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TORONTO – Barrick Gold Corp. said it would “carefully consider” an unprecedented rejection by shareholders of the company’s executive compensation plan on Wednesday, even as management strongly defended a record payment given to the co-chairman.
The rejection at Barrick’s annual meeting here was a direct challenge to a board that last year agreed to pay US$17-million to co-chairman John Thornton, which included a staggering US$11.9-million signing bonus.
Barrick founder and chairman Peter Munk was defiant during the meeting, defending his company’s decision to bring on Mr. Thornton, a former president at Goldman Sachs.
“We had to secure him,” Mr. Munk told shareholders. “The right thing was to have this advanced investment … to secure the kind of access he could give us and the credibility he could provide us with in securing major capital.”
Under the terms of his hiring, Mr. Thorton had to invest the bonus in Barrick shares, which he did in December, paying a market price of about $33.50. The compensation vote is non-binding, but Barrick CEO Jamie Sokalsky said management would carefully consider the views of shareholders. In a second vote, shareholders agreed to re-elect all 13 directors to Barrick’s board.
While 85% of votes cast were against Mr. Thornton’s pay package, an average of 82% of votes were cast in favour of each director’s reelection.
“I think it’s a bit more than symbolic,” said Barry Allan, senior mining analyst at Mackie Research Capital. “It’s certainly a statement about what is appropriate executive compensation as seen by the Canadian marketplace, saying basically [the salary] is not really performance-driven — which has been an endemic problem, particularly in the gold mining industry.”
But Mr. Allan said it’s unclear whether this will actually result in any scaling back of salaries already paid, but he predicted Barrick’s board would soon issue a statement that would seek to mollify shareholders and their concerns.
“Any board that ignored this would be folly,” he said.
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