- Annual Review 2006
- Overview
- Chairman's message
- Interview with the chief executive
- Selected financial data
- Features
- Review of operations
- Financial information by business unit
- Summary financial statements
- Australian Corporations Act - summary of ASIC relief
- Independent auditors' statement
- Management overview
- Directors' report
- Remuneration report
- Corporate governance
- Audit committee charter
- Shareholder information
- Useful addresses
- Investor calendar
- Publications
Chairman and non executive director remuneration
Remuneration policy
Reflecting the board's focus on long term strategic direction and corporate performance rather than short term results, remuneration for the chairman and non executive directors is structured with a fixed fee component only, details of which are set out below and in Table 1. The board as a whole determines non executive directors' fees, although non executive directors do not vote on any changes to their own fees. Fees are set to reflect the responsibilities and time spent by the directors on the affairs of Rio Tinto. To reflect the commitment expected from directors, as well as market practice for similar companies, fees for committee chairmen and members were reviewed in December 2006. The new fees are set out below.
It is Rio Tinto's policy that the chairman should be remunerated on a competitive basis and at a level which reflects his contribution to the Group, as assessed by the board. The chairman is not present at any discussion regarding his own remuneration and he does not participate in the Group's incentive plans or pension arrangements.
Letters of appointment
Non executive directors have formal letters of appointment setting out their duties and responsibilities. These letters are available for inspection at Rio Tinto plc's registered office prior to the annual general meeting and at the meeting itself. Each non executive director is appointed subject to periodic re-election by shareholders as detailed on page 50. There are no provisions for compensation payable on termination of any non executive director's appointment.
The chairman's letter of appointment summarises his duties as chairman of the Group and was agreed by the Remuneration committee. It stipulates that he is expected to dedicate at least three days per week on average to carry out these duties. The letter envisages that Paul Skinner will continue in the role of chairman until he reaches the age of 65 in 2009, subject to re-election as a director by shareholders, although the appointment may be terminated by either Rio Tinto or Paul Skinner giving six months' notice. Other than in this case, there is no provision for compensation payable on termination of his chairmanship or directorship.
Remuneration components
The following table sets out the annual fees payable to the chairman and the non executive directors in £/A$ as appropriate.
| As at 31 Dec 2006 | As at 1 Jan 2006 | |
|---|---|---|
| Base fees: | ||
| Chairman | £630,000 | £600,000 |
| Other directors | £60,000/ | £60,000/ |
| A$150,000/ | A$150,000 | |
| Additional fees: | ||
| Senior independent director | £35,000 | £35,000 |
| Audit committee chairman | £30,000 | £20,000 |
| Audit committee member | £15,000/ | £10,000 |
| A$37,500 | ||
| Remuneration committee chairman | £20,000 | £15,000 |
| Remuneration committee member | £10,000/ | £5,000 |
| A$25,000 | ||
| Committee on social and environmental accountability chairman | £20,000 | £10,000 |
| Committee on social and environmental accountability member | £7,500/A$18,750 | £3,000/A$7,500 |
| Overseas meeting allowances: | ||
| Long distance (flights over 10 hours per journey) | £4,000/A$10,000 | £4,000/A$10,000 |
| Medium distance (flights of 5-10 hours per journey) | £2,000/A$5,000 | £2,000/A$5,000 |
No additional fee is payable to the chairman or members of the Nominations committee although this arrangement remains subject to review and will depend on the volume of committee business in future.
Rio Tinto does not pay retirement benefits or allowances to non executive directors, nor do any of them participate in any of the Group's incentive plans. Where the payment of statutory minimum superannuation contributions for Australian non executive directors is required by the Australian superannuation guarantee legislation, these contributions are deducted from the directors' overall fee entitlements.
Remuneration paid during 2006
Details of the nature and amount of each element of remuneration paid to the chairman and non executive directors during 2006 are set out in Table 1. No post employment, long term or termination payments were paid and no share based payments made.
