(Bloomberg) — A coalition of gold investors, including firms backed by billionaires John Paulson and Naguib Sawiris, is taking aim at mining executives who don’t have enough skin in the game.
Businesses tend to perform better when top managers have a high ownership-to-pay ratio, according to the inaugural report of the newly launched Shareholders’ Gold Council, which tracked 17 gold companies.
“You have a much bigger ownership in those stocks that have performed above the median and the gold price in the last five years,” Christian Godin, who heads the Shareholders’ Gold Council, said in a telephone interview.
The report compared stock ownership by chairmen and women and chief executive officers with five-year compensation, and then compared that ratio to shareholder returns.
Of the 30 executives listed, Kirkland Lake Gold Ltd.’s Chairman Eric Sprott and Franco-Nevada Corp.’s Pierre Lassonde had by far the highest ownership-to-pay ratio, at 381 times and 160 times compensation, compared with single digits or lower for most of the pack, the report shows. Both companies have performed well in the five years through Nov. 15, with 256 percent and 61 percent total shareholder returns, the gold council’s analysis shows.
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