Rio Tinto plc (LON: RIO) fires Tom Albanese after further write-offs.
The shares of Rio Tinto (LSE: RIO) (NYSE: RIO.US) slid 100p, or 3%, to 3,357p during early London trade this morning after the company sacked chief executive Tom Albanese and warned of write-offs totalling $14bn.
The FTSE 100 miner admitted its upcoming annual results would contain a $3bn charge relating to operations in Mozambique, a near-$11bn charge covering the group's aluminium division, and a further $500m charge relating to various other assets.
Jan du Plessis, Rio Tinto's chairman, said:
"The Rio Tinto Board fully acknowledges that a write-down 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 write-down in our aluminium businesses, albeit in an industry that continues to experience significant adverse changes globally."
The Mozambique operation was bought during 2011 for $4bn, while Alcan was purchased during 2007 for $38bn. Rio Tinto wrote off $9bn last year, of which most related to Alcan and other aluminium operations.
Rio Tinto confirmed today that Mr 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, Mr 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 Mr Albanese retained 525,508 vested but unexercised options that were granted between 2003 and 2009 and had a current value of £10m.
Mr 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 $15b rescue rights issue and a 60% dividend chop during 2009.
Rio Tinto's annual reports show Mr Albanese collected at least $2m 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 recognise that accountability for all aspects of the business rests with the CEO."
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> Maynard does not own any share mentioned in this article.