Rio Tinto Has Already Botched CEO Stausholm’s Exit

The papers this morning all seem to be telling the same story about the announcement that Rio Tinto CEO Jakob Stausholm will be stepping down from his position by fall of this year. The move is “unexpected,” according to the Financial Times, a “surprise exit.” The editors at mining.com opted for “shock exit;” the Wall Street Journal calls it a “surprise departure.” Shares tumbled in London on the news.

Berenberg analyst Richard Hatch appears to be one of the people driving this narrative. Nearly all the headline writers are working from what he had to say:

This news comes as a big surprise, and in our view was not expected.

We had expected Mr Stausholm to remain with the company and drive the integration of the lithium business, so his exit comes as a surprise.

No clear reason for his departure has been given by the company other than to state that now is ‘a natural moment’ to appoint a successor – but it does not feel that natural to us.

Hatch has not backed off his Buy rating, indicating, I suppose, that he doesn’t think the big surprise of Stausholm’s unexpected exit or Stausholm’s unnatural exit itself will affect long term prospects. Fair enough.

But clearly something is amiss.

Two possibilities present themselves. One, the company seriously bungled the rollout of Stausholm’s departure, surprising and shocking analysts and investors. The failure to set and manage expectations would indicate internal coordination problems. Or, two, Stausholm’s surprise departure signals board intervention over some as yet undisclosed misstep, conflict, or business failure. But what that might be is not yet clear. Perhaps another shoe is going to drop.

The first possibility is charitable, the second a little more cynical. The two are not mutually exclusive. Stausholm could be stepping down for as yet undisclosed reasons and the company could be doing a bad job of handling that. No matter: this is hardly a model of orderly succession planning. It’s a botch, and shareholders would be right to ask whether it indicates other organizational and governance problems.

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