Rio Tinto shareholder revolt
interactive investor comments on rebellion over executive pay.
6th May 2021 19:07
by Jemma Jackson from interactive investor
interactive investor comments on rebellion over executive pay.
Lee Wild, Head of Equity Strategy, interactive investor, says: “Company AGMs can often be a box-ticking exercise, or at least an event where all resolutions are waved through with very few, if any, dissentions. To see more than 60% of shareholders rebel against Rio Tinto (LSE:RIO)’s boardroom pay policy is a real eye-opener. Such a significant display of disapproval is evidence that shareholders can make themselves heard and shock companies into action.
“Rio has been widely criticised for blowing up a 46,000-year-old Aboriginal heritage site to expand the Pilbara iron ore mine in Western Australia. That mistake cost CEO Jean-Sébastien Jacques his job, but the £7.2 million he was paid last year, a 20% increase on the year before, will not have sat well with investors.
“There is little doubt that Rio now understands the full strength of feeling against both the behaviour of its executives and, in this case, both an excessive and insensitive pay policy.”
interactive investor polled 1,101 of website visitors on behalf of the Law Commission in July 2020 and found that more than six in 10 (62%) say they rarely vote at AGMs, if ever.
But executive pay scored highest on the voting agenda for 22% of respondents. As talk of action on ESG issues grows, interactive investor also found one in four (25%) customers were primarily interested in voting on resolutions about corporate governance and on environmental or social issues.
Just over a fifth of customers (21%) said that they voted on company resolutions at least sometimes, and only 6% say they always do. Almost a third of respondents (30%) said that they would in fact be more likely to invest in a company if they felt they could affect the way it is run through exercising their right to vote.
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