By Nick Toscano
More than half of Rio Tinto’s shareholders have revolted against its decision to award former CEO Jean-Sebastien Jacques a lucrative exit package despite the destruction of the 46,000-year-old Juukan Gorge rock shelters occurring under his watch.
Mr Jacques and two of his deputies resigned from the world’s second-largest mining company last year after the destruction of the culturally significant Aboriginal rock shelters left traditional owners devastated, sparked a public outcry and triggered a federal parliamentary inquiry into the disaster.
Former Rio Tinto CEO Jean-Sebastien Jacques resigned following the Juukan Gorge cave disaster. Credit: Bloomberg
Despite being stripped of some of their bonuses for their role in the company’s failures, Mr Jacques’s remuneration was nearly $13 million in 2020, while proxy advisers estimated he still held tens of millions of dollars’ worth of Rio shares upon his departure.
More than 60 per cent of the dual-listed Rio Tinto’s shareholders voted down the company’s remuneration report at its annual investor meetings in recent weeks, voting results showed on Thursday.
Prominent proxy advisers including Institutional Shareholder Services (ISS) and CGI Glass Lewis – firms that advise large shareholders on how to vote on executive pay and other corporate matters – had recommended their clients vote against the report.
“We have severe reservations with the size of the awards vesting for former chief executive Jean-Sebastien Jacques under his 2016 long-term incentive plan in light of the events in the Juukan Gorge in the past fiscal year, and are concerned with the opacity of disclosure on the decision-making related to remuneration sanctions made as a result,” CGI said in its report.
“As such, we are unable to recommend shareholders support this proposal.”
Rio Tinto has apologised and acknowledged multiple failures in its communication with the traditional owners that could have prevented the debacle. Mr Stausholm, Rio’s new CEO, has made restoring trust one of his top priorities.
However, Sam Laidlaw, the chair of Rio’s remuneration committee, on Thursday defended the executives’ payouts, saying the board had not been in a position to legally terminate the three former executives and their outstanding remuneration.
“The penalties applied to the responsible executives were, in the best view of the board, the most that could durably be applied and legally defended in light of the extent of the executives’ ultimately accountability for Juukan Gorge,” Mr Laidlaw said.
Although Rio’s Juukan Gorge blast was legally sanctioned, it went against the wishes of the Puutu Kunti Kurrama and Pinikura people, who said they were not made aware of Rio’s plan to proceed with the destruction until it was too late to call it off. The disaster has prompted Rio’s board and senior management to pursue sweeping improvements to the company’s approach to cultural heritage and rebuild meaningful relationships with Australian community stakeholders including First Nations peoples.
Rio Tinto’s senior Australian director, Simon McKeon, acknowledged the company “did not have the right relationship with Australia 12 months ago”, despite the country accounting for the vast majority of Rio’s earnings. He said it had been a year of “enormous learning” for Rio and implored Australian shareholders to judge the company in another year’s time.
Ancient artifacts unearthed at Juukan Gorge – including grinding and pounding stones, a 28,000-year-old marsupial bone sharpened into a tool and a 4000-year-old belt made of plaited human hair with DNA linking directly to today’s PKKP people – had placed the caves among the most significant archaeological research sites in Australia.
Rio chairman Simon Thompson, who will step down from the company within 12 months, has vowed to use his remaining time at the miner overseeing the rollout of critical reforms to ensure a disaster like the destruction of the Juukan Gorge rock shelters never happens again.
“I feel confident that we have the right people in the right jobs to deliver our strategy and to implement all the necessary changes in our risk management, governance, work culture and relationships, following the tragedy at Juukan Gorge,” Mr Thompson said.
Rio Tinto is in talks with the PKKP about the appropriate remedy for the site’s loss, but Mr Thompson said the traditional owners had asked that those discussions remain confidential.
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