Aug 21 (Reuters) – Peter Munk has long driven the agenda for Barrick Gold Corp, the company he formed in 1983 and built into the world’s largest gold producer, but recent missteps have raised questions about the leadership of a man once seen as a visionary in the industry.
Munk, who owns a stake of less than a quarter of a percent in the company, still steers Barrick’s strategy from his position as chairman, and he is now attempting to shore up the miner’s position. But some investors, seizing on what they view as misguided decisions and problems at several mines, are questioning both the company’s direction, and Munk’s role.
In the last two years, gold miners across the globe have been stung by falling bullion prices and a surge in costs. Barrick has fared worse than its rivals, outlining about $13 billion in writedowns this year alone.
Its share price is down nearly 65 percent in two years, outpacing a 50 percent drop in the NYSE Arca Gold Bugs Index , and a 26 percent drop in the price of spot gold.
While environmental woes at its Pascua-Lama gold-mining project, high in the Andes, have been the biggest drag on Barrick’s share price, investors have taken the most issue with its disappointing push into copper and with a proposal to give Munk’s heir apparent, co-chairman John Thornton, an unusually large, $11.9 million signing bonus.
In interviews with Reuters, five Barrick insiders said Munk himself played a pivotal role in both these decisions.
Neither Munk nor Thornton would comment for this story, and Barrick declined to comment on Munk’s role in the decisions.
But the high-level insiders, who asked not to be named as they are not authorized to discuss such matters with media, describe a company where Munk – an entrepreneur, real estate mogul and avid skier – has a powerful influence in every major board decision.
“The level of deference shown to Peter Munk within Barrick and its boardroom is surprising,” said one source familiar with Barrick’s boardroom discussions.
Only seven of Barrick’s 13 directors are independent, a ratio that Barrick says meets New York Stock Exchange rules. But proxy advisory firm Glass Lewis says the board lacks two-thirds independence – a best practice for big, widely held companies.
“It would be nice if we could get a feeling that the board of directors is acting for all shareholders, because there is a feeling, I think, that we are dealing with a little bit of a fiefdom,” said Caesar Bryan, a portfolio manager at Gabelli, which owns some 2.9 million shares in Barrick Gold. “The whole corporate governance and board situation is a little disconcerting.”
GAMBLE ON COPPER
The insiders all praised Munk, who was born in Hungary and escaped the Nazis as a teenager, for his achievement in building Barrick and the tens of millions of dollars he has donated for healthcare and education in Toronto, where the company is based.
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