Mineral Resources (ASX:MIN) has announced substantial changes to its corporate governance and leadership structure following a board-led investigation into governance practices.
In a report issued on 4 November 2024, the company disclosed that its Managing Director, Chris Ellison, will face financial penalties and that an accelerated leadership succession plan will be implemented to safeguard shareholder interests.
The governance review uncovered issues tied to Mr Ellison’s personal financial activities, including a previously undisclosed tax settlement with the Australian Taxation Office (ATO) related to income from an offshore entity, Far East Equipment Holdings Limited (FEEHL), which was active between 2003 and 2014. Mr Ellison’s undisclosed revenue led to a personal tax payment of nearly $4m in 2023. Additionally, the board found that Mr Ellison occasionally used company resources for personal matters, although it concluded that these incidents did not result in significant financial harm to Mineral Resources.
Chairman James McClements explained the rationale for the changes, stating, “In reaching our position, the board considered multiple factors, including the appropriate response to the identified governance issues and protecting long-term shareholder value. The company’s rapid growth over the past five years placed pressure on its governance systems, and we recognise the need for accelerated change that reflects our status as a major ASX-listed company.”
In response, Mineral Resources has imposed a financial penalty on Mr Ellison, requiring him to pay back $3.8m to the company. Furthermore, he will forfeit up to $9.6m in incentives and make charitable contributions of $1m annually for the next five years. Mr Ellison has expressed his commitment to supporting the transition, apologising for the events and pledging to “win back the confidence of investors and the MinRes team.”
In addition to financial penalties, the board has fast-tracked the leadership succession plan and appointed an Ethics & Governance Committee, composed of independent directors, to enhance oversight and ensure adherence to ethical standards. Mr McClements, who has announced his intention to step down as Chair, noted, “Orderly transitions are in the best interests of the company, bearing in mind the strong views voiced by investors.”
Shares are currently trading 7.95% lower at $37.38.