Rio Tinto’s former chief received pay rise despite cave blasts scandal

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Rio Tinto’s former chief executive Jean-Sébastien Jacques received a pay rise last year despite the destruction of two 46,000-year-old Aboriginal rock shelters that caused an international outcry and forced him to stand down.

Jacques’ total remuneration rose 20 per cent to £7.2m in the 12 months to the end of December, even though the blasting of the Juukan Gorge caves cost the French executive performance bonuses worth an estimated £2.7m

The increase in his annual pay was driven by a surge in the value of unvested shares awarded in 2016 when Jacques took the helm of the Anglo-Australian company.

Rio, the world’s biggest producer of iron ore, had a record-breaking year due to red hot Chinese demand for the steelmaking ingredient. The company last week announced the largest dividend in its history.

Rio’s annual report, published on Monday, also disclosed that two other executives who left the company on December 31 in the wake of the Juukan Gorge debacle — Simone Niven, head of corporate relations, and Chris Salisbury, head of iron ore — were awarded termination benefits worth $1m and $1.3m, respectively.

The departure of Jacques and his two lieutenants was announced in September after investors demanded tougher action over the blasts. Rio had initially said they should keep their jobs but lose several millions of pounds in bonus payments.

Simon Thompson, Rio’s chairman, said the group’s financial performance in 2020 had been overshadowed by the destruction of the ancient site. “We fell well short of our values as a company and breached the trust placed in us,” he said.

The increase in Jacques’ pay drew strong criticism, with the Australasian Centre for Corporate Responsibility arguing he should not be rewarded for presiding over the scandal.

“The decision to destroy the Juukan Gorge caves was morally repugnant and financially stupid. It has already cost the company millions, and the true cost won’t be known for years to come,” said James Fitzgerald, strategy lead of ACCR. “The payout casts doubt over Rio Tinto’s various expressions of sorrow and regret.”

Rio’s stock price has risen almost 200 per cent over the past five years. As Rio gave Jacques and the other two executives “eligible” leaver status, they were still entitled to long-term share awards.

Under Australian accounting rules, which take into account retained share awards that are still subject to performance testing, Jacques’ remuneration could total $13.3m for 2020, according to Rio’s annual report.

“The board fully recognised the gravity of the destruction at Juukan Gorge but was mindful that they did not deliberately cause the events to happen, they did not do anything unlawful, nor did they engage in fraudulent or dishonest behaviour or wilfully neglect their duties,” said Sam Laidlaw, chair of Rio’s remuneration committee.

Jakob Stausholm, previously Rio’s head of finance, was named chief executive in December.

Jacques will formally leave the company on March 31. He will receive a further £519,000 in lieu of his remaining unworked notice of five months plus £215,000 for unused leave.

The annual report also disclosed that Rio had paid another former chief executive, Sam Walsh, A$17.6m (US$13.9m) in deferred bonus payments last year. The payment had been frozen since 2017 due to an investigation by regulators into payments made by Rio to a consultant working on the Simandou iron ore project in Guinea.

Rio said it made the payment following an independent dispute resolution process and because “no further material information” had emerged from the investigation by regulators.

The mining group made a previous payment of A$7.3m to Walsh in March 2020 related to his deferred bonus entitlements.

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