Investors blast ‘terrible’ Goldcorp chair deal
Telfer’s lucrative retirement package to rise to $12 million
A lucrative retirement package for the chair of Goldcorp Inc. is raising the hackles of investors ahead of a key vote on the company’s planned merger with Newmont Mining Corp.
Ian Telfer’s retirement allowance will rise to roughly $12 million (U.S.) from $4.5 million if the miners merge, according to a regulatory filing from Vancouver-based Goldcorp, once the world’s largest gold miner by market value. Initially, the plan was for Telfer, 72, to join Newmont’s board as deputy chair.
On Tuesday, Goldcorp announced he wouldn’t accept the new job.
“I’m appalled by it,” said Joe Foster, a portfolio manager at VanEck, the second-largest Goldcorp shareholder, according to Bloomberg data on filings as of Dec. 31.
“They put the current management in place three years ago, and they’ve done a very poor job of operating the company, and it shows in their results. To reward that poor performance with these huge payouts is a crime in my view.”
Meanwhile, the Shareholders’ Gold Council welcomed Telfer’s decision not to join Newmont’s board, but the group said the two mining companies “have still failed to justify how the threefold increase in the payment to Telfer is in the best interests of their respective shareholders.” Rich parachute payments granted to company leaders who may lose jobs following a merger sometimes come under fire from investors, but they rarely are controversial enough to scuttle a multibillion-dollar deal. Goldcorp investors are set to vote April 4; Newmont’s vote is April 11.
Goldcorp’s attempt to top-up its chair’s retirement haul has met significant resistance. The stock has plummeted almost 75 per cent since its 2011 high, and the company fell short of almost every target when it last reported earnings.
Meanwhile, Telfer has collected $900,000 in average annual compensation since becoming chair in 2006 and reaped at least $35 million from exercis- ing stock options, according to data compiled by Bloomberg.
The retirement package is “completely oppositely aligned with long-term shareholders, and a terrible outcome,” John Qian, an analyst at T. Rowe Price Group Inc., said in an email Wednesday.
“He is getting paid for destroying a ton of value over his tenure then selling at a low,” he wrote.
“In what world is that worthy of a massive payout?”
T. Rowe owns 2.3 per cent of Newmont’s shares. Qian declined to comment on how the firm will vote its shares on the merger.
Telfer’s increase was granted in light of him giving up years of incentives and bonuses by stepping down as chief executive officer in 2006 and instead taking the chair role, Goldcorp said in its filing.
A Goldcorp spokesperson declined to comment. A Newmont representative deferred questions to Goldcorp.
“He’s got a pretty generous salary or whatever they call it,” VanEck’s Foster said in an interview in New York.
“He’s very well compensated already. I don’t see why he should rewarded for poor performance.”
On Monday, SGC, the coalition of gold investors backed by billionaire John Paulson and Naguib Sawiris, chair of Orascom Investment Holding SAE, accused Telfer of “pillaging Newmont shareholders” and called on the boards of both companies to explain how the proposed retirement package would benefit investors.