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Barrick Gold Corp. is seeking to align the bulk of its executives’ compensation with the gold company’s performance and is expected to require top managers to hold their stock until retirement.
After a tumultuous year where Barrick’s stock plummeted 50 per cent and the company recorded nearly $14-billion (U.S.) in writedowns, the miner is considering a plan that would require its executives to hold their shares until they leave the company.
Currently, executives are paid a mix of cash, stock options, restricted share units and performance-based share units. They are not required to hold their Barrick shares until retirement and can exercise their stock options at certain dates.
“That would be a step in the right direction,” said Chris Mancini, an analyst with the Gabelli Gold Fund, which holds 2.9 million Barrick shares. “To the degree that this could have executives think toward long term, that would be a positive development,” he said.
Barrick’s shareholders have been pushing for changes to how the company is governed after Barrick overpaid for copper company Equinox Minerals Ltd. and awarded incoming chairman John Thornton with a $11.9-million signing bonus.
News of the bonus came after the company announced that costs at one of its top gold projects, Pascua Lama, would jump more than 50 per cent to $8.5-billion. That project has since been suspended, and Barrick has embarked on a soul-searching journey to improve its corporate governance. The company recently announced changes to its board.
Peter Munk, the 86-year old founder and chairman, will hand over the top position to Mr. Thornton at Barrick’s 2014 annual meeting of shareholders. Two of the other long-serving directors will resign and Barrick has nominated four new independent directors.
If Barrick ends up adopting this plan, the biggest difference, according to Mr. Thornton, is that executives cannot sell their stock awards until they retire.
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