The Company is currently involved in lawsuits related to a series of scandals. This includes a bribery scandal, fraud scandal and tax scandal.
In July 2017, the UKns Serious Fraud Office launched an investigation into a 2011 payment of $10.5m made in connection with the Simandou project to François Polge de Combret, a French banking consultant who was a university friend of President Alpha Conde of Guinea and connected to the Simandou project. The Company has stated that it is fully complying with authorities but has not admitted to bribery. The investigation is still ongoing but could lead to costly litigation against the Company, its employees, and directors. In August 2018, the court dismissed a related US class action commenced on behalf of securities holders.
The Company is currently involved in legal charges for fraud by the regulators in the US and Australia. In October 2017, the US Securities and Exchanges Commission announced that they were charging the Company, its former Chief Executive Officer Tom Albanese and former Chief Financial Officer Guy Elliott with fraud for allegedly inflating the value of their coal mine in Mozambique and concealing critical information.
In March 2018, the Australian Securities and Investments Commission filed a lawsuit against the Company, former CEO Tom Albanese, and former CFO Guy Elliot for the alleged fraud.
In January 2018, the Company, and its Canadian subsidiary Turquoise Hill, were accused of avoiding CAN $700m in Canadian taxes in relation to its Oyu Tolgoi copper and gold mine in Mongolia, and of costing the Mongolian government US $230m in taxes over a five-year period. Please see the attached report for further details.
The structure is not acceptable. The maximum bonus, maximum LTIP award and maximum total incentive pay all exceed guidelines. 30% of the bonus depends on individual criteria that cannot be readily quantified. Accelerated vesting in the event of a change of control is not possible. Actual awards were excessive and actual total variable remuneration exceeded guidelines.
Item 14: Re-appoint the auditors PricewaterhouseCoopers LLP (PwC) have audited the Company for 60 years. We strongly recommend the rotation of the auditors. A tender for the audit role was most
recently undertaken during the year under review, with the Company selecting KPMG as auditor with effect from 2020. Shareholder approval to confirm KPMGns appointment will be sought at the 2020 AGM. The Company states that they have delayed the rotation of the auditors so that KPMG can shadow the current auditors for half a year and so that non-audit services can be transferred away from them such that they can be considered independent.
Items 19b and 20b: These items will only be voted on by Rio Tinto Limited shareholders.
Items 19b and 20b were added to the agenda under section 249N of the Australian Corporations Act 2001 by a representative of shareholders of Rio Tinto Limited, Market Forces, which acts as agent for 109 shareholders.
In item 19b, they request an amendment to the Constitution of Rio Tinto, which is intended to facilitate shareholder proposals to request information. The proposal is as follows:
To amend the constitution to insert beneath Clause 57 mAnnual general meetingsnthe following new sub - clause: oThe company in general meeting may by ordinary resolution express an opinion or request information about the way in which a power of the company partially or exclusively vested in the directors has been or should be exercised. However such a resolution must relate to a material risk as identified by the company and cannot either advocate action that would violate any law or relate to any personal claim or grievance. Such a resolution is advisory only and does not bind the
directors or the Company.p ECGS would recommend support for this proposal as it is a way for shareholders to clearly request information and accountability from directors without binding the Company to potentially redundant or cost prohibitive responses.
In item 20b, they request that the Board approve the publication of details on transition plans consistent with the goal of the Paris Agreement to limit global warming to 1.5°C. We would recommend support for this proposal.Please see the attached report for further details.
Rio Tinto is engaged in finding, mining and processing mineral resources. Co. has four product groups: iron ore, which supplies the global seaborne iron ore trade; aluminium, which includes bauxite mines, alumina refineries, and aluminium smelters; Copper and Diamonds, which has managed operations in Australia, Canada, Mongolia and the U.S., and non-managed operations in Chile and Indonesia, with by-product including gold, silver, molybdenum and others such as sulphuric acid, rhenium, and lead carbonate; and Energy and Minerals, which comprises mining, refining and marketing operations across borates, coal, iron ore concentrate and pellets, salt, titanium dioxide and uranium sectors.
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Currently '(TM)Value Indicator - UK main market' is a value analysis of the Basic Resources, construction & Materials, Telecoms and Utilities sectors of quoted companies on the London Stock Exchange's main market that provides the reader with indicative longer-term target prices.
Higher near-term iron ore forecasts primarily drove the recent upgrade in our fair value estimate for no-moat Rio Tinto to AUD 69 per share. At the current share price of AUD 104, the shares are materially overvalued. Our valuation hinges on two key drivers: steel production growth and iron ore supply. Steel production in China is elevated, up 10% for the year ended June. Strong steel production is a second order impact of the U.S./China trade war and weakening industrial production. The Chinese...
Item 3: Approve the Remuneration ReportThe remuneration structure is satisfactory, though accelerated vesting is possible. Potential and actual total variable remuneration exceed guidelines, but not very much. They are moderate in comparison with UK market practice. Overall, the quantum during the year was not excessive. We recommend shareholders vote in favor.
Item 3: Approve the Remuneration Report The structure is weighted more heavily towards short-term performance. One of the performance metrics for the LTI is the payment of sustainable dividends, which is not considered appropriate as executives can potentially influence the payout level. The LTI also includes relative TSR as a performance metric. Nevertheless, the quantum is not excessive and even maximum potential amounts are moderate. On balance, we recommend shareholders vote in favor. Item 4: Approve the Remuneration PolicyThe main concern with the Company's remuneration policy is that pa...
Item 2: Approve the Remuneration ReportThe remuneration structure is unsatisfactory. The main concern at the Company is that the potential maximum incentive pay including the bonus, matching shares on the deferred portion of the bonus and the LTI amounts to 1000% of base salary, which is considered grossly excessive. Actual incentive pay during the year was1.6 times the ECGS limit. Furthermore, variable remuneration is overly reliant on a single performance metric, benchmark profit before tax. A second performance criteria will be used in the coming year. We note that the Company has adjusted ...
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