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Barrick Gold chairman John Thornton’s $12.9-million (U.S.) compensation for 2014 did not go down well with investors.

MARK BLINCH/REUTERS

John Thornton has finally addressed the recurring outcry over his compensation – by taking a nearly $10-million (U.S.) cut in pay.

The executive chairman of Barrick Gold Corp. will receive $3.1-million for his work in 2015, a dramatic reduction from the $12.9-million he pocketed for 2014.

Shareholders have twice voted against Mr. Thornton's compensation package in recent years through non-binding "say-on-pay" resolutions, and he had vowed to address investors' anger on the issue.

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"Last year, our shareholders voiced concern about how we compensated our executive chairman," said J.B. Harvey, chair of Barrick's compensation committee. "We have listened carefully to their feedback."

To be sure, the 75-per-cent run-up in Barrick's stock price since the start of the year will go a long way to easing Mr. Thornton's pain. He owned $29-million in Barrick stock as of March 1.

Still, outside observers said the pay cut was welcome. "It's a positive step to address investors' concerns from last year," said Sid Subramani, an analyst at Veritas Investment Research. "But shareholders will have to decide whether this goes as far as they want."

Among other questions, it's not certain whether Mr. Thornton's new compensation level will be typical of what can be expected in future years.

Barrick said its compensation committee awarded Mr. Thornton $3.4-million in incentive compensation for 2015, but he decided to forfeit all of it "in order to better reflect the recent experience of our shareholders."

As a result, he will collect only $3.1-million in base salary plus pension and other benefits.

Since it was Mr. Thornton's decision to forgo the incentive compensation, it's not entirely clear what message the company's board is sending in regards to the executive chairman's level of compensation.

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However, the company's information circular, released after the close of markets on Thursday, included the nomination of two new independent directors – Gary Doer, Canada's former ambassador to the United States, and Graham Clow, a mining engineer and chairman of Roscoe Postle Associates.

It also included pledges to tie incentive compensation for the executive chairman to Barrick's share-price performance and to engage shareholders more directly.

Mr. Thornton has been a controversial figure since arriving at Barrick more than three years ago.

He spent more than two decades at Goldman Sachs, where he helped build the investment bank's business in China and rose to become president of the Wall Street firm, before resigning in 2003 to teach at a Beijing university and pursue other activities.

Peter Munk, Barrick's founder, was impressed by Mr. Thornton's deal-making prowess as well as his deep ties to China.

He persuaded Mr. Thornton to join Barrick as co-chairman in 2012, in part by offering him an $11.9-million signing bonus. Shareholders expressed their disapproval by turning thumbs down on the pay package in a non-binding vote. In total, Mr. Thornton collected $17-million in compensation from Barrick in 2012.

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He received a more modest $9.5-million in 2013, before ascending to executive chairman – the company's most senior post – on April 30, 2014.

His $12.9-million compensation for 2014 did not go down well with investors, who contrasted his paycheque with the company's declining share price. Shareholders again voted against his pay package.

Investors have griped that Mr. Thornton has yet to produce results that are in keeping with his remuneration. On the day he took over the top job in 2014, Barrick's share price stood at $19.13 (Canadian). Nearly two years later, it has slid below $18.

While the price of gold has declined modestly during that time, Barrick's share price performance has lagged that of its peers, as measured by the S&P/TSX global gold index.

Mr. Thornton has earned plaudits for trimming Barrick's bureaucracy and overseeing the sale of several mines as well as a major reduction in Barrick's mountain of debt, from $13-billion (U.S.) to under $10-billion. He has made it a priority to knock another $2-billion off the company's debt load this year.

The problem is that, while debt has been tumbling, so has the value of Barrick's assets. Measured in terms of debt to equity, Barrick remains one of the most highly leveraged gold miners.

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It faces other risks, too. On Wednesday, a U.S. judge ruled that Barrick must face a class-action lawsuit filed by investors who accuse the miner of concealing problems at its Pascua-Lama project on the border of Argentina and Chile.

The project was mothballed in 2013 as a result of cost overruns, environmental concerns and falling bullion prices.

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