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Five years ago, the Financial Post asked Peter Munk when he planned to retire from Barrick Gold Corp. His response: “When they kick me out.” But that wasn’t really true.
Mr. Munk is as stubborn and proud a businessman as there is. And despite the numerous calls for him to step aside in recent years, he was always going to leave on his own terms.
On Friday, Mr. Munk’s 86th birthday, Barrick disclosed that he plans to retire. No timeline was provided, though sources said the departure will most likely come at next year’s annual meeting, when the company plans to introduce new directors in a long-awaited overhaul of its board.
Investors have gotten increasingly fed up with the board in recent years, as it has made some awful strategic errors and approved some outlandish pay packages for company insiders. Mr. Munk, the founder and chief authority at Barrick for 30 years, was the key figure behind every move and the natural lightning rod for investor dissent.
It would be easy to look at Friday’s disclosure as a sign that Mr. Munk is caving to shareholder pressure to resign, particularly since the disclosure came in a prospectus for a US$3-billion equity offering that Barrick’s bankers are struggling to sell. Roughly a quarter of the stock has not been sold , according to sources.
But in reality, angry shareholders were not the singular factor behind this move.
The simple fact is that Barrick has repaired much of the self-inflicted damage it committed in recent years. And with a successor in place and ready to take over, this is an ideal time for Mr. Munk to move on. The disclosure provided some clarity for the street, which is skeptical of almost everything that comes out of Mr. Munk’s mouth these days.
His departure does not come as a surprise; he has signalled several times that his days at Barrick are nearing an end. Last year, he named former Goldman Sachs President John Thornton his co-chairman. Mr. Munk was so desperate to secure Mr. Thornton’s services that Barrick paid him a US$12-million bonus just for taking the job. Mr. Thornton assumed greater responsibility this year, meeting with many of the miner’s top shareholders.
Meanwhile, the big problems at Barrick have been addressed. The troubled Pascua-Lama project has been suspended, meaning it will stop sucking billions of dollars out of the miner’s treasury until the many problems surrounding it have been resolved. And the over-levered balance sheet is being repaired by the equity offering. The company has also improved the performance of many of its operations, most notably the Lumwana mine in Zambia.
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