Yamana vows to improve compensation plan as shareholders reject proposal
TORONTO Shareholders have voted against a gold miner’s lofty pay package for the second straight day, delivering a resolute message that compensation needs to better reflect stock performance.
Yamana Gold Inc.’s “say on pay” resolution got a firm rejection at the company’s annual meeting on Wednesday, with 63 per cent of votes cast against it. Chairman and chief executive Peter Marrone said he regrets the result, which is nonbinding, and will work with shareholders on linking compensation more closely with the share price.
“That share price does matter. We’re sensitive to it and we need to be sensitive in our compensation construct,” he said in an interview following the meeting in Toronto.
What’s more, Marrone saw that shareholders were unhappy and decided to cancel 450,000 performance share units that were granted to him last year following the Osisko Mining Corp. transaction. “I hope that will be seen as a positive sign,” he said.
Yamana’s proxy circular states that Marrone’s total compensation was US$5.8 million in 2014, down 45 per cent from the prior year. But after adding in a “special cash bo- nus” for completing an acquisition and other awards, his overall pay was a whopping $11.3 million US, according to Glass Lewis & Co. It was a less rewarding year for investors, as Yamana shares plunged 49 per cent in 2014.
The Yamana vote came just a day after a Barrick Gold Corp.’s “say on pay” resolution also received a resounding “no” from investors. Only a quarter of shareholder votes backed that compensation plan.
After the meeting, Marrone said he thought the result of the Yamana vote would be similar to Barrick’s. But several of the company’s largest shareholders ended up voting in Yamana’s favour, bringing support up to the 37 per cent level.
He also said there are “lots of precedents” to the $2.7 million US bonus he got for the partial acquisi- tion of Osisko Mining Corp., and that this deal was the culmination of a much longer effort to build a presence in Canada.
The results of the Yamana and Barrick “say on pay” votes were not a surprise, as both Glass Lewis and Institutional Shareholder services urged clients to vote “no”. Glass Lewis is also urging investors to vote against the compensation plans at Goldcorp Inc. and Agnico Eagle Mines Ltd. Those companies hold their annual meetings on Thursday and Friday, respectively.
While Yamana had a brutal year from a share-price viewpoint in 2014, Marrone argued that it was successful in other ways. In addition to the Osisko takeover (done jointly with Agnico Eagle), he noted that the company streamlined management, performed well in its core operations, and hived off noncore assets into a new subsidiary with a separate management team.
The Osisko deal gave Yamana its first mining properties in Canada, including the prized Canadian Malartic gold mine. Last week, the company took another step to boost its Canadian business by striking a $17.5 million deal to buy Mega Precious Metals Inc.
“We were not in Canada before. Now we are here to stay,” Marrone told shareholders.