Rio Tinto caves in to shareholder pressure and scraps appointment of Tory chief Sir Mick Davis

 
Oliver Gill
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Sir Mick Davis is the former chief executive of miner Xstrata (Source: Getty)

Mining giant Rio Tinto has scrapped plans to appoint the chief exec of the Conservative party as its new chairman, according to reports.

Frontrunner Sir Mick Davis is "no longer in the running" to replace Jan du Plessis after a shareholder revolt.

City sources told Sky News over the weekend several institutional investors had drawn up plans to oppose the re-election of Rio Tinto board members next year if they failed to back down on recruiting the former Xstrata chief executive.

The move came after the shareholders, which represent approximately 20 per cent of Rio Tinto's shareholder base, wrote to the FTSE 100 firm's board to say Davis' appointment would be unacceptable. The letter was sent by the Investor Forum and reported by the Financial Times on Friday.

Both Davis and Rio Tinto declined to comment on the reports.

Read more: Conservative CEO Sir Mick Davis tipped for top job at Rio Tinto

Rio Tinto has been hunting for a new chairman since March when du Plessis announced he was to take over from Sir Michael Rake as chairman of telecoms giant BT.

Investor disapproval of Davis' appointment stems from anger over bonus awards made to top Xstrata execs after it agreed to merge with Glencore in 2012, Sky News reported.

The process to pick du Plessis' replacement has been hampered after the person chosen to lead the search, former Barclays chief executive John Varley, was forced to resign from the Rio Tinto board this summer. Varley was charged by the Serious Fraud Office over his role in the bank's controversial Middle Eastern fundraising at the height of the financial crisis.

Read more: SFO charges four former Barclays bankers including ex-CEO John Varley

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