The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.
Someone needs to break the bad news to gold miners: their party’s all but over. If they keep paying their chief executives handsomely, there’s no chance they’ll win back the global investors they sought for so long.
After peaking in 2011, the S&P/TSX Gold Index has been decimated, losing 63 per cent of its value. Miraculously, though, boards of directors have barely noticed. Which is why, even after tens of billions of dollars worth of writedowns and rounds of executive upheaval, the gold sector’s chief executives still get paid through the roof.
Barrick Gold Corp. is feeling the heat. Despite a share price that plunged by nearly one-third in 2014 – Barrick’s stock now trades at $15.52, a level not seen since last century – chairman John Thornton was handed a 36 per cent pay bump, bringing his total compensation to $12.9-million (U.S.).
If only it ended there. Barrick’s in the spotlight, but many of its rivals, such as Eldorado Gold Corp. and Yamana Gold Inc., are in the same boat.
Eldorado is a particularly fascinating case study. Even though the company’s shares have plunged 59 per cent over the past five years, Paul Wright, the long-time CEO, was paid $13.8-million last year – a 146 per cent pay raise.
As if that isn’t enough to raise eyebrows, let’s put it in context. Brian Porter, Bank of Nova Scotia’s CEO, made $10.3-million (Canadian) during the last fiscal year, steering the lender to a profit of $7.3-billion. Eldorado, meanwhile, made $106-million (U.S.) – after losing $649-million the year prior – yet its CEO got paid more.
Yamana Gold Corp. is also in on the trend – something few people have noticed. The compensation table in the miner’s proxy circular makes it appear as though CEO Peter Marrone took a steep pay cut last year, and for good reason. After earning $10.4-million in 2013, his pay was apparently slashed to $5.8-million in 2014, coinciding with a halving of the company’s stock price. Good corporate governance, it seemed.
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