Rio Tinto Sacks Boss And Writes Off $14 Billion
Jan 17th 2013 5:26PM
Updated Jan 17th 2013 6:35PM
LONDON -- The shares of Rio Tinto slid 100 pence, or 3%, to 3,357 pence during early London trade this morning after the company sacked chief executive Tom Albanese and warned of write-offs totaling $14 billion.
The FTSE 100 miner admitted its upcoming annual results would contain a $3 billion charge relating to operations in Mozambique, a near-$11 billion charge covering the group's aluminum division, and a further $500 million charge relating to various other assets.
Jan du Plessis, Rio Tinto's chairman, said: "The Rio Tinto Board fully acknowledges that a writedown of this scale in relation to the relatively recent Mozambique acquisition is unacceptable. We are also deeply disappointed to have to take a further substantial writedown in our aluminum businesses, albeit in an industry that continues to experience significant adverse changes globally."
The Mozambique operation was bought during 2011 for $4 billion, while Alcan was purchased during 2007 for $38 billion. Rio Tinto wrote off $9 billion last year, of which most related to Alcan and other aluminum operations.
Rio Tinto confirmed today that Albanese would not receive a lump-sum payout, would not receive a short-term performance bonus for 2012 and would not enjoy a long-term share award for 2013.
In addition, Albanese would see all of his outstanding entitlements under Rio Tinto's long-term incentive plans lapse. He will also forfeit all of his outstanding deferred bonus share entitlements earned in previous years.
However, the miner confirmed Albanese retained 525,508 vested but unexercised options that were granted between 2003 and 2009 and had a current value of £10 million.
Albanese took charge of Rio Tinto during May 2007, at which time the miner's share price was almost £40. However, plunging commodity prices and the debt associated with the Alcan purchase prompted a $15 billion rescue rights issue and a 60% dividend chop during 2009.
Rio Tinto's annual reports show Albanese collected at least $2 million a year as basic pay and bonuses between 2008 and 2011.
Mr Albanese said today: "While I leave the business in good shape in many respects, I fully recognize that accountability for all aspects of the business rests with the CEO."
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