Rio Tinto avoids large pay vote rebellion

6 May 2016

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Mining group, Rio Tinto, which is dual-listed in the UK and Australia, avoided a large scale rebellion over its remuneration report although there was a higher level of dissension than in previous years. The voting results were announced following the Australian AGM - Rio Tinto plc held its AGM last month.

The resolutions - one is put forward to conform to Australian law and the other for UK law - to approve the remuneration report were passed with 87% approval compared with around 94% approval in the previous two years.

Manifest had given Rio Tinto a Grade E in its total remuneration assessment. Despite the losses incurred in 2015 there had been a high bonus payout to the chief executive Samuel Walsh – 30% of the annual bonus is based on individual performance while the the metrics provided under the bonus scheme are vague and not quantifiable. Walsh – whose total remuneration amounted to £4.3m – received 61.3% of his salary in benefits last year. Manifest’s analysis also found there was a high bonus cap and high upper limit for the LTIP which created unequal internal pay between Walsh and other employees.

Meanwhile a shareholder resolution, which had received management backing, calling on the company to provide more detailed annual reporting on its carbon emissions and management of emissions; its low-carbon energy research and development and investment strategies; relevant strategic key performance indicators and executive incentives; and public policy positions relating to climate change was overwhelmingly passed. Rio Tinto was given a grade B in Manifest's analysis of its sustainability reporting. The company currently discloses 10 years worth of carbon emissions data, but not information on emissions relating to its suppliers, materials sourcing, transport in non-company-owned vehicles or outsourced activities.

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