Canadian gold miners’ performance lags: study

Yamana Gold Inc. posted a negative 73 per cent total shareholder return in the past five years — the worst among 17 large companies analyzed in a report released Monday by gold sector investors.

The report pointed a finger at Peter Marrone, who founded Toronto-based Yamana in 2003, and serves as executive chairman and until recently chief executive.theratioofhisownership stake in his company as compared to his compensation during the past five yearswasaround0.1,lowest among all executives analyzed.

The report is by the Shareholders Gold Council, formed earlier this year with backing from U.S. billionaire John Paulson and other large investors who areupsetwithgoldminers’ share prices that have largely underperformed the price ofgoldandthatwantsmanagement to invest alongside shareholders. The council suggests that the ownershipto-compensation ratio for either CEOS or chairs of the board strongly predicts company performance.

At the other end of the spectrum, Bill Beament, chief executive of Australia’s Northern Star Resources Ltd., had the best ownershipto-compensation ratio at about 10.6 — meaning his ownership stake is worth more than ten times his compensation. His company was also the best performer, delivering an 869 per cent return to shareholders during the past five years.

“The principle is how much skin in the game does the key leader have,” said Christian Godin, who heads the Shareholders Gold Council. “My personal opinion is that investors are concerned with the fact that in too many cases, there’s not enough skin in the game.”

Godin said the 17 gold companies analyzed in the report, the group’s first, were selected based on their market capitalization.

The survey covered the period from Nov. 15, 2014 to Nov. 15, 2018.

In a statement, Yamana called Marrone a “significant investor,” noting he holds restricted stock units, which vest over time, and deferred stock units, which vest upon retirement, which were not counted by the Shareholders Gold Council.

But Yamana wasn’t the only company to rank poorly.

Toronto-based Kinross Gold Corp. delivered a negative 45 per cent return during the five-year period in question.

Its CEO and chair both ranked at or near the bottom on the ownership to compensation ratio.

In fact, the report analyzed 17 companies’ five-year performance and seven companies — all of them Canadian; in addition to Yamana and Kinross, they are Alamos Gold Inc., Goldcorp Inc., Iamgold Corp., Barrick Gold Corp., and Wheaton Precious Metals Corp.— underperformed gold, which fell 8 per cent during the period.