A coalition of labor organizations in the United States, United Kingdom and Australia launched a three-continent shareholder proxy contest against Rio Tinto PLC, one of the world's biggest mining companies, to seek changes in corporate governance and labor practices.
The initiative represents what might be the broadest internationally sponsored proxy fight by any group of shareholders, at least among labor organizations, in recognition of the growing globalization of the capital markets.
"There's not been a proxy contest waged on this scale," said Kenneth S. Zinn, North American regional coordinator of the International Federation of Chemical, Energy, Mine and General Workers' Union, Washington.
"It's a recognition of how integrated and global the capital markets are and how ownership is spread around the world.
"If you are going to engage these global companies, you have to do it on a global basis."
The coalition consists of the AFL-CIO and the IFCEMGWU, both in the United States; the Trades Union Congress in the United Kingdom; and the Australian Council of Trade Unions and the Construction, Forestry, Mining and Energy Union, both in Australia.
The coalition and its member organizations own, mainly through pension funds, 19% of Rio Tinto's shares, valued at $3.2 billion. In addition, many of the workers they represent work at Rio Tinto-owned operations.
2 coalition resolutions
The coalition submitted two shareholder resolutions, both to Rio Tinto PLC, London, and Rio Tinto Ltd., Melbourne, Australia.
One resolution seeks the appointment of an independent, non-executive deputy chairman, free from any business or other relationship that could materially interfere with the exercise of his or her judgment.
The other resolution seeks the implementation of a workplace code of labor practice at its operations worldwide. This code includes recognizing the right of workers to form and join independent trade unions and to bargain collectively.
Roger Dowding, assistant secretary, Rio Tinto PLC, said the companies will include the shareholder resolutions in their proxy statements, which he expects to be mailed in April. Their annual meetings are scheduled for May 10, he added.
The U.K. company owns less than 50% of the Australia company, he said; a specific percentage wasn't immediately available. That ownership interest will decline to 40% over the next five years under an agreement with the Australian government, he added.
Mr. Dowding said management believes the two resolutions are unnecessary.
Regarding the first resolution, the company proposes to keep its existing executive deputy chairman, Richard Giordano, based in London, while adding a new position, another deputy chairman. That would be Leon Davis, who would be based in Australia. Mr. Davis, now chief executive officer of the U.K. company, plans to retire, so he would become a non-executive deputy chairman, Mr. Dowding said.
"We think it's a reasonable management structure, given the rather complicated corporate structure of the two companies," Mr. Dowding said.
As for the other resolution, on the right to organize and other labor policies, Mr. Dowding said workers "already have that right. There are unions at most of our operations."
Australian coalfield dispute
He said this issue "stems from a dispute in the Australian coalfields, where the mining unions are very strong and have been able to maintain restrictive labor practices for a long time. We've offered employees there individual employment contracts and most have accepted, meaning we no longer have to negotiate with the unions" for those workers. He said these contracts involved 450 workers and perhaps some others.
Mr. Dowding said to avoid any conflict the U.K. company cannot vote on the resolutions at the Australian company, so only votes of outside shareholders will count. He said the votes on the resolutions at both companies will be counted as one to avoid an unfair or contrary tally between the two companies.
Mr. Zinn agreed, saying it's sufficient for the resolutions to pass in one company to have an impact. Both resolutions are advisory only, he noted. Binding resolutions would necessitate getting some two-thirds of the vote instead of a simple majority, he added.
Rio Tinto mines gold, copper, coal and other minerals with operations throughout the world, including the United States, where it owns a number of Kennecott companies that extract coal and copper and other natural resources.
