Royal London Asset Management (RLAM), voiced concerns about the unusual remuneration and board structure of Glencore ahead of its May 24 AGM.

The voting results show RLAM’s concerns may have been shared by other shareholders. While all Glencore’s resolutions were carried,  the figures showed dissatisfaction with the board with the nomination committee chairman Peter Grauer polling 13.92% vote against. Chairman Tony Hayward, received 4.92% vote against, however, John Mack the remuneration committee chairman escaped significant vote opposition. Set against the votes of the the largest shareholder, CEO Ivan Glasenberg, with an a 8.42% stake in the company, the results show a level of concern amongst investors about the miner’s unconventional governance arrangements.

Ashley Hamilton Claxton, corporate governance manager at RLAM stated: “The anomalous structure of Glencore’s board renders the company’s remuneration policy materially irrelevant, as it only applies to one executive director, the company’s CEO Ivan Glasenberg, a significant shareholder in his own right who does not participate in any bonus or long-term incentive schemes.

Meanwhile Claxton pointed out that Steven Kalmin, Glencore’s finance director attends most of the firm’s board meetings but is not a formal member of the board and therefore his remuneration is not disclosed. There is also no disclosure of what any other senior executives are paid, so the overall performance and reward structure of the most senior executives at Glencore is largely opaque, RLAM said.

RLAM said it voted against both the remuneration report and policy, as well as against the reappointment of the chairman of the remuneration committee. The asset manager said it would like the company to address its long-standing concerns with the structure of the board and to improve board diversity, so it had also elected to vote against the re-election of Glencore’s chairman.

Concerns about board diversity may also have be the reason behind the strong vote against Grauer as chairman of the nomination committee. Manifest noted the company’s poor record on diversity in its analysis ahead of the AGM and also highlighted Grauer’s poor attendance at board and committee meetings.

Meanwhile international trade union group, Industriall, raised concerns at the AGM about the mining companies poor health and safety record and the lack of transparency from the company on these issues.

Glen Mpufane, IndustriALL mining director, said: “Sixteen workers killed in 2016 is unacceptable. The reports of the causes of the fatalities have not been disclosed, IndustriALL insisted that they be disclosed officially.”

Sustainability Governance from Manifest Manifest’s analyses the sustainability disclosures of quoted companies ahead of every AGM according to a carefully researched schedule of key facts and information that shareholders need to make an informed voting judgement. The 2017 Sustainability Governance Score for Glencore was C (on an A-F scale). Of particular concern to our analysts were the absence of Greenhouse Gas Targets and the lack of up to date information. Although the annual report contained some information, the only sustainability report available ahead of the meeting had been published on 27 May 2016 in respect of the 2015 financial year. This lack of timeliness gave Glencore an automatic penalty score of minus 15 in the disclosure and transparency pillar. If you would like to receive a sample Say on Sustainability report or would like more information about the methodology, please contact sustainability@manifest.info

 

Last Updated: 26 May 2017