SYDNEY-- Rio Tinto PLC extended the tenure of chief executive
Sam Walsh, rewarding him for restoring capital discipline after a
run of hefty write-downs from soured acquisitions.
Rio Tinto also extended the term of finance chief, Chris Lynch.
Together, the decisions eliminate a layer of uncertainty at Rio
Tinto after the company recently became a takeover target of
Glencore PLC.
Mr. Walsh, who succeeded former chief executive Tom Albanese in
January 2013, faced the task of steering Rio Tinto through a period
of weakening resources prices and slowing demand, as a decadelong
mining commodity-price boom came to a halt. He was quick to make
dramatic changes, stripping billions of dollars of costs out of the
business and cutting jobs to safeguard profits.
"Sam has made no secret of the fact that he loves his job and
would like to continue well beyond next year," chairman Jan du
Plessis said Thursday. "Given his performance and his enthusiasm to
continue in the role, the decision to extend his tenure has been an
easy one for the board."
The Anglo-Australian company said Mr. Walsh and Mr. Lynch would
be moved to open-ended contracts after the annual general meetings
in Australia and the U.K. next year. The contracts were slated to
end Dec. 31, 2015 and Feb. 28, 2017, respectively.
Mr. du Plessis said the move to rolling contracts represented
"long-term, open-ended commitments to the company."
The leadership decisions also come amid speculation about the
future of London-based Rio Tinto.
The world's No. 2 iron-ore miner rebuffed Glencore's approach in
July about a merger, saying a deal wasn't in the best interests of
shareholders. The company said earlier this month it hadn't been in
contact with the commodities producer and trader on the matter
since early August.
Mr. Walsh and his team argue they are best placed to strengthen
the company's footing and bolster returns to shareholders. Rio
Tinto more than doubled its profit in the first half of 2014, the
company said in August, as it signaled plans to give back more cash
to its investors starting next year.
Mr. Walsh's austerity drive marks a bold break with the
company's past, one dotted with several big acquisitions that
subsequently were written down when commodity prices slumped. His
predecessor, Mr. Albanese, stepped aside after Rio wrote down more
than $14 billion in assets, stemming from big aluminum and coal
asset purchases made at the top of the market. The company has
continued to face write-downs from acquisitions made before Mr.
Walsh took the helm.
Even with Mr. Walsh's bold measures, Rio Tinto still faces
challenges from a 40% slide in iron-ore prices this year, which
some analysts say may hinder the company's ability to buy back
shares as expected. Rio Tinto relies on iron ore for the majority
of its earnings.
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com
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