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'Rio TNT' detonates investor rage over a £7.2m bonus for boss who oversaw destruction of a sacred site

This Is Money logo This Is Money 04/05/2021 Francesca Washtell For The Daily Mail
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Rio Tinto is bracing for a shareholder rebellion tomorrow after handing £7.2million to its boss who oversaw the destruction of a sacred site.

A huge row is brewing over the decision to grant the windfall to former chief executive Jean-Sebastien Jacques – despite him being ousted after the company blew up two 46,000-year-old rock shelters.

Rio is one of several major London-listed firms preparing for a showdown with investors in the coming weeks over issues including executive pay, corporate governance and climate change.

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It has prompted speculation that the 2021 AGM season could bring bruising encounters like that seen in 2012.

Laith Khalaf, analyst at AJ Bell, said: 'Investors are putting companies under the microscope on environmental, social and governance [ESG] issues, so we could be set for another 'shareholder spring'. 

I think rebellions are increasingly regular occurrences as ESG concerns have risen up the priority list for investors, and institutions flex their muscles to influence boardrooms.'

Among those likely to suffer revolts are BAE Systems and Just Eat Takeaway. Others including Foxtons, Pearson and Glencore have already suffered a bloody nose at their annual meetings.

Shareholder advisory groups Glass Lewis, Pirc and Institutional Shareholder Services (ISS) urged investors to vote down Rio's 2020 pay report at its annual UK meeting. 

The meeting was held last month but the results have not been released as Rio is also listed in Australia.

The results from both its UK and Australian annual meetings will be published after the Australian event tomorrow.

Rio provoked global outrage when it destroyed the caves in Juukan Gorge, Australia last May to expand an iron ore mine.

The disaster, which earned it the nickname 'Rio TNT', prompted an Australian parliamentary inquiry and led to a management clear-out.

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But it was also driven by a huge backlash from heavyweight investors, including Legal & General and Australian superannuation funds.

Jacques and two other executives resigned last September.

Jacques had £2.7million deducted from his package – £1million of which was from long-term performance share awards and the rest from a cash bonus. But he still holds shares worth £27million.

ISS claims Rio should have used its power to claw back more from Jacques by invoking a 2018 policy that said pay can be docked following a 'catastrophic environmental event'.

BAE Systems also faces a shareholder revolt tomorrow – and the contentious vote will be linked to Rio.

The defence giant faces push-back over a £2million bonus for chief executive Charles Woodburn – for staying instead of joining Rio. All three major proxy advisers have come out against the proposal.

BAE said the pay was justified in part because it had been a difficult hiring process the last time it hired a chief executive.

Luke Hildyard, executive director at the High Pay Centre, said: 'It's a huge sum required to stay. One would expect leading a renowned international company like BAE and the responsibility and prestige that brings would be reward enough.'

Just Eat Takeaway could also come under fire. Pirc has told shareholders to consider opposing the most recent pay report. It says that the policies and targets the company uses makes it too hard to tell if bosses are receiving the appropriate pay.

Trading platform operator Plus500 had also been tipped to suffer a bruising revolt, with Pirc and ISS urging people to vote against potentially excessive pay for finance boss Elad Even-Chen, who stands to get a one-off bonus of £927,000.

Plus500 said 45 per cent of votes at the annual meeting were cast against the payout.


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