Interactive Investor

Rio Tinto shareholder revolt

6th May 2021 19:07

Jemma Jackson from interactive investor

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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.

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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