John Thornton had been executive chair of Barrick Gold for nearly 10 years and during that time put a formidable stamp on the company.Chris Helgren/Reuters
The power structure at the upper tiers of the world’s second biggest gold company is shifting with the diminution in the role played by long-term Barrick Gold Corp. executive chairman John Thornton.
Toronto-based Barrick ABX-T on Wednesday announced that Mr. Thornton has moved from the role of executive chairman to chairman, a position that carries fewer responsibilities, lower pay, and much more clearly-defined parameters.
Barrick said the change in Mr. Thornton’s role was driven in part by governance considerations.
In a regulatory disclosure alongside its latest quarterly earnings, Barrick said that considering Mr. Thornton had achieved key objectives following the company’s 2019 acquisition of Randgold Resources Ltd., this was both the right time for him to transition to chairman, and for the company to do away with the executive chairman role.
“This governance structure is best suited for the company’s next growth phase,” Barrick said.
Most Canadian companies don’t have executive chairs, and the parameters around what an executive chair does aren’t clearly defined either.
While responsible for running the board of directors, an executive chair also has the ability to get involved in operations or strategy on a daily basis, and essentially act as second chief executive.
Mr. Thornton had been executive chair for nearly 10 years and during that time put a formidable stamp on Barrick.
Originally recruited by Barrick founder Peter Munk in 2012, Mr. Thornton started out as a director. He was quickly named co-chairman, a role he held for about two years.
A former investment banker with Goldman Sachs in Asia, Mr. Thornton forged deep ties between Barrick and state-controlled China-based gold companies, including Shandong Gold Group and Zijin Mining Group, both of which are joint venture partners on mines with Barrick.
He was also instrumental in Barrick buying Randgold Resources Ltd. in 2019, a US$6-billion transaction that saw Randgold founder Mark Bristow join Barrick as CEO.
At times, Mr. Thornton’s reign has been controversial. Barrick lost two non-binding “say-on-pay” votes in light of what shareholders deemed to be excessive compensation paid to him. Shareholders at the 2013 meeting voted against the US$11.9-million signing bonus awarded to him by Mr. Munk. Two years later, Barrick lost another say-on-pay vote, after Mr. Thornton earned US$12.9-million in a year the stock lost about one-third of its value.
For several years before Mr. Bristow joined the company in 2019, Barrick did not have anyone in the traditional CEO role. Instead, Mr. Thornton performed many of the duties of CEO as part of his executive chair position.
But after Barrick brought back the CEO role for Mr. Bristow, Mr. Thornton’s imprint, influence and pay all gradually fell. Over the past few years, Mr. Thornton has only tended to surface once a year at the company’s annual meeting where he gives prepared remarks.
Last year, Mr. Thornton earned US$3.1-million, a fraction of his peak earning years at the company.
The change in Mr. Thornton’s role also comes after several years of lower approval ratings from shareholders at Barrick’s annual general meeting. Last year, he received the lowest approval rating of any director, garnering only 81.9-per-cent approval, with 18.1 per cent per cent of inventors withholding their votes. Mr. Bristow, by comparison, received 99.5-per-cent approval.
Barrick reported better-than-expected earnings in the fourth quarter but the street was disappointed with its gold production forecast.
“Guidance is significantly worse than we anticipated for 2024 gold volumes and costs,” Jefferies analyst Christopher LaFemina wrote in a note to clients.
Mr. LaFemina pointed out that Barrick has underperformed the price of gold since the creation of exchange-traded funds in 2004 that track the price of the precious metal. While the bullion price has risen fivefold during that time, Barrick shares have fallen by 22 per cent. He also noted that Denver-based Newmont Corp., the world’s biggest gold producer, has lost 6 per cent of its value.
“Has this period of relative underperformance for gold mining shares fully played out following what has been a 20-year massive derating of valuations in these equities? It is possible, as long as these companies can deliver operational improvements. The 2024 guidance from Barrick is a concern in this regard, and, for the moment, we still prefer gold itself over the gold mining equities.” Mr. LaFemina said.
Barrick shares on Wednesday fell by 0.7 per cent on the Toronto Stock Exchange to close at $19.04 apiece.
Niall McGee