The shortlist for the next chair of Rio Tinto Plc will incense the corporate governance crowd. At the top is Mick Davis, former CEO of Xstrata Plc. His association with high boardroom pay makes him a divisive candidate.
Davis drew criticism at Xstrata for remuneration well above industry norms. The attacks came to a head when he was offered a $45 million retention plan to stay with the company after a proposed merger with Glencore Plc in 2012.
Shareholders later resoundingly vetoed the package, and embarrassed Xstrata’s board by pushing for more generous financial terms. The deal had to be recast as a takeover by Glencore.
Now, five years later, Davis is in line to lead the board of one of the world’s biggest resources companies — a role that involves winning the trust of investors and providing both a support and a counterweight to executive ambition. He’s not the grandee-type usually associated with such a job.
The Glencore-Xstrata debacle was ugly but it would be unfair to blame only Davis for that. There was a collective lack of judgement by both boards. In fact, Davis has some worthy credentials for chairing Rio.
For the rest of this column: https://www.bloomberg.com/gadfly/articles/2017-11-14/mining-s-45-million-man-eyes-an-earth-shattering-return