Barrick shareholders urged to vote ‘no’ on John Thornton's 'excessive' pay

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A second influential proxy adviser urged shareholders to oppose Barrick Gold Corp.'s compensation plans, citing concerns about chairman John Thornton's pay.

The gold miner's decision to increase Mr. Thornton's pay by 36 per cent to $12.9-million (U.S.) is "problematic at a minimum and seemingly unwarranted," Institutional Shareholder Services said in a note released late on Thursday.

Another proxy adviser, Glass Lewis & Co. earlier Thursday urged shareholders to vote against Barrick's pay scheme at the company's annual meeting of shareholders in late April.

The two negative recommendations come one year after Barrick overhauled its remuneration practices in the wake of criticism by investors. The company now evaluates its executives against a set of performance metrics. It also requires executives and other top Barrick employees to use their "long-term incentive compensation" to buy Barrick stock that they cannot sell until they leave the miner.

The proxy advisers praised these changes, but said Mr. Thornton's pay raise was not warranted given Barrick underperformed its peers in terms of shareholder returns. Glass Lewis went a step further and said it considers Barrick's "ongoing compensation arrangement with its chairman to be excessive and extremely risky, particularly given the company's track record of exorbitant pay packages for Mr. Thornton.

It is a blow to the company that spent months listening to investor concerns and revamping its pay practices after shareholders overwhelmingly voted against Mr. Thornton's $11.9-million signing bonus in 2013 in a non-binding vote.

Many large shareholders such as managers of index funds are expected to follow the proxy firms' advice.

One of Barrick's largest shareholders, Seymour Schulich, said he had already voted in favour of Mr. Thornton, Barrick's directors and the compensation plans, but nevertheless, he still agreed that Mr. Thornton's compensation was inappropriate.

"I don't know why he couldn't freeze his salary," said Mr. Schulich, a prominent Canadian businessman who owns 15 million shares of Barrick.

"Do I think there was a lack of sensitivity there? Yes. Do I think you go and kill people because of it? No. Out of 12 things I think [Mr. Thornton] has done, 11 things are right," he said.

Mr. Schulich, who made his fortune in mining, said the Barrick board should have been sensitive to the fact that Barrick did not have a good year, even if that was a result of weak gold prices and fallout from decisions made before Mr. Thornton's time.

Andy Lloyd, a spokesman for Barrick said: "We hope that shareholders will recognize that this is about a fundamental change in the way we compensate our leaders with share ownership at the very heart."

Mr. Thornton used half of his latest compensation, plus his signing bonus and his own funds to buy 1.4 million shares of Barrick. Other executives have also bought Barrick stock.

"Half of the shares he has purchased with his own money. There is no better reflection of his commitment to the company," Mr. Lloyd said.

Stock of the world's biggest gold producer is down about 17 per cent since Mr. Thornton became chairman last April.

Although the vote on executive pay is non-binding, it does send a message to the board. Companies often take shareholder concerns into account.