Rio Tinto often finds itself hosting a feral AGM because its global
mining operations reach to dozens of countries so there is plenty of
mud that various green, union, anti-uranium campaigners can throw at
the board. I’ve long given up going because it’s very difficult to get
a serious question in among the various ferals who take over
proceedings.

This year’s meeting kicked off at 9:30am in Sydney this morning and is
presumably still going as you read this. You can check out both the
notice of meeting and various presentations to shareholders here.

There was no mention of any forthcoming bid for WMC Resources by
chairman Paul Skinner or CEO Leigh Clifford in their formal addresses
although Clifford did keep his options open with the following comment:
“We have many options for investing in
our future growth and as always our focus remains on maximising value
for shareholders”.

Rio shares plunged $1.20 to $41.65 this morning but that was because of
the slightly gloomier outlook presented rather than any reckless $10
billion bid for WMC Resources. WMC shares were 2 cents stronger at
$7.98 as rumours remain that Rio could yet trump BHP Billiton’s $7.85 -a-share
offer which has just been extended as acceptances only trickle in.

Because Rio is a dual-listed company – in Australia and the UK – it has to
submit its remuneration policy to a non-binding vote – something which
starts in Australia on 1 July. The
resolution is item nine at today’s AGM and the no-vote might
just creep up a bit this year after some very lumpy retirement payouts
to executives.

I spoke at a seminar put on by legal firm Freehills in Melbourne
yesterday and there were plenty of company secretaries in attendance
trying to get their heads around what these non-binding votes on
remuneration reports will mean.

In the UK the no-vote averaged about 20% in the first year and
there was the celebrated example of pharmaceuticals giant Glaxo
Smithkline having its remuneration report defeated. Two directors
subsequently resigned but the hugely successful CEO remained with
shareholder support, as the issue was over a guaranteed termination payout
of more than $50 million, not a criticism of his performance.

The three Australian companies which are dual-listed in London –
BHP-Billiton, Rio Tinto and Brambles – have all got through the
non-binding votes on remuneration reports without too many troubles
over the past couple of years.

However, if any company faces rejection it is construction giant
Leighton Holdings as the $26 million bonus to veteran CEO Wal King was
just way over the top in light of recent profit warnings. Others that
might face high no-votes over excessive executive pay include AMP,
Babcock & Brown, Lend Lease and Westfield.

Peter Fray

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