The week in investor relations: Pay revolt at Rio Tinto, EU clamps down on foreign subsidies and skepticism over climate pledges
– Rio Tinto suffered a shareholder revolt with 61 percent of votes cast against the miner’s executive compensation package at the AGM, reported the BBC. The rebellion follows the destruction of sacred rock in Western Australia last year, which led to several executives, including former CEO Jean-Sébastien Jacques Jacques, stepping down. ‘The board acknowledges that the executive pay outcomes in relation to the tragic events at Juukan Gorge are sensitive and contentious issues,’ said Rio Tinto in a statement.
– The EU proposed clamping down on foreign companies that operate in its market with support from national governments, according to CNBC. The bloc bans member states from providing government support to businesses that could cause unfair competition, but companies from outside the EU do not face the same restrictions. The move could particularly impact Chinese companies operating in the EU, noted the article. ‘We want every company that operates in Europe – no matter where it comes from – to respect our house rules,’ said Margrethe Vestager, the EU’s competition chief, at a press conference.
– Institutional investors displayed skepticism over the decarbonization plans of major oil and gas companies, reported the Financial Times (paywall). In a survey of 64 institutions, just 17 percent said they ‘believe oil groups will transform their businesses to focus on green energy,’ noted the article. In recent years, investors have stepped up the pressure on energy companies over climate change, calling for net-zero targets and credible transition plans to a low-carbon economy. The industry’s major players have largely responded with pledges to transform their businesses over the coming decades.
– Reuters reported that the US Federal Reserve warned of increasing risks to the financial system in its semi-annual report. The central bank highlighted the vulnerability of high-stock market valuations, the potential of social media to drive share prices up and down, and risk-management concerns stemming from the collapse of hedge fund Archegos Capital Management. ‘With investors ebullient on expectations for a strong rebound, it is important to closely monitor risks to the system and ensure the financial system is resilient,’ said Fed governor Lael Brainard in a statement.
– Sherborne Investors, the activist investor, sold its 6 percent stake in British bank Barclays, noted Reuters. The firm invested in Barclays in 2018 and called on the bank to reduce its focus on investment banking. ‘Sherborne Investors has informed the company that it believes the risk of and rewards from a new investment opportunity it has identified offer a better return to the company’s shareholders than a continuing investment in Barclays,’ said the firm in a statement.
– Berkshire Hathaway CEO Warren Buffett will be succeeded by vice chairman Greg Abel, reported the Wall Street Journal (paywall). Market commentators have long speculated over who will take over from 90-year old Buffett when he finally steps down from the conglomerate he has run for more than 50 years. Abel is currently in charge of all non-insurance operations and regularly joins calls with Buffett when he talks to the CEOs of portfolio companies, said the article. Berkshire Hathaway has not indicated when Buffett might step down.