Rio Tinto has been ordered to pay long-deferred incentives worth nearly $7 million to its former chief executive Sam Walsh following a formal dispute resolution process.
Rio Tinto has been ordered to pay long-deferred incentives worth nearly $7 million to its former chief executive Sam Walsh following a formal dispute resolution process.
The deferral was agreed between Rio and Mr Walsh in 2017 after regulators launched investigations into a $10.5 million payment made to a consultant in relation to the Simandou iron ore project in the African nation of Guinea.
Perth-based Mr Walsh was chief executive of the iron ore product group at the time the payment was made, in 2011.
He was promoted to group chief executive in 2013, before retiring in July 2016.
Months later, Rio said it had alerted authorities, including the US Department of Justice and the UK’s Serious Fraud Office, about the questionable Simandou payments.
Under the agreement, incentive plan awards that would have vested up to 2021 were subject to a staged deferral.
Rio said today it had wanted to defer the amounts that were payable on 31 December 2018 given the regulatory investigations in relation to Simandou were ongoing.
Mr Walsh did not accept this and consequently, an independent confidential and binding dispute resolution process commenced.
It determined that Mr Walsh’s incentive plan awards should not be subject to any further deferrals.
As a result, payments will be made to Mr Walsh of all deferred incentive plan awards which would have been payable on 31 December 2018 together with associated dividends and interest, the company said in a statement.
These payments amounted to $6.8 million.
“When the deferral agreement was entered into, both Rio Tinto and Sam hoped that the Simandou regulatory investigations would have been completed by now,” Rio chairman Simon Thompson said.
“The Rio Tinto board made a determination, pursuant to the deferral agreement, to further defer the awards as the regulatory investigation remains open.
“Following the completion of the confidential and binding dispute resolution process, a decision was made that the amounts should be paid.”
Mr Walsh has previously stated that he had always acted lawfully and ethically.
Two other Rio executives were fired in 2016 over the Simandou controversy.
They were energy & minerals chief executive Alan Davies and legal & regulatory affairs executive Debra Valentine.
Mr Walsh currently chairs the Perth Mint, the Royal Flying Doctor Service and the Australia Council for the Arts and is a director of Mitsui & Co.
