A highly anticipated AGM of Rio Tinto's shareholders has seen votes cast overwhelmingly against the remuneration of the mining giant's former CEO, while a protest vote against the re-election of director Dr Megan Clark was heard loud and clear by the board.
In addition, the company will now be more transparent about its commitment to hitting key climate change targets after minority shareholders saw their requisitioned resolutions passed by nearly every voter at the meeting.
Shareholders have voted overwhelmingly against the remuneration of mining giant Rio Tinto's (ASX: RIO) former CEO in the company's first shareholder meeting since the much maligned destruction of the Juukan Gorge Indigenous heritage site.
The revolt is in response to a lucrative exit package awarded to ex-CEO of RIO Jean-Sebastien Jacques, who stepped down last year after accepting responsibility for the destruction of the 460,000-year-old cave in the Pilbara region.
More than 60 per cent voted against approving the directors' remuneration report yesterday which would have seen Jacques receive a $13 million pay package for the 2020 financial year.
Because more than 25 per cent of votes were cast against the remuneration report, Rio Tinto has been hit with a "first strike".
In response to the shareholder outcry, the Rio Board has asked the Remuneration Committee to reflect on the AGM result.
"The board understands the voting outcome in relation to the 2020 Remuneration Report was a response to the extent of the malus adjustment applied to unvested LTIP awards of the former chief executive, chief executive iron ore and group executive corporate relations," the board said.
"During the course of 2021, the Remuneration Committee will engage further with shareholders in response to the 2020 Remuneration Report vote.
"The Committee will take time to reflect further on the feedback already received and on any new input obtained from this subsequent engagement, in particular as it considers the implementation of the new remuneration policy."
Shareholder disapproval of Megan Clark heard loud and clear
Shareholders were also asked to vote on the re-election of a number of Rio Tinto's directors, and Dr Megan Clark received the biggest protest vote of the lot.
More than 26 per cent voted against her re-election - a result of her helming the company's sustainability committee at the time of the Juukan Gorge destruction.
While her re-election was passed as an ordinary resolution with 73.52 per cent of votes passed in her favour, the board has recognised the protest vote.
"Rio Tinto acknowledges that the reduced vote for Dr Clark's re-election compared to previous years reflects the fact that, as chair of the Sustainability Committee at the time that the rock shelters at Juukan Gorge were destroyed, Dr Clark shares accountability for the failings in the areas of communities and social performance that led to those events occurring," the board said.
"In light of the support provided by almost 75 per cent of shareholders, Dr Clark and the board have carefully weighed the need for accountability for the events at Juukan Gorge against the significant contribution, experience and continuity that Dr Clark brings to the board and the group's relationship with Traditional Owners, and concluded that she should remain on the board in order to provide stability at this important time for Rio Tinto."
The board said Clark was continuing to engage with Traditional Owners in Western Australia.
"Importantly, Dr Clark is playing an active and important role on behalf of the board in engaging with the Traditional Owners of the lands where the company operates in Western Australia, including attending engagements with stakeholders," the board said.
"As an Australian resident, Dr Clark is committed to attending several such meetings with Traditional Owners during 2021.
"As such, she is playing a key role for Rio Tinto in rebuilding trust and in ensuring that communities have a clear channel to escalate any concerns on the ground directly to the board."
In an address to shareholders at the AGM chief executive Jakob Stausholm described the destruction of the Juukan Gorge rock shelters as a "terrible chapter in our history".
"Perhaps this cannot be said enough, so let me say it again. The rock shelters at Juukan Gorge should not have been touched. We are so sorry," Stausholm said.
"The work we have to do at Juukan Gorge is beyond the remediation of the site. I know that 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."
Climate change resolutions overwhelmingly passed
Two resolutions requisitioned by minority shareholders that regard Rio Tinto's commitment to positive environmental changes were also passed overwhelmingly by shareholders at the AGM yesterday.
They refer to Rio's disclosure of how it is meeting short, medium, and long-term targets for its greenhouse gas emissions, as well as making the company enhance its annual review of industry associations to ensure that it identifies areas of inconsistency with the Paris climate Agreement.
The second requisitioned resolution requests that the company suspend membership, for a period deemed suitable by the board, where an industry association's record of advocacy is, on balance, inconsistent with the Paris Agreement's goals.
Both resolutions were passed, with 99 per cent of votes cast in favour of the climate-focussed declarations.
Shares in RIO are up 0.65 per cent to $126.58 per share at 11.52am AEST.Never miss a news update, subscribe here. Follow us on LinkedIn, Instagram and Twitter.
Business News Australia
Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support