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UPDATE 1-Rio Tinto postpones decision on former CEO's bonus over Guinea scandal
March 2, 2017 / 1:38 PM / 9 months ago

UPDATE 1-Rio Tinto postpones decision on former CEO's bonus over Guinea scandal

* New CEO’s base salary around 1 mln pounds

* Does not get some expatriate benefits former CEO Walsh had

* Walsh says always acted lawfully, confirms agreed deferral (Updates with comment from Sam Walsh)

By Barbara Lewis

LONDON, March 2 (Reuters) - The world’s second biggest miner Rio Tinto has deferred for at least two years a decision on former chief executive Sam Walsh’s performance-related pay, after a scandal over $10.5 million in payments to a consultant in Guinea.

The scandal erupted in November after Rio Tinto become aware of emails from 2011 that referred to the payments in connection with the vast Simandou iron ore project. Investigations are ongoing.

In an emailed statement, Walsh said he agreed “in good faith” to the deferral as best practice in terms of the company’s corporate governance.

“I would add that the company acknowledges my firm belief that during my time with Rio Tinto I always acted lawfully and in accordance with my duties and this applies to the Simandou project,” he said, adding that after 25 years with the company he had left “with a good conscience”.

Walsh, who took retirement in 2016, was named in the emails sent by senior executive Alan Davies. Davies was sacked in November and is taking legal action.

In its annual report published on Thursday, Rio Tinto said its board decided it would not be appropriate to decide on Walsh’s “outstanding remuneration” for now.

It said it had therefore reached agreement with Walsh to defer payment of long and short term incentive plans for “a minimum of two years”.

The 2016 base salary of Walsh’s successor Jean-Sebastien Jacques, who took over as chief executive from July, was around 1 million pounds ($1.2 million) plus a performance-related bonus of 1.5 million pounds, half of which was paid immediately and the other half deferred for three years.

The annual report also said Jacques would not receive the expatriate benefits provided to his predecessor.

Walsh’s base salary was nearly 2 million Australian dollars ($1.5 million) when he retired.

As shareholders press for a more moderate approach to executive pay, another miner Anglo American has said its annual report to be published later this month will put forward a cap on long-term incentive plans, on which shareholders will vote in April.

Last year, shareholders said Anglo American CEO Mark Cutifani’s remuneration was too generous after a share price collapse linked to the commodity downturn. All the big miners have since recovered.

($1 = 0.8151 pounds)

$1 = 1.3127 Australian dollars Additional reporting by Simon Jessop; Editing by Elaine Hardcastle and Mark Potter

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