Embattled global mining company, Rio Tinto, yesterday announced that South African director, Jan du Plessis, will assume the chairmanship at the Anglo-Australian giant, replacing Paul Skinner on 20 April 2009. Du Plessis appears perfectly groomed to take over from Skinner, having enraged shareholders by being one of the directors to unanimously endorse the much maligned Chinalco deal, and also being a director of the Lloyds Banking group since 2005 (and Chairman of its Audit Committee since May 2008).

Last week, the British Government was forced to take a majority stake in Lloyds and insure £260 billion of its toxic assets. Du Plessis’ prime role as Chairman will be to sell the company’s US$19.5 billion Chinalco deal, with large institutional shareholders, including Legal & General (which owns 5% of the company’s London-listed shares) and the Australian Foundation Investment Company strongly opposed to the plan.

Meanwhile, Rio yesterday released its Remuneration Report for 2008, which revealed that CEO, Tom Albanese, the man who guided Rio towards the Alcan acquisition, was paid cash remuneration of US$2.003 million last year. The Remuneration Report also stated that:

Based on record earnings in a challenging year overall, the [Remuneration] committee assessed [Albanese’s] personal performance including group safety at 99 percent of target. The overall STIP award is 86 percent of target (43 percent of maximum) which is 52 percent of salary (43 percent of maximum).

Rio shares slumped by approximately 70% during 2008, largely caused by the company’s crippling US$38 billion debt load (assumed in the Alcan purchase) and its foolish rejection of BHP’s takeover offers. The so-called “record earnings” only occurred because the company’s enterprise value (and specifically, its debt load) increased — net earnings per share actually fell from 568c to 286c last year.

Shareholders may question exactly how Albanese, the man who must take responsibility for those errors of judgment, could receive any bonus at all, let alone be assessed to have performed at “99 percent of target”. In Rio’s defence, at least the bonus was paid in deferred shares, as opposed to cash (however, the company did not disclose the price at which the deferred shares were issued).

While Albanese’s remuneration appears somewhat excessive given Rio’s performance, the payments made to departing Chairman Paul Skinner appear even more outrageous. The obstinate Rio chair, who signed off on the Alcan purchase and refused to countenance BHP’s offers, received cash pay of US$1.3 million last year, making him the highest paid non-executive chair of an Australian-listed company (as Crikey noted in February, BHP Chairman Don Argus, was paid AUD$1.4 million last year to oversee a larger, competent board, while Telstra chair, Donald McGauchie was paid $602,500 in 2008).

Members of the Rio Tinto remuneration committee include DuPont executive, Richard Goodmanson, oil company boss Andrew Gould, former investment banker Sir David Clementi, former Alcan director Paul Tellier and Australia’s own Mike Fitzpatrick, who also serves as chairman of the AFL Commission.