* Investors oppose payout to former CEO
* Juukan Gorge backlash hits vote for director Megan Clark
* Vote is advisory only
* New policy with clawback for reputational damage wins
support
(Adds Rio chairman, proxy adviser comments)
By Sonali Paul
MELBOURNE, May 6 (Reuters) - A majority of Rio Tinto's
shareholders rejected the global miner's
executive pay packages on Thursday, in a backlash over its
destruction last year of ancient rock shelters in Western
Australia.
Rio Tinto blasted 46,000-year-old rock shelters at Juukan
Gorge last May to expand an iron ore mine, sparking
condemnation from investors, politicians, its own staff and the
wider community.
Following the company's Australian annual meeting, Rio Tinto
said more than 60% of votes cast by investors in the
Anglo-Australian dual-listed company were against its
remuneration report.
Although shareholders rejected the proposed payouts, the
vote was advisory only, and will not impact the $55 million
earmarked in salary and bonuses for the company's top 14
executives, as booked in the company's annual report.
"This constitutes a 'first strike'," the company said.
In Australia, if a company's executive pay package is
rejected two years in a row, the board could face a vote to be
removed.
"The Board acknowledges that the executive pay outcomes in
relation to the tragic events at Juukan Gorge are sensitive and
contentious issues," it said in a statement with the vote
results.
Widespread anger at the destruction of the caves cost the
jobs of its chief executive Jean-Sébastien Jacques and two other
senior leaders and led Chairman Simon Thompson to flag he would
step down in 2022.
Proxy advisers CGI Glass Lewis, Institutional Shareholder
Services (ISS), and the Australian Council of Superannuation
Investors (ACSI) recommended voting against the pay report, all
raising concern about the long-term incentives Jacques was
allowed to hold on to after the caves destruction.
Jacques kept 5.7 million pounds of his long-term incentive
award, losing only 1 million pounds as a result of the cave
blasts.
CGI Glass Lewis said it had "severe reservations with the
size of the awards vesting" for Jacques under his 2016 long-term
incentives plan.
Rio Chairman Thompson told shareholders the company had
withheld as much as the board considered "legally defensible"
under the terms in place in 2016 when the incentives were set
and also took into account that Jacques was losing his job.
Investors overwhelmingly approved a new policy which allows
directors to claw back long-term awards for a situation like the
Juukan Gorge disaster, where actions were not illegal or
fraudulent but damaged the company's reputation and its social
licence.
In a further sign of shareholder discontent, 26% of votes
were against the re-election of Megan Clark, who heads the
board's sustainability committee. That compared with less than
5% opposition to other directors' re-election.
(Reporting by Sonali Paul; Additional reporting by Shruti Sonal
in Bengaluru; editing by Kirsten Donovan and Jason Neely)
Rio Tinto (RIO)
