western Australia.

Under UK law, Rio Tinto requires shareholder approval for its remuneration policy at least every three years, and 2018 is one of those years. The company has received criticism for its award of executive bonuses in light of two site fatalities in 2017.

Though a downward adjustment was made for Jacques and chief financial officer Chris Lynch as a result of the aforementioned fatalities, stressed Thompson, following recent advice from consultants new measures are to be  introduced.

“As a result of the feedback we obtained during the consultations, we have increased the focus on fatalities by introducing a new binary measure into our Short Term Incentive Plan,” explained Thompson. “Should there be a single fatality anywhere in the group, there will be zero payment in relation to this component of the plan.”

“In 2018, our aim is clear: no fatalities,” said Jacques in his speech.

“Critical risk management is now embedded across the business to help us eliminate fatalities. We continue to focus on reducing injuries, improving process safety and supporting mental health.”

Jacques went on to discuss the Oyu Tolgoi project, which contributed to a 49 per cent boost in capital copper expenditure as the project’s prominence increased.

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