Investors punt ‘say-on-pay’ move for second time at Barrick Gold
TORONTO — For the second time in three years, investors have sent Barrick Gold Corp. an overwhelming message that its executive pay is unacceptable.
Three-quarters of shareholder votes were cast against the company’s “say-on-pay” resolution at its annual meeting in Toronto on Tuesday, according to a preliminary count. The result, which is nonbinding, was enough to convince chairman John Thornton the company has to go back to the drawing board on its pay program, even though it recently revamped it.
“We will go back and refine our system, particularly as it relates to me,” he told shareholders.
“And with the goal next year of this vote being at minimum the opposite of the vote this year, and hopefully a lot better than that.”
If there were any consolation for Toronto-based Barrick, this result was not as bad as the one it received two years ago. At the 2013 annual meeting, more than 85 per cent of shareholder votes were against the gold miner’s executive pay plan.
Thornton’s pay was at the centre of both firestorms. In 2013, the controversy was due to a $12 million US “signing bonus” he received just for becoming co-chairman. This time, investors were furious that his pay increased more than 35 per cent over last year, even though Barrick’s stock plunged 33 per cent. Thornton earned $12.9 million US in 2014.
The voting result on Tuesday was not a huge surprise. The major proxy advisory firms (Institutional Shareholder Services and Glass Lewis & Co.) urged shareholders to vote “no,” and a few major pension funds criticized Thornton’s pay as well.
One or more proxy advisers have also urged “no” votes against the pay plans at Goldcorp Inc., Yamana Gold Inc. and Agnico Eagle Mines Ltd. All three companies hold annual meetings this week, so their “say on pay” votes will be closely compared to Barrick’s.
Thornton got the pay controversy out of the way at the start of the meeting.
After that, he made some frank comments about how Barrick and other gold miners ruined their own bull market by focusing on shortterm results and making huge investments to grow production on the assumption that gold prices would go up indefinitely. That strategy backfired when gold dropped and companies recorded billions of dollars of writedowns.
“We are painfully aware of the value that has been destroyed,” Thornton said. “We are working tirelessly to rebuild that value and to regain your trust and confidence.”
To turn Barrick around, Thornton has implemented a “Back to the Future” plan that eliminates middle management and tries to get the company back to its entrepreneurial roots. In the 12 months that Thornton has been chairman, Barrick replaced nearly all of its senior management team and shrunk its head office by half. It has also re-focused on its highly profitable Nevada operations.
Investors are generally supportive of Thornton’s strategy, but remain skeptical until they see results. Barrick shares are stuck around their lowest levels since the early 1990s.
Barrick shares in Toronto closed up three per cent (47 cents) to $15.99.