* Danish-born Jakob Stausholm joined as CFO in 2018
* Insider choice comes as surprise to investors
* New CEO to be tasked with rebuilding miner's image
(Adds comments, updates shares)
By Sonali Paul and Rashmi Ashok
Dec 17 (Reuters) - Rio Tinto named Chief
Financial Officer Jakob Stausholm as its next chief executive on
Thursday, defying expectations it would pick an external
candidate to repair its image after its destruction of sacred
Aboriginal rock shelters.
The destruction of the 46,000-year-old Juukan Gorge rock
shelters, while legal, sparked public and investor uproar that
ultimately led to the resignation of incumbent Jean-Sebastien
Jacques and two deputies.
Stausholm, who joined Rio as CFO in 2018, is now tasked with
the tough job of repairing strained relationships with investors
and the Aboriginal community while reforming the mining company
to improve oversight.
Rio's choice of an internal candidate was a surprise as most
bankers and investors had expecting the company to choose an
outsider to start with a clean slate.
"This decision appears to be further evidence of poor
corporate governance and suggests a lack of any credible
succession planning," said Doug McMurdo, chairman of Britain's
Local Authority Pension Fund Forum which represents 82 members
with 300 billion pounds ($408 billion) under management.
"It further raises questions about Rio Tinto's corporate
culture over the last few years," he said, adding that it also
showed there had been a lack of consultation by Rio Chairman
Simon Thompson with investors.
The board's handling of the aftermath of the cave blasts has
cast a shadow over Thomson's tenure.
Analysts at Morgan Stanley said Stausholm's appointment
could indicate little change in the overall strategy but that it
should minimize the typical disruption period caused by
management transitions.
Shares in London, which are at record highs on booming iron
ore prices, had climbed 1.8% by 1135 GMT.
'ENORMOUS CHALLENGE'
The appointment of a Danish CEO after Frenchman Jacques will
also come as a surprise to Australian investors, who have argued
that a new CEO should have local experience and be based in the
country that provides 85% of Rio's profits.
"Coming in at Rio at a time when the company's social
license has been so fundamentally undermined through its own
actions is an enormous challenge," said Adam Matthews, director
of ethics and engagement at the Church of England.
Some investors said the appointment was unlikely to go down
well with markets as a more radical change had been expected,
with others highlighting Stausholm's lack of operational
knowledge as a hurdle.
"It's a bit of a surprise. Stausholm is a financial guy,
focused on details and process and hopefully will be good at
stabilising Rio after what has been a very difficult year," said
George Cheveley, portfolio manager at Ninety One.
As well as navigating Australia's trade tensions with China,
potential aluminium plant closures and job losses, he will have
to manage cost overruns at Rio's biggest growth project in
Mongolia, a new iron ore mine in Guinea and legacy issues in
Bougainville.
A parliamentary inquiry has called on Rio to pay restitution
to Indigenous Australians affected by the destruction and also
fully reconstruct the rock shelters.
Rio said Stausholm, who was formerly at Royal Dutch Shell
and Maersk, will take over as CEO on Jan.
1, 2021, and Peter Cunningham will be appointed as chief
financial officer on an interim basis.
($1 = 0.7345 pounds)
(Reporting by Rashmi Ashok in Bengaluru and Sonali Paul in
Sydney; Additional reporting by Sameer Manekar, Nikhil Nainan
and Zandi Shabalala; Editing by Stephen Coates and David Clarke)
Rio Tinto (RIO)
