Pension Funds to Vote Against Barrick Board -- Update

By Alistair MacDonald 

Three of the world's largest pension funds are set to vote against the re-election of Barrick Gold Corp.'s board, complaining of poor performance and overpay and setting up a potential clash between investors and the world's largest gold company.

Canadian funds Ontario Teachers' Pension Plan and British Columbia Investment Management Corporation along with the Netherlands' PGGM Vermogensbeheer B.V., which is one of Europe's biggest pension-fund managers, said on Friday that they will vote against Barrick's board.

Their vote is also a vote against Barrick Executive Chairman John Thornton, whose $13 million pay packet for 2014 has already been widely criticized by investors.

The funds said compensation at the company wasn't in line with its performance. Mr. Thornton, a former president of Goldman Sachs, received a 36% pay rise in 2014. Last year, Barrick's share price lost over a third of its value and underperformed many of its peers.

In an emailed statement, OTPP said that they will vote against the compensation and have concerns over the compensation of the board.

"We do not believe that sufficient progress has been made in crafting a board with the appropriate set of skills we assess that Barrick needs," the statement says. "Coupled with our ongoing concerns with the compensation decisions taken by the board, we have now lost confidence in the ability of the directors to effectively exercise their duties to our level of satisfaction."

Some investors complain about what they see as a lack of mining experience on the board and have expressed concern that Mr. Thornton is a de facto chief executive in a company that currently has no official CEO but two co-presidents.

While none of these funds are among Barrick's biggest investors, and some other shareholders have expressed support for the board, complaints from these giant pension funds may act as a rallying call for protesters. It will also bring unwelcome attention to a company that been dogged by years of complaint over allegedly poor corporate governance.

The three funds own a combined 0.9% of Barrick.

On its website, BCIMC complained that Barrick's board hasn't been responsive to shareholders and that the company's directors don't meet its expectations.

A spokesman for PGGM said that it will vote against the board. The Dutch pension giant has publicly pressed Barrick for governance changes in the past.

A spokesman for Barrick said Mr. Thornton's performance isn't measured on short-term share price moves but on his "transformational reforms," and executives are being paid with shares that must be held until retirement from the company.

In recent months, Barrick has cut head office staff and talked of becoming more entrepreneurial by making decisions closer to the actual mines.

The spokesman denied that there is little mining experience on the board.

"We have added six new independent directors with significant expertise across a range of disciplines pertinent to the work of the company," he said.

Mr. Thornton was paid $5 million in cash and was given $7 million to buy Barrick shares for the year ended Dec. 31, 2014. A further $913,547 was awarded to Mr. Thornton in pension and other benefits.

Two of North America's biggest proxy-advisory firms have also told investors to vote against Mr. Thornton's pay packet.

Still, while some investors say that Mr. Thornton's pay package is large, but they believe that he is making some positive changes to the company.

"It's a does seem like a lot of money," said Chris Mancini, analyst at Gabelli Gold Fund. "Whether or not he will have proven to be worth it will be born out over a period of time."

Write to Alistair MacDonald at [e-mail]

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