Former Rio Tinto boss Sam Walsh wins right to deferred pay

Rio Tinto’s former boss has won the right to frozen bonus payments after taking the mining giant to arbitration.

Former Rio Tinto boss Sam Walsh. Picture: Colin Murty, The Australian.

Former Rio boss Sam Walsh will finally be paid his last round of bonus awards after baulking at a further deferrals from the mining giant.

Mr Walsh left Rio in 2016, making way for current chief executive Jean-Sebastien Jacques, but the final short and long-term incentives due to him have been frozen since 2017, pending the ongoing investigation into controversial payments made in connection to Rio’s Simandou iron ore project in Guinea.

It is understood some of those investigations are still on foot and, although Rio flagged further deferrals in its most recent annual report, Mr Walsh appears to have lost patience over the ongoing cloud over his reputation — and a multi-million payment of cash and shares — and taken the matter to arbitration.

Mr Walsh is now due for an immediate payment of about $6.8m, with further payments due early in 2021 that could take the total beyond $20m.

In a statement on Thursday Mr Walsh said he was pleased with the decision coming from the dispute resolution process.

“I am pleased that the position with my incentive payments has been resolved in my favour and that there is no basis for those awards to be further deferred by Rio Tinto following the dispute resolution process,” he said.

The deferred payments stem from a scandal over whether Rio Tinto authorised dubious payments to French consultant Francois de Combret in 2011 to secure ownership of the giant Simandou iron ore deposit.

International authorities including Britain’s Serious Fraud Office, the Australian Federal Police and the US Department of Justice all launched investigations into the $US10.5 million ($15m) payment to Mr Combret.

Concerns over the payment also cost Rio executives Alan Davies and legal counsel Debra Valentine their jobs.

The company also decided to defer the final payments to Mr Walsh of a $1.6m short-term incentive as well as a long-term incentive of 44,285 Rio Tinto shares worth about $3.4m.

Mr Walsh will also be eligible for additional Rio Tinto shares of value equivalent to the dividends that would have been paid on the bonus shares during the deferred period.

Rio chairman Simon Thompson said the company had originally hoped the investigations would have been concluded by now.

“When the deferral agreement was entered into, both Rio Tinto and Sam hoped that the Simandou regulatory investigations would have been completed by now. The Rio Tinto Board made a determination, pursuant to the deferral agreement, to further defer the awards as the regulatory investigation remains open,” he said.

“Following the completion of the confidential and binding dispute resolution process, a decision was made that the amounts should be paid.”