Rio Tinto said Monday it will cut the short-term bonuses of some senior executives but stopped short of leadership overhaul following review of the company’s destruction of two ancient caves in Australia.
Chief Executive Jean-Sébastien Jacques and two other leaders will take financial penalties after the world’s biggest iron ore miner legally destroyed two historically significant sacred caves in Western Australia state — against the wishes of Aboriginal traditional owners — as part of a mine expansion.
Rio said it would reduce the short-term bonuses of Jacques, chief executive of iron ore Chris Salisbury and group executive, corporate relations, Simone Niven in 2020 by about $3.7 million in total.
Jacques’ long-term incentive plan award would also be reduced by about 1 million pounds ($1.3 million). He was paid 5.8 million pounds last year.
“The Rio Tinto board has come to an informed judgment that the sanctions that have been applied to senior executives are appropriate,” Michael L’Estrange, who led the review, told Reuters.
The destruction in May sparked public outrage and an Australian government inquiry that senior Rio leadership faced early this month. The penalties were well short of management change pushed for by some investor groups who have criticized Rio’s leadership for a lack of accountability.
“Irreplaceable cultural heritage has been lost and the only consequence for any of the senior leadership at Rio is the loss of a bonus — not even their job,” said shareholder advocacy group the Australasian Corporate Centre for Responsibility.
“Rio’s board could have acted decisively. This soft touch, public relations-oriented review calls into question the suitability of every board member, especially the Chair Simon Thompson and the head of the review Michael L’Estrange.”
L’Estrange told Reuters he was confident Rio’s board had made the correct decision that was in line with community expectations, even as investor pressure on boards for greater accountability grows.
“The board has thought very, very deeply on this … Now we will consult with investors and others,” he said.
Australian wealth manager AMP Ltd. saw a leadership shakeup on Monday after investors were unhappy with board decisions around accountability over allegations of inappropriate conduct.
“The review found no single root cause or error that directly resulted in the destruction of the rockshelters. It was the result of a series of decisions, actions and omissions over an extended period of time,” Rio said.
The Aboriginal traditional owners, the Puutu Kunti Kurrama and Pinikura people did not comment. They have previously said they were too distressed to comment.
Rio is reviewing the organizational structure of its communities function that will report to Mark Davies, who joined the executive committee in charge of safety and technical projects in July, after it previously reported to corporate affairs.
The miner also said that it was reviewing the terms of its existing 2011 agreement with the PKKP, in relation to consent to “reflect evolving practice.”
Rio did not tell the PKKP, the traditional owners of the two caves destroyed to mine iron ore, about three alternative mine plans, Jacques told the government enquiry, despite saying it had won fully informed consent for blasting.