Canada's largest pension fund manager has thrown its support behind a campaign opposing executive pay practices at Barrick Gold Corp., saying it will vote against the gold miner's compensation plan this year.
The Canada Pension Plan Investment Board, which manages $239-billion in assets for the Canada Pension Plan, said it will oppose Barrick's compensation in the annual say on pay vote at the company's annual meeting on April 28 in Toronto, and will also withhold its support for the re-election of Brett Harvey to Barrick's board. Mr. Harvey is the chair of Barrick's compensation committee, which decides executive pay issues.
The fund said it is unhappy with compensation for Barrick executive chairman John Thornton, who was paid $12.6-million last year, a 36-per-cent pay increase over 2013.
"We believe the company continues to inadequately address key shareholder concerns related to its chair's compensation," CPPIB said in a statement. "We continue to be concerned with the company's practice of granting outsized awards on a largely discretionary basis, which we believe is inconsistent with the governance principle of pay-for-performance."
Also Friday, Ontario's smaller OPTrust pension fund said it will also vote against Barrick's compensation plan and withhold its vote for all members of Barrick's compensation committee, including Mr. Harvey. In a statement, OPTrust said it appreciated the company's efforts in recent years to significantly restructure its compensation arrangements, but said "these efforts are undermined" by the company's pay for executive chairman John Thornton.
"Due to a lack of structure or pre-disclosed performance targets where it comes to Mr. Thornton, we cannot easily discern any link between pay and performance," OPTrust said. "Given that our concerns about Mr. Thornton's pay structure and pay levels have been ongoing for three years, OPTrust has decided to also withhold votes from returning compensation committee members."
OPTrust manages $17.5-billion on behalf of Ontario government workers who are members of the OPSEU union.
Several other major shareholders have also indicated they will vote against Barrick's pay practices this year.
Both the Ontario Teachers' Pension Plan Board and British Columbia Investment Management Corp. have already said they will vote against the entire board of Barrick over compensation concerns. Dutch pension plan PGGM has also said it will oppose the board and vote against the compensation plan in the say-on-pay vote.
Barrick spokesman Andy Lloyd said last week that the gold miner is rewarding executives for creating long-term superior returns, noting they receive common shares that must be held until retirement.
"The result is that our leaders' personal wealth is tied to the long-term success of the business," he said.
Canadian investors are increasingly using say on pay votes to express displeasure about compensation practices at major companies. The votes are advisory only and not binding on companies, but most firms typically make significant changes when the votes are low.
Barrick received just 15-per-cent support in its 2013 say on pay vote and made major changes to its compensation practices in the following year.
On Thursday, Canadian Imperial Bank of Commerce got just 43 per cent support from shareholders for its compensation plan in its say on pay vote. Investors complained about the bank's post-employment pay packages for former chief executive Gerry McCaughey and former chief operating officer Richard Nesbitt.