Hermes to target Rio Tinto’s Du Plessis

Hermes Investment Management will vote against the reelection of Jan du Plessis, the chairman of Rio Tinto Group, because of the company’s policy on boardroom diversity.

The London-based money manager, which has said it will be focusing on diversity issues and climate change during this year’s annual shareholder meeting season, is targeting 63-year-old Du Plessis at Wednesday’s annual general meeting because he is chairman of the group’s nominations committee. Rio has two women on its board and Hermes argues the company has not been convincing enough about its plans to broaden the gender composition of its boardroom.

Hermes, which owns about 0.5% of Rio’s London shares, said it wrote to the chairmen of Britain’s largest 350 companies, warning them it would be concerned if they had fewer than 25% women on their boards and lacked a credible plan to raise it to the government’s target of 33% by 2020.

THE BOARD RECOGNISES THAT THE EVOLUTION OF THE MIX OF SKILLS AND DIVERSITY IS A LONG-TERM PROCESS

Du Plessis is due to retire from the world’s second-biggest mining company shortly, so the Hermes move will only be a gesture. He is set to take over from Mike Rake as chairman of BT Group in November.

“The board recognises that the evolution of the mix of skills and diversity [gender and nationality] is a long-term process and it weighs the various factors relevant to board balance and diversity when vacancies arise,” Rio said.

The company appointed three new independent directors in February with former Centrica CE Sam Laidlaw, former Sasol chief David Constable and current Royal Dutch Shell chief financial officer Simon Henry all joining the board. The appointments will cause the proportion of women on the board to drop to 17% from 27%.

“The board remains committed to diversity and to seeking to ensure better gender balance in future appointments to the board,” Rio said.

Hermes is also voting against Rio on climate change issues, saying the group needs greater disclosure. A spokesman for London-based Rio declined to comment.

In a separate report, Institutional Shareholder Services (ISS) advised investors to approve all the resolutions at Rio’s meeting. Although “significant” bonuses were again paid out, they were “broadly aligned to the group’s performance”, ISS said in its report.