LONDON – Hermes Investment Management will vote against the re-election of Jan du Plessis, the chairperson of Rio Tinto Group, because of the company’s policy on boardroom diversity.
The London-based money manager, which has said it will be focusing on diversity issues and climate change during this year’s annual shareholder meeting season, is targeting 63-year-old Du Plessis at Wednesday’s AGM because he is chair of the group’s nominations committee.
Rio has two women on its board and Hermes argues the company hasn’t been convincing enough about its plans to broaden the gender composition of its boardroom. The mining industry has been somewhat of a laggard on the issue of diversity in recent years. Swiss commodity trader Glencore was the last company left on the UK’s FTSE 100 Index with an all-male board prior to the appointment of Patrice Merrin in 2014.
Hermes, which represent about 0.5% of Rio’s London shares, said it wrote to the chairs of Britain’s largest 350 companies warning them it would be concerned if they had fewer than 25% of women on their boards and lacked a credible plan to raise it to the government’s target of 33% by 2020.
Du Plessis is due to retire from the world’s second-biggest mining company shortly, so the Hermes move will only be a gesture. He’s set to take over from Mike Rake as chair of BT Group in November.
'BOARD BALANCE'
“The board recognises that the evolution of the mix of skills and diversity (gender and nationality) is a long-term process and it weighs the various factors relevant to board balance and diversity when vacancies arise,” Rio said in its annual report.
The company appointed three new independent directors in February with former Centrica CEO Sam Laidlaw, former Sasol chief David Constable and current Royal Dutch Shell CFO Simon Henry all joining the board. The appointments mean that the proportion of women on the board will drop to 17% from 27%.
“The board remains committed to diversity and to seeking to ensure better gender balance in future appointments to the board,” Rio said.
Hermes is also voting against Rio on climate change issues, saying the group needs greater disclosure. A spokesperson for London-based Rio declined to comment.
In a separate report, Institutional Shareholder Services (ISS) advised investors to approve all the resolutions at Rio’s meeting.
Although “significant” bonuses were again paid out they were “broadly aligned to the group’s performance,” ISS said in its report.