Bonus backlash strikes again as Rio bosses decline payout

Against a backdrop of rising opposition to "rewards for failure", Albanese, who received a $1.6 million (£1.01 million) bonus in 2010, decided he wasn't eligible for a top-up to his $1.4 million salary as he revealed that Rio Tinto was taking an $8.9 billion charge against the Alcan business. This represents nearly a quarter of the $38 billion Albanese paid for the business when he bought it at the top of the market in 2007.

The charge plunged Rio Tinto into the red during the second half of 2011, while dragging down its full-year profits by 59% to $5.8 billion, the company said today.

"As the acquisition of Alcan happened on my watch, I felt it only right not to be considered for an annual bonus this year," Albanese said. Chief financial officer Guy Elliott also said he would forgo his bonus for 2011, after taking home a $1.3 million top-up to his $1 million salary in 2010.

In addition to waiving their bonuses, the pair sought to appease their investors by announcing a 34% hike to Rio's full-year dividend to 145 cents a share.

Albanese and Elliott are waiving their bonuses amid growing pressure from politicians and investors on business leaders, inside and outside banking, to exercise pay restraint.

This has seen Royal Bank of Scotland boss Stephen Hester forgo his £1 million bonus and Cairn Energy chairman Sir Bill Gammell lose his £2.5 million bonus. RBS chairman Sir Philip Hampton and Lloyds TSB boss Antonio Horta-Osorio have also declined their bonuses, while Barclays chief Bob Diamond is thought to be considering a similar move.

Lloyds is also trying to claw back some of the £1.45 million bonus it paid to former chief executive Eric Daniels after setting aside £3.2 billion to cover the cost of compensating people over its mis-selling of payment protection insurance. The Alcan writedown was forced upon Rio amid a 12% decline in the aluminium price over the past year.

At the same time, aluminium producers have been squeezed by growing supply from China and wage inflation, while the cost of the energy-intense production process has soared in line with utility prices.

Albanese said: "Uncertain macroeconomic conditions [with]... stronger currencies in some regions and high raw material costs, will result in impairments of our aluminium business."