Ousted Rio boss in line for £32m of shares

RIO Tinto chief executive Jeansebastien Jacques could collect up to £31.7m of shares after he was forced to quit the mining giant following its decision to blow up 46,000-year-old sacred caves in Australia in its search for iron ore.

The Anglo-australian company announced that Mr Jacques was leaving by mutual agreement following an international outcry after it demolished the Juukan Gorge rock shelters, regarded as one of the country’s most important archaeological sites. Although £1m has now been docked from his bonuses, Mr Jacques was eligible for up to 654,657 shares by the end of 2023, based on various bonus plans detailed in the firm’s annual report.

At yesterday’s closing price of £49.92, these are worth £31.7m.

He is being docked of shares worth about £1m due to the destruction. Mr Jacques is also in line for 12 months’ pay and pension benefits worth about £1.5m once he leaves the firm.

A spokesman stressed the bonuses would only pay out if certain performance conditions were met. However, the revelation risks re-igniting fury over the company’s actions.

Mr Jacques is due to leave when a replacement has been appointed or on March 31, whichever happens sooner.

Chris Salisbury, Rio’s iron ore division chief, and Simone Niven, head of corporate relations, who is responsible for dealing with indigenous communities, will leave the company on Dec 31.

Shareholders had put intense pressure on the board following the outcry.

The FTSE 100 miner said: “Significant stakeholders have expressed concerns about executive accountability for the failings identified.”

Rio Tinto announced last month that Mr Jacques would miss out on almost £3m of pay, and Mr Salisbury and Ms Niven on around £600,000 each, over the destruction in May of two rock shelters in Juukan Gorge in Western Australia. Mr Salisbury sold shares worth more than £600,000 last month.

Rio had been warned in 2018 that the Juukan Gorge caves were a priceless part of the nation’s cultural heritage.

The departure of Rio Tinto boss Jean Sebastien-jacques may have taken too long but it will still be cheered from the Square Mile to the Australian outback. His exit is a victory for shareholder activism, corporate governance and the rights of minority groups. Boardrooms around the world will shudder at this democratic triumph.

More importantly, common sense and decency have prevailed. Miners are expected to blow things up. It’s what they do. But they are not expected to destroy sites of great archaeological and cultural significance to access lucrative materials in the ground.

Natural resources companies need a social licence to operate and Rio’s was blown to smithereens with this gross act of vandalism. In allowing Jacques to stay, there was a real risk of irreparable damage to the company’s reputation and its ability to continue operating in its biggest market.

The idea that Rio could blame the destruction of a 46,000-year-old Aboriginal site on “a misunderstanding”, dock the bonuses of those at fault, and expect everyone to quickly move on from the whole saga was frankly laughable.

So, too, was the idea that Jacques was the right man to repair the damage. After all, he claimed he hadn’t even been aware of the importance of the ancient cave shelters despite a series of external reports highlighting precisely that.

Yet, even with Jacques and two other senior managers – head of iron ore Christopher Salisbury and corporate affairs chief Simone Niven – finally gone, the FTSE 100 giant faces a fight to salvage its name. The trio aren’t leaving because of some epiphany at the top, they’ve walked the plank because the backlash became deafening.

The bunker mentality occurs naturally in the boardroom when there is clear wrongdoing. Even when it is obvious to the outside world what needs to happen, senior executives will try to desperately cling on in the hope that it all blows over.

Imagine then what some of these individuals might try to get away with if there wasn’t the external scrutiny by a free press and shareholder activism to hold them to account. Rio might have blown up the Acropolis or bulldozed the Taj Mahal by now.

Of course we are all human and make mistakes. But public accountability is the foundation of liberal democracy. Without it, the fabric of society becomes frayed.

Companies are no different. They are essentially human constructs but errors are too often met with the “he said/she said” response common among squabbling children.

That’s when you need someone, in this case chairman Simon Thompson, with an outside perspective to realise that this is more than just corporate stupidity, to intervene and determine the appropriate response.

Instead, it was reportedly nonexecutives Simon Henry and Sam Laidlaw that led the push for more severe action.

Rio’s trouble is having not moved fast enough in the first instance, Thompson has been forced to admit that he got it wrong.

It was down to him to realise that Jacques needed to go from the outset. By allowing him to stay, and then changing his mind, the chairman has also failed.

So, doesn’t he have to go too?

The best may have passed

There is much to cheer in the latest figures for the UK economy.

Growth surged another 6.6pc in July, the third consecutive month of gains. GDP has now recovered half of its Covid losses with every sector rebounding further. Manufacturing is closing in on pre-pandemic levels.

And yet, the best of it may have already passed. The recovery is tapering off.

On its own 6.6pc looks mightily impressive, but July’s growth was 8.7pc, meaning that output is not only not rebounding as fast as it fell, it is slowing.

The economy is still 12pc below its pre-covid level and in three months has recovered half of what it lost in two months.

So much for the instant bounce back so widely predicted including by the Bank of England’s own chief economist only recently.

But then, as Bank of America Merrill Lynch points out, it was foolish to expect a V-shaped recovery because “lockdown was only eased gradually”.

So if not a V, then what? The smart money is now on a square root-shaped comeback where growth flatlines next year. Pass the smelling salts.

‘In allowing Jacques to stay, there was a real risk of irreparable damage’