Investor agitation has forced Rio Tinto to backtrack on plans to appoint Conservative Party CEO Sir Mick Davis as chairman.
The Investor Forum, a group of shareholders which represents some 20% of the miner’s stock, opposed the appointment, according to the Financial Times.
Sir Mick previously served on Xstrata’s board as CEO at the time of its merger with Glencore, which saw Xstrata investors push for better deal terms and voted against a huge payout for board members to stay at the new business.
The latest reports suggest that the letter has led to Rio Tinto abandoning its plan to appoint Sir Mick in place of Jan du Plessis.
There are suggestions of investor wariness about Sir Mick’s history in making big deals, at a time when Rio Tinto faces pressure to improve, and head off regulatory investigations.
Sky had reported the likelihood of Sir Mick’s appointment just two weeks ago. Du Plessis is heading to take over the chairmanship of BT Group.
The shelving of the appointment is another setback to Rio Tinto, which faces fraud charges in the US from the Securities and Exchange Commission for allegedly inflating the value of its ill-fated Mozambique coal mine acquisition. It also settled with the Financial Conduct Authority for £27m over its financial reporting of the mine.
Rio Tinto recently completed an AUS$750m (£437m) buyback of off-market shares, the first tranche in its US$2.5bn share buyback programme announced in September. It has also extended its Channar Mining joint venture with China’s Sinosteel Corporation, which will see an additional ten million tonnes of iron ore delivered from Western Australia.