The industry fund has flagged the ASX-listed company for “recent governance failures” regarding its response to allegations made against its CEO.
HESTA has placed Mineral Resources Limited (MinRes) on its “watchlist” following its “recent governance failures”.
In a statement, the $88 billion industry fund said it has been engaging with MinRes and remains “disappointed” with the company’s response to date after allegations that founder and CEO Chris Ellison profited significantly from an offshore equipment markup scheme between 2003 and 2009.
HESTA’s CEO Debby Blakey said the fund is “disappointed with the company’s response to date”, including its succession plan that sets out Ellison’s exit within 18 months.
“Our concerns include that the managing director’s succession time frame does not reflect the seriousness of the issues and that the issues identified indicate a systemic failure of governance at the senior management and board level,” said Blakey.
“As a result, HESTA has placed MinRes on our watchlist, and subject to our engagement escalation framework.”
The fund said that watchlist companies are the focus of closer direct engagement and monitoring.
“Our engagement escalation framework also considers voting against director elections, supporting or filing of shareholder resolutions, and/or consideration of divestment where HESTA considers there is inadequate evidence of progress to address risks and it is in members’ best financial interests,” the CEO said.
“We believe the MinRes board has a critical opportunity ahead of the company’s upcoming annual general meeting to provide investors with confidence they are taking appropriate action to address these governance failures.”
Earlier this month in an ASX listing, MinRes said in response to mounting shareholder concerns that it has initiated governance reforms and plans to implement leadership succession.
Key actions outlined in the listing included introducing new corporate governance processes, imposing financial penalties of $8.8 million on Ellison, and forfeiting up to $9.6 million in additional remuneration. The firm said at the time that it is accelerating its leadership succession plan, with Ellison expected to transition out within 12–18 months.
“With the interests of shareholders absolutely front and centre, the board has determined there needs to be an orderly leadership transition, significant strengthening of governance protocols, and a financial penalty imposed on Mr Ellison,” MinRes chair James McClements, who is due to step down shortly, said in the listing.
“There can be no doubt that the actions, decisions and behaviours of Mr Ellison have been profoundly disappointing and require sanction and penalty.”
Also quoted in the statement is Ellison who said: “I am deeply sorry for the events that have occurred and the impact they have had on MinRes’ reputation. I apologise to the rest of the Board and to our people, who expect and deserve better from me.
“I acknowledge that I made mistakes, some of which were driven by my wish to keep private certain events that cause me great personal embarrassment. I am committed to the leadership succession that the Board has announced, and I will work tirelessly to win back the confidence of investors and our whole MinRes team.”
