The Rio Tinto Ltd [ASX:RIO] share price is indecisive on how to react to the news of CEO Jean-Sebastien Jacques’ departure from the mining giant.
The RIO share price opened lower this morning at $99.76 per share, before climbing to $100.78 just after 11am.
At the time of writing, the RIO shares were down 0.2% or 20 cents, trading at $100.25 per share.
Heads roll from heritage site disaster
In an announcement made this morning, RIO said that Mr Jacques and two other senior executives will leave the company after the destruction of the Juukan rock shelters in May, after a review deemed the three to be partially responsible for the incident.
Earlier this week, The Australia Financial Review reported that harsher punishments were likely after investors said that the financial penalties handed down were inadequate.
Though RIO said the exit of their three executives was a ‘mutual agreement’.
Joining Mr Jacques out the door is iron ore boss Chris Salisbury and corporate affairs boss Simone Niven.
The pair will leave by the end of the year, while Mr Jacques will remain in his role until March 2021 or until a successor is found.
Though the impacts of the sudden leadership change are not immediate, it does make for a good case study in shareholder activism.
RIO chairman Simon Thompson said:
‘…this question of individual accountability is hindering our ability to start the process of rebuilding trust and really to move forward…At the end of the day if these three individuals do not have the confidence of critical shareholders to lead the required changes then we have to move on.’
Buck stops at the top
The destruction of the Juukan rock shelters was a gross error in judgement by RIO and there deserves to be an adequate punishment laid out.
Now, when Mr Simon says they cannot have people at the company that hinder the confidence of shareholders, he doesn’t mean you.
He means the heads of big funds, like Peter Costello (head of Future Fund), or Louise Davidson, chief of The Australian Council of Superannuation Investors.
AustralianSuper and UniSuper also had their two cents.
These are the activist investors. And right or wrong, what they say usually goes.
Look at it this way…
In his role as CEO, Mr Jacques led the best safety performance in RIO’s history, simplified the portfolio, divested coal assets, established a climate change strategy and generated exceptional shareholder returns.
But heads will roll when an error of this magnitude is made.
And the buck stops at the top.
For The Rum Rebellion
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