Rio Tinto CEO Walsh given open-ended job contract as predator looms

By James Regan

SYDNEY, Oct 23 (Reuters) - Rio Tinto (Xetra: 855018 - news) on Thursday gave its chief executive Sam Walsh an open-ended extension to his job contract after rival miner Glencore Plc (Xetra: A1JAGV - news) expressed interest in a merger.

Walsh took over as CEO in early 2013 after his predecessor was fired due to a series of bad investments costing the Anglo-Australian mining house $22 billion in writedowns in two years. His initial contract was due to end on Dec. 31, 2015.

The 64-year-old CEO is expected to emphasise internal growth projects in profitable businesses such as iron ore and copper with an eye for greater dividends as it seeks to insulate itself against another approach from Glencore, analysts say.

Glencore said last month that it made an informal enquiry by telephone to Rio Tinto in July, trying to gauge whether there might be any interest at Rio Tinto in investigating some form of merger between the companies.

Rio Tinto responded that it was not interested in pursuing these discussions and confirmed it was no longer pursuing a dialogue with the company, according to Glencore.

The comments leave Glencore unable to make a move on Rio Tinto for six months, should it change its mind, due to British takeover rules.

Analysts are mixed on the likelihood of Glencore returning for a second try.

"Certainly Sam Walsh does present a formidable barrier to a potential takeover," Investec (LSE: INVP.L - news) analyst Hunter Hillcoat said.

Walsh, along with chief financial officer Chris Lynch, will transfer to open-ended contracts in 2015. Lynch's initial contract was due to end on Feb. 28, 2017.

Both executives will move to a rolling contract with no end date and a 12-month notice period, according to Rio Tinto.

Walsh, previously an executive with General Motors (NYSE: GM - news) and Nissan Motor Corp before switching to mining in 1991, was head of Rio Tinto's iron ore division before taking the top job.

Under Walsh, iron ore rose to account for more than 80 percent of Rio Tinto's net earnings. (Additional reporting by Silvia Antonioli in LONDON; Editing by Ryan Woo)