Rio executive under fire for bonuses paid after fatality

RIO Tinto has come under fire at its London annual meeting for paying out bonuses to executives in a year when two of its workers died on the job.

Proxy adviser Glass Lewis said paying bonuses linked to safety at a mining company that had suffered a workplace death was “considered a serious breach of moral and ethical code by many investors”.

Glass Lewis said Rio rivals such as BHP Billiton, Fortescue Metals and Newcrest generally cut the safety component of a bonus, usually housed under short- term incentive payments, to zero in years when an employee died.

Rio chief Jean- Sebastien Jacques and chief financial officer Christopher Lynch had their safety bonuses reduced last year but not cut in full.

The miner has introduced a new executive pay framework that emphasises safety and ensures the safety- linked component is void if a worker dies.

“Safety is one of our core values and this is why everyone in Rio Tinto deeply felt the loss of two of our colleagues in 2017,” Mr Jacques said. “In 2018 our aim is clear – no fatalities.”

Glass Lewis, which advises more than 1300 large investors globally, welcomed the changes to Rio’s executive pay structure but said safety still only accounted for 8 per cent of total bonuses available to executives.

New Rio chairman Simon Thompson said global trade tensions and rising industry costs were likely to make 2018 more difficult to navigate than 2017.

“This year promises to be more challenging than the last, as the industry faces rising cost inflation, as well as geopolitical uncertainties, particularly in relation to trade,” Mr Thompson said.