Pay plan to emphasize long-term stock ownership, company says
Canadian gold miner Barrick Gold has announced an overhaul to its compensation policies and cut pay for its chairman amid rising shareholder pressure.
After what it calls ‘extensive’ discussions with shareholders representing more than 30 percent of the company’s stock, Barrick says it will now reward executives based more on collective performance against a scorecard that will be disclosed in advance to investors.
Overall compensation for chairman John Thornton for last year, the company says, dropped to $8.9 mn from $16.8 mn in 2012, which included an $11.9 mn signing bonus. Around $5 mn of the compensation is to be used to buy Barrick stock.
The announcement comes after the company suffered a defeat at a general meeting last September in which 85 percent of voters rejected the company’s compensation policies. The vote came in response to increases in executive pay despite falling share prices, major writedowns and operational setbacks.
Barrick says a smaller portion of overall compensation for management will now come in the form of an annual bonus, and it has raised its minimum share ownership requirements for executives to what it says are the highest in Canada. The firm adds that the CEO is now required to own shares equivalent to 10 times his base pay in value.
‘We believe our new system features the most shareholder-friendly, long-term compensation program of any Canadian company today, as well as among our peers in the global mining industry,’ says Brett Harvey, chairman of the board’s compensation committee, in a press release. ‘Our management team members will now be owners, receiving a significant portion of the compensation they earn in the form of common shares that cannot be sold – fully aligning the long-term interests of executives and shareholders.’
Under the plan, most executive compensation will come primarily in common stock and most of it must be held until the executive retires or quits, the company says. Barrick adds that it has implemented a new clawback policy that ‘goes beyond the yet-to-be implemented requirements of the US Dodd-Frank Act.’
