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Goldcorp Inc. president and CEO Ian Telfer speaks during the annual general meeting in Toronto on April 19, 2006. Goldcorp Inc. says its chairman, Ian Telfer, will not be joining the board of Newmont Mining Corp. after the U.S. gold miner completes its deal to buy the company.Aaron Harris/The Canadian Press

Goldcorp Inc. says its long-time chairman will not be joining the board of Newmont Mining Corp. after an outcry over a huge bump in his retirement benefits.

Last week, Goldcorp’s board approved a near-tripling of Ian Telfer’s retirement benefit to US$12-million from US$4.5-million. The cash is payable to Mr. Telfer should Newmont succeed in its plans to buy the Vancouver-based miner. In explanation for the increase, Goldcorp has said Mr. Telfer’s compensation has not historically been adjusted for inflation.

The arrangement was met with scorn by some stakeholders, especially considering Mr. Telfer agreed to sell Goldcorp near a historic low in its stock price.

Joe Foster, portfolio manager with big Goldcorp shareholder VanEck, told The Globe and Mail he was “appalled” by the increase for Mr. Telfer, as well as the approximately US$10-million severance for outgoing Goldcorp chief executive David Garofalo if the acquisition goes through. VanEck is Goldcorp’s biggest shareholder and Newmont’s third biggest, according to Refinitiv data.

With shareholders at both Newmont and Goldcorp yet to vote on whether to approve the transaction, the compensation controversy injects an added air of uncertainty over whether the US$10-billion deal will close. If the transaction is successful, Colorado-based Newmont will bypass long-time rival Barrick Gold Corp. as the world’s biggest gold company by production and value.

While Mr. Telfer is still slated to receive his retirement benefit in full if the deal closes, Goldcorp said in a statement late on Wednesday that he would not now serve on Newmont’s board as deputy chair as previously announced.

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“Ian Telfer, the chairman of Goldcorp, has informed Newmont Mining Corp. … that he will not be joining the Newmont-Goldcorp board of directors upon completion of the proposed acquisition of Goldcorp by Newmont,” the statement said. “Mr. Telfer is focusing all of his efforts on having the Goldcorp shareholders approve the pending transaction with Newmont.”

In a statement on Thursday, the Shareholders’ Gold Council (SGC), a gold industry research group made up of large institutional shareholders, said it welcomed Mr. Telfer’s decision in light of what it called “the absurdity of his continuing as a director,” calling the retirement payout “gratuitous.”

But the SGC added that the board of Goldcorp had still failed to explain why the payment to Mr. Telfer is in the best interest of shareholders, considering the massive losses many have taken on their investment.

Adrian Day, president of Maryland-based Adrian Day Asset Management, a shareholder in both Newmont and Goldcorp, said he was surprised Goldcorp is still allowing Mr. Telfer to receive the full benefit.

“There has been no rational explanation for why that payment should be tripled,” he said.

"One can argue whether he should be getting anything, given the stock’s disastrous performance.“

Mr. Day said he intends to vote against the Newmont transaction at the Goldcorp shareholder meeting in large part because of the “absolutely outrageous” payment to Mr. Telfer.

In the Goldcorp statement, Mr. Telfer said: “I am excited about the creation of the world’s premier gold mining company, Newmont Goldcorp, and appreciate Newmont’s support in my decision to not join the board, as they have supported all of the agreements that have brought this merger together.”

Neither Mr. Telfer nor Goldcorp responded to requests for comment.

Mr. Telfer, 72, joined Goldcorp about 15 years ago, after it acquired his predecessor company, Wheaton River Minerals Ltd. He briefly became CEO after the departure of founder Robert McEwen. In 2006, Mr. Telfer became chair after Goldcorp acquired Glamis Gold. While Mr. Telfer never gained the official role of executive chair, he functioned as a de facto executive chair in a similar way to John Thornton at Barrick, Mr. Telfer was responsible for the big strategic decisions at Goldcorp and handpicked its CEOs.

Not that long ago, Goldcorp was the most valuable gold company in the world, worth more by market capitalization than Barrick, even though it was nowhere near as big in terms of production. The company navigated the great commodities gold boom-and-bust cycle better than Barrick by not hedging its gold exposure on the way up, and was lauded for having a much better balance sheet on the way down. But after a series of missteps, including flawed acquisitions, and execution problems at a number of its biggest mines, investors lost faith in the company and the share price collapsed over the past few years. When Newmont announced its acquisition in January, Goldcorp’s stock was trading at a 17-year low.

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