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 alistair.macdonald@wsj.com
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