MONTREAL — Rio Tinto Alcan’s top two executives scored big last year, earning almost half of the US$15.69 million of bonuses paid out by the global mining giant to its senior officers.
Aluminum division CEO Dick Evans, who retired last April but remained a special adviser until year-end, and his replacement, Jacynthe Cote, shared US$7.7 million in cash bonuses, according to the Anglo-Australian parent company’s annual report.
Evans received US$5.5 million plus a US$1.5 million salary.
“This reflects the exceptional synergy savings generated over the past two years, the strong progress in developing and appointing a successor and the organizational and cultural integration of Rio Tinto Alcan into the wider group,” Rio Tinto plc said.
He was eligible to receive up to US$9.6 million in 2009, after collecting more than US$4.4 million in 2008.
The package, including an integration bonus, was negotiated to keep Evans following the 2007 takeover of the former Alcan by the global mining giant.
Cote earned a US$2.2 million bonus plus US$813,000 in base salary. She was rewarded for surpassing targets related to a series of criteria, including integration of the two companies, cash initiatives and safety.
Both executive also received non-monetary and long-term benefits.
The Montreal-based aluminum division earned a profit in the second half of the year due primarily to severe cost cutting and rising prices.
Its underlying earnings, adjusted to remove one-time items, were US$111 million in the last six months of 2009, compared with a US$689 million loss in the first six.
The parent company’s profits increased by 33 per cent in 2009 despite large losses in its aluminum division and a dramatic decrease in commodity prices.
Rio Tinto earned US$4.872 billion last year, up from its 2008 figure of US$3.67 billion.
The company said it expects more than US$1.1 billion in annual savings once the two companies are fully integrated.
Tom Albanese, president and CEO of the mining giant (NYSE:RTP) earned $2.7 million in 2009, including $947,000 in bonus. That was up from a total of $2 million with no bonus in 2008.
Rio Tinto paid out US$30.3 million in pay and benefits last year to 14 executives. That included US$11 million in base salary and US$15.69 million in cash bonus. Non-monetary benefits totalled more than US$3 million.
A company spokesman said the remuneration is consistent with rewarding executives “for providing stable returns over the long term relative to the broader market as well as the mining sector.”
“Following a review in 2009, target and maximum bonus potential was increased to ensure competitiveness with our key comparator group,” said spokesman Stefano Bertolli.
Over the past year, Rio Tinto has sold about US$10 billion of assets, including Alcan’s packaging business, to pay of its debt that ballooned with the US$38 billion acquisition of the Canadian aluminum company.
Rio Tinto responded to a collapse in commodity prices last year by reducing its global workforce by 14,000, including 1,100 aluminum jobs.
The move included the closure of the Beauharnois smelter near Montreal, output reductions at the Vaudreuil alumina refinery in the Saguenay region, affecting 300 jobs in Quebec, and layoffs at the division’s head office.