Rio Tinto optimistic amid stakeholder backlash

Climate action

Rio Tinto has held its 2021 annual general meeting in a grim light following last year’s destruction of Juukan Gorge in Western Australia.

All speakers – chairman Simon Thompson, chief executive Jakob Stausholm, and remuneration committee chair Sam Laidlaw – began their speeches with an apology and acknowledgement of the events at Juukan Gorge.

To open the AGM, Rio Tinto displayed a video montage of staff from across departments discussing the Juukan Gorge disaster, some of them visibly distressed by the topic.

“We need to go and spend time with the Traditional Owners, understand what they want to achieve and how we can work together to deliver lasting and enduring relationships that’ll bring value to them and value to their communities,” managing director Colin Mackey said.

Despite the company’s sorrow, shareholders voted strongly against the approval of the directors’ remuneration report.

Over 60 per cent of the 1.16 million votes casted had denied the remuneration report, which would have allowed for large bonuses to be paid to executives.

Laidlaw acknowledged the dissatisfaction showed by shareholders towards the company’s efforts in punishing those in charge of the Juukan Gorge disaster.

“We, as your board, understand that, given the circumstances which led to the destruction of the rock shelters, executive pay outcomes are a sensitive and contentious point for many stakeholders,” Laidlaw said.

“The loss of cultural heritage was tragic, and many have understandably sought to allocate appropriate accountability and responsibility.”

Australian law dictates that two consecutive years of rejected executive pay packages can lead to a vote to remove the board.

As the situation at Rio stands, however, the board is not legally obliged to be removed just yet.

In any case, former chief executive officer Jean-Sébastien Jacques has already left his position, and Thompson has announced his departure effective in 2022.

In response to the Juukan Gorge destruction, the company’s remuneration policy updated its short-term incentive plans in 2020, reducing individual performance benefits from 30 per cent down to 15 per cent.

The 15 per cent has now been reallocated to address ESG (environmental, social, governance) issues.

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