Investors Should Oppose Rio Tinto on Pay, Dividend, PIRC Says

Investors in Rio Tinto Group should oppose its policy on pay and dividends at the annual meeting of shareholders of the world’s second-biggest mining company this month, said Pensions & Investment Research Consultants Ltd.

Chief Executive Officer Sam Walsh’s pay compared with the company’s average worker is “deemed to be disproportionate,” PIRC, a U.K. adviser to institutional investors with more than 1.5 trillion pounds ($2.5 trillion) in assets, said today in an e-mailed statement. Walsh’s pay compared with total shareholder returns is also excessive, PIRC said in recommending investors vote against resolutions including remuneration policy.

The 64-year-old Australian head of the London-based company was appointed in January last year, relocating from Perth where he led the iron ore division, Rio’s most profitable unit.

He was given a 44 percent pay increase, receiving A$10.1 million ($9.3 million) last year. The figure includes salary, a cash bonus, shares, superannuation and other benefits.

Rio paid relocation costs of A$206,000 when Walsh moved to London as CEO, and he receives a housing allowance and other benefits during his “secondment” there, the company said last month. The “other benefits” payments to Walsh “also raise concerns and are contrary to best practice,” PIRC said today.

Investors should also oppose the mining company’s annual report as shareholders “have no say on the dividend policy,” it said. A spokesman for Rio was unable to immediately comment.

Walsh, a 23-year company veteran, has reduced costs by $2.3 billion, curbed spending plans and driven productivity gains since becoming CEO in January 2013 amid an industry-wide push to preserve profitability as some commodity prices slide.

Rio reported a 10 percent increase in underlying profit to $10.2 billion last year. The annual general meeting of shareholders will take place in London on April 15.

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