Rio chief's exit a non-issue to clients
Steelmakers say Tom Albanese's ouster from iron ore producer unlikely to affect market
Nanjing Iron & Steel, Baoshan Iron & Steel and other mills in China, the world's biggest buyer of iron ore, expect little change in the market after chief executive Tom Albanese leaves Rio Tinto.
Albanese will leave Rio without a cash windfall, forgoing his bonus for a third year after failed deals in aluminium and coal forced him out of the world's second-biggest mining company.
"The top three iron ore miners will continue to control supplies, while China's domestic steel industry is still fragmented," Yang Siming, chairman of Jiangsu-based Nanjing Steel, a Rio customer, said yesterday.
Albanese resigned as chief executive after Rio said it will take about US$14 billion of write-downs. He will not get a short-term performance bonus for 2012 or 2013, or a lump-sum payment on leaving, the London-based company said. He will leave with £10.7 million (HK$132.72 million) of share options.
The 55-year-old executive would have been entitled to about £1.27 million in cash and deferred shares for last year had he met performance targets, Rio's annual report shows. He gave up his 2011 bonus following an earlier write-down. In contrast, Canada's Kinross Gold booked a severance expense of US$16.4 million after chief executive Tye Burt was replaced.
"It was almost a given that he wouldn't get a payoff … under these circumstances," said Deborah Hargreaves, director of the High Pay Centre, a British monitoring body. "It's also not certain that he would have qualified for the other performance targets."
The board picked Sam Walsh, the 63-year-old head of Rio's iron-ore unit, to lead the firm.
Rio, which counts Aluminum Corp of China as its largest shareholder, got about a third of its revenue from China in 2011 and 78 per cent of net income from its iron ore unit.
Prices for the ore rallied to an almost 15-month-high last week.
Companies in Britain and the US have faced mounting pressure to curb executive remuneration amid an investor revolt.
Albanese's basic salary was £1.06 million in 2012, a 2.5 per cent increase from a year earlier, according to Rio's annual report. His total remuneration fell 19 per cent to £4.47 million in 2011 after he declined a bonus, citing a US$8.9 billion write-down of the company's aluminium division.