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Rio Tinto has decided defer the payment of thousands of bonus shares to its former chief executive Sam Walsh until regulators have reviewed payments made to consultant who helped the miner secure rights to giant iron ore deposit in Africa.
The decision was revealed in Rio’s annual report, published on Thursday morning,
“The board has determined that it would be inappropriate, while investigations are ongoing, to make any determination about Sam Walsh, our former chief executive, or about his outstanding remuneration,” Rio said in the report.
“The company has therefore reached an agreement with Sam to defer the payment of his 2016 Short Term Incentive Plan (STIP) award and all remaining unvested Long Term Incentive Plan (LTIP) awards for a minimum of two years.”
In November, Rio notified law enforcement authorities in the US, UK and Australia about a $10.5m payment in 2011 to François Polge de Combret, a French consultant who helped the company reach a settlement with Guinea over the Simandou deposit.
It then fired two senior managers: Alan Davies, the head of energy and minerals who was previously in charge of Simandou, and Debra Valentine, head of legal.
That followed an internal inquiry triggered by the leak of company emails. These showed senior executives, including Mr Walsh and Mr Davies, discussing Mr de Combret’s consultancy fee.
The Anglo-Australian company faces the risk of large fines if it is found to have broken anti-corruption laws.
“The outcome of the regulatory investigations, and any potential litigation, is uncertain. There is unfortunately little more I can say at this time, other than to assure you that the board is giving these matters its full and proper attention, and that we are continuing to co-operate fully with the relevant authorities,” said Rio’s chairman Jan du Plessis in the annual report,
The ability to limit or claw back bonuses paid to directors, both past and present, was a policy introduced at Rio by Mr du Plessis. He was unhappy with remuneration policy that allowed executives receive share awards regardless of errors or bungled deals such as Rio’s acquisition of Riversdale, a coal company in Mozambique.
Under the provisions, Rio can reduce or cancel any share award made from 2013 because of gross misconduct, an error in its financial statements or “exceptional events that have a materially detrimental impact of the value of the company”.
The company can also claw back the value of any shares that have vested in “the event of deliberate misconduct by a participant that may have a material impact on the value or reputation of a Rio Tinto”.