Pressure on Barrick Board Centers on Long-Time Directors – by Liezel Hill & Katia Dmitrieva (Bloomberg News – September 18, 2013)

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Investor pressure to change the board at Barrick Gold Corp. (ABX), the world’s biggest producer of the metal, is centering on long-serving directors, including former Canadian Prime Minister Brian Mulroney.

Canada’s biggest pension funds want new independent board members and say the miner should consider replacing directors who have been there longer than 20 years and are close to Co-chairman and founder Peter Munk, according to two investors briefed on the matter who asked not to be identified because the information hasn’t been made public.

Barrick said yesterday it will add new independent directors and strengthen its executive pay policies after investors criticized governance at the company. The gold miner took $8.7 billion of writedowns in the second quarter and cut its dividend 75 percent after gold prices fell the most in three decades.

“The tenure on the board is far too long and there are far too many non-independent directors,” said Robert Gill, a Toronto-based fund manager at Aston Hill Financial Inc. (AHF), which manages C$7.8 billion ($7.6 billion), including Barrick shares. “It’s time to change the board and we need to bring in more independence into the board,” he said by phone Sept. 11.

‘No Disagreement’

Barrick plans to announce progress on the moves by the end of the year, Andy Lloyd, a company spokesman, said in an e-mailed statement. Independent directors have been meeting with shareholders since the company’s April annual general meeting to discuss governance matters, including compensation, he said.

“Barrick takes matters of governance seriously and feedback from our shareholders is important to us,” Lloyd said. “There is no disagreement on this process at the board.”

Canada’s six biggest pension fund managers in April criticized as excessive an $11.9 million signing bonus for Co-chairman John Thornton.

Spokesmen for Canada Pension Plan Investment Board, Caisse de Depot et Placement du Quebec, Ontario Teachers’ Pension Plan Board, the Public Sector Pension Investment Board, Alberta Investment Management Corp. and Ontario Municipal Employees Retirement System didn’t immediately return phone calls and e-mails seeking comment today.

Calls to Mulroney’s Montreal office seeking comment weren’t immediately returned.

Munk’s Departure

While Munk said in April he found a successor in Thornton, a former Goldman Sachs Group Inc. president who was named Barrick co-chairman in June 2012, the gold miner hasn’t announced a date for Munk’s departure. It’s “appropriate” that the company considers a path to new leadership at a board level, Munk wrote in Barrick’s annual report filed March 25.
Barrick, which rose 8.6 percent to C$20.50 at the close in Toronto, has dropped 50 percent in the past 12 months. In that time the 49-company Standard & Poor’s/TSX Global Gold Sector Index has declined 44 percent.

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