London — The short list for the next chairperson of Rio Tinto will incense the corporate governance crowd. At the top is Mick Davis, former CEO of Xstrata. His association with high boardroom pay makes him a divisive candidate.

Davis drew criticism at Xstrata for remuneration well above industry norms. The attacks came to a head when he was offered a $45m retention plan to stay with the company after a proposed merger with Glencore in 2012. Shareholders later resoundingly vetoed the package, and embarrassed Xstrata’s board by pushing for more generous financial terms. The deal had to be re-cast as a takeover by Glencore.

Now, five years later, Davis is in line to lead the board of one of the world’s biggest resources companies — a role that involves winning the trust of investors and providing both a support and a counterweight to executive ambition. He’s not the grandee-type usually associated with such a job.

The Glencore-Xstrata debacle was ugly but it would be unfair to blame only Davis for that. There was a collective lack of judgment by both boards. In fact, Davis has some worthy credentials for chairing Rio. He knows mining and mergers and acquisitions, having built Xstrata from small beginnings through acquisition to a group that at one point made a merger proposal to Anglo American.

This nous should ensure high-quality boardroom discussions on Rio’s strategic and operational challenges. True, Davis’s private-equity mining venture, X2 Resources, hasn’t worked out because of a lack of targets at suitable prices, but at least this shows discipline. An entrepreneur with industry and deal-making expertise, capex savvy and a disdain for committees may be what Rio needs.

Moreover, Davis is unlikely to crowd out CEO Jean-Sébastien Jacques, still in only his second year. Davis likes to delegate, say people who’ve worked with him. His outside interests, which include being CEO of the UK Conservative Party, suggest he isn’t looking for a domineering executive role at a global miner.

No chairperson candidate ever ticks all the boxes. Still, there must be reservations. Davis would need to help Jacques deliver change, while keeping enough distance to be comfortable finding a replacement should things go wrong. Investors will wonder whether Davis really can tune into their concerns. No-one doubts his mining acumen. But if he lands this role, he’ll have to show he thinks like a public company shareholder.

Peter Grauer, the chairperson of Bloomberg LP, is a senior independent non-executive director at Glencore.

Hughes is a Bloomberg Gadfly columnist covering deals. This column does not necessarily reflect the opinion of Bloomberg and its owners.


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