Rio Tinto will push ahead with plans to hand its former chief executive a 20% pay hike despite shareholders voting overwhelmingly to reject the deal.
Investors are unhappy at the payout for Jean-Sebastien Jacques, who quit following a scandal over the company’s destruction of a sacred Aboriginal site in Australia.
More than 60% of shareholders voted against two resolutions on the company’s remuneration report. However, the vote is just advisory and does not bind Rio to make any changes.
The miner was forced to apologise last year after it blew up a 46,000-year-old site when it was expanding a nearby iron mine.
The blasting was legal under rules which have since been placed under review by the Australian government.
A resulting scandal claimed the jobs of several senior members of Rio Tinto, including Mr Jacques, the chief executive, who left last September.
Yet Mr Jacques was still handed a 20% rise in his pay packet in the company’s remuneration report, due to long-term incentive schemes dating back to his appointment to the top job in 2016.
It meant that despite being stripped of millions of pounds worth of performance bonuses, his pay reached £7.2 million last year.
Luke Hildyard, director of the High Pay Centre, said that the case reads like an experiment in what corporations and bosses can get away with.
“When a company literally blows up priceless archaeological monuments … and yet the CEO still walks away with a multimillion dollar bonus, it illustrates the inadequacy of clawback provisions and shareholder powers of oversight supposedly in place to hold big businesses to account,” he said.
“Questions about much stronger provisions around the legal responsibilities and potential sanctions applicable to directors of companies like Rio Tinto, protections for sites of historical or environmental performance and the governance and stewardship requirements for major corporations will all become a lot more pressing as a result of this saga.”
Shares in Rio Tinto are listed in both the UK and Australia, and at two separate meetings shareholders voted against the report.
In London, shareholders voted 55% against the pay report, while in Australia, where fewer shares are listed, the vote against was 84% against the pay deal.
“The board acknowledges that the executive pay outcomes in relation to the tragic events at Juukan Gorge are sensitive and contentious issues,” Rio Tinto said in a statement to investors on Thursday.
The board said it “has engaged extensively with shareholders and proxy advisors to explain the rationale for the decisions reached on executive pay and to listen to feedback.”
It said that a new pay policy, which was passed by shareholders, will strengthen the company’s ability to exercise discretion over the incentive programmes if there are further major blows to the miner’s reputation.