Mineral resources (ASX:MIN) announced substantial changes to its corporate governance and leadership structure following a board-led investigation into governance practices.
In a report released on November 4, 2024, the company revealed that its CEO, Chris Ellison, will face financial sanctions and that an accelerated leadership succession plan will be implemented to safeguard shareholder interests.
The governance review uncovered issues relating to Ellison’s personal financial activities, including a previously undisclosed tax settlement with the Australian Taxation Office (ATO) relating to the income of an offshore entity, Far East Equipment Holdings Limited (FEEHL ), active between 2003 and 2003. 2014. Mr. Ellison’s unreported income resulted in a personal tax payment of nearly $4 million in 2023. Additionally, the board found that Mr. Ellison occasionally used company resources for personal matters, although he concluded that these incidents did not result in significant financial harm to Mineral Resources.
Chairman James McClements explained the rationale behind the changes, saying: “In reaching our position, the board considered multiple factors, including appropriately responding to the governance issues identified and protecting long-term shareholder value. The company’s rapid growth over the past five years has placed pressure on its governance systems and we recognize the need for accelerated change to reflect our status as a major ASX-listed company.”
In response, Mineral Resources imposed a financial penalty on Mr Ellison, requiring him to repay $3.8 million to the company. It will also forgo up to $9.6 million in incentive payments and make charitable contributions of $1 million per year for the next five years. Ellison expressed his commitment to supporting the transition, apologizing for the events and pledging to “regain the trust of investors and the MinRes team.”
In addition to the financial penalties, the board accelerated its leadership succession plan and appointed an ethics and governance committee, made up of independent directors, to improve oversight and ensure compliance with ethical standards. McClements, who announced his intention to step down as chairman, noted: “Orderly transitions are in the best interests of the company, keeping in mind the strong views expressed by investors.”
The shares are currently trading 7.95% lower at $37.38.