Fund manager in vote call over lack of diversity

MINING giant Rio Tinto has come under fire from fund manager Hermes over a lack of diversity on its board ahead of its annual meeting.

Hermes hit out at the fact that only two of 12 Rio Tinto board directors are women, and recommended shareholders vote against the reappointment of chairman Jan du Plessis as chair of the nominations committee at the group’s AGM.

This is due to the “lack of diversity and a credible plan to address this imperative issue”, Hermes said.

It added: “Diversity is an issue of great importance, and it will be a key area of focus in our voting activity throughout the AGM season.

“Following changes to the board earlier this year, including the appointment of three male non-executive directors, only two out of the 12 Rio Tinto board directors are women, which falls significantly short of the 25% target.

“Although the company has stated its commitment to diversity and to seeking to ensure better gender balance in future appointments to the board, we believe Rio Tinto must demonstrate a credible plan and a serious commitment to reaching the 33% target by 2020.”

Hermes, which advises on over £250bn of assets, said it is voting against the re-election of the chairs of nominations committees of FTSE 100 firms if their boards fall significantly short of a 25% Government female directorship target for 2015, and they are unable to demonstrate credible plans to achieve a 2020 target of 33%.

Earlier this year, Hermes also wrote to the chairs of FTSE 350 companies to outline its intention to support the “long-term aspiration” that company boards and all levels of management reflect the “diversity of society across dimensions such as race and gender”.