UPDATE: Rio Tinto Holders Should Oppose Executive Pay Report - PIRC
April 07 2009 - 8:23AM
Dow Jones News
Shareholders in Rio Tinto PLC (RTP) should oppose the
Anglo-Australian miner's renumeration report at its annual general
meeting on concerns of an excessive bonus for an outgoing
executive, according to advisory group PIRC.
"Excessiveness is a concern in light of the integration bonus
received by Dick Evans," PIRC said.
Evans, who stepped down as chief executive of Rio Tinto's
aluminum division Feb. 1 and is due to leave the company's board
April 20, received a $1.35 million cash bonus for 2008, and is
eligible for a 2009 bonus of up to $9.6 million, according to Rio
Tinto's annual report.
The bonus is for his work integrating Canadian aluminum producer
Alcan Inc., acquired in 2007, into the group. That deal added
almost $40 billion in debt to Rio Tinto's balance sheet and has
weighed on the company since a swift and sharp decline in commodity
prices started in the second half of 2008.
PIRC added that it welcomed the miner's recommendation that
other top executives defer 2008 bonuses into shares, but said it
"has concerns over the combined level of incentive remuneration and
the appropriateness of targets."
Rio Tinto froze the base salaries of top-level management as it
works to conserve cash and pay down debt. But it maintained its
target level for annual bonuses at 60% of salary, according to its
annual report.
"Executives may receive up to twice their target for outstanding
performance against all criteria," the annual report said.
The company couldn't immediately be reached for comment. The
annual report said Evans' bonus in both 2008 and 2009 "was provided
as part of his remuneration arrangements to maintain the
remuneration he was entitled to at Alcan at the time of the
acquisition."
Evans was CEO of Alcan when Rio bought the company.
Rio Tinto will hold AGMs on April 15 in the U.K. and April 20 in
Australia.
PIRC didn't advise shareholders to vote against any other
resolutions.
Company Web site: www.riotinto.com
-By Jeffrey Sparshott, Dow Jones Newswires; +44 (0)207 842 9347;
jeffrey.sparshott@dowjones.com