BARRICK GOLD
TSX: ABX Meeting Date: 4/28/2015
Canada’s largest gold company may be in for a contentious annual meeting focused around executive pay issues – a repeat, in some sense, from two years ago. Once again, chairman John Thornton’s pay package is being scrutinized by shareholders, not only for its sheer size but also for its exclusion from the incentive plans governing the pay of other executives.
After receiving only 15% support for its say-on-pay proposal in 2013, Barrick appeared poised for significant change and improvements with regard to its executive compensation program at its 2014 annual meeting. The 2014 “transitional year” showed some promise for shareholders, with the introduction of a new long-term incentive plan following extensive engagement with the Company’s shareholder base. Shareholders seemed to support these actions, as say-on-pay approval rocketed to over 80%.
The newly adopted “PGSU Plan” does indeed show signs of the Company’s commitment to change, as the plan requires executives to hold all long-term share grants until retirement or leaving the Company. The plan was adopted in connection with the Company’s “Back to the Future” strategy, which is meant to move the Company toward a structure where its leaders are also owners, such that their personal wealth is tied to the Company’s fortunes.
While the Company’s chairman, John Thornton, has been credited with leading the Company’s “Back to the Future” strategy (of which the new PGSU Plan is a key component), he does not actually partake in the new PGSU plan and will instead continue to receive awards that are ultimately determined at the discretion of the compensation committee.
The failure to link Mr. Thornton’s compensation to Barrick’s performance can be seen in his generous 2014 pay package, a staggering $13.0 million despite a year of lackluster performance for the Company. It will certainly be interesting to see how shareholders weigh-in on the continued exclusion of Mr. Thornton from the compensation programs, which are utilized for each of the Company’s other executives, particularly in light of the Company’s performance.
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