Peter Munk’s bittersweet goodbye to Barrick

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Peter Munk, a Hungarian refugee whose ambitions led him to build hotels in the South Pacific and create stereos for Frank Sinatra, said goodbye to Barrick Gold Corp., the company he founded three decades ago and turned into the world's biggest gold producer.

The 86-year-old Canadian businessman stepped down as the company's chairman on Wednesday, a bittersweet moment for Mr. Munk, who has described Barrick as his life and the one thing that keeps him up at night.

"You can take, maybe, Munk out of Barrick. You can't take Barrick out of Munk," he said at the company's annual meeting of shareholders in Toronto.

Mr. Munk knew nothing about gold mining when he took a stake in a small mine near Wawa, Ont., in 1983. He spent the next 30 years buying out rivals and building Barrick into a gold giant.

He has been succeeded by former Goldman Sachs executive John Thornton, who he says shares his vision of transforming Barrick into a Canadian-based mining titan with production in all types of metals.

Mr. Thornton has been waiting in the wings for more than a year, first serving as a board adviser and then as Barrick's co-chairman. He becomes executive chairman at a critical time in Barrick's history.

The company is on the mend after it borrowed billions to buy Equinox Minerals and grossly miscalculated the costs to build its Pascua Lama project in the Andes. To deal with depressed gold prices, the miner has divested more than $1-billion (U.S.) of non-core assets, shrunk its production and changed its strategy of growth in favour of discipline.

Shareholder anger over Barrick's performance and its decision to award Mr. Thornton with an $11.9-million signing bonus prompted the miner to overhaul its executive compensation plans as well as its board.

In a victory for Barrick, shareholders voted on Wednesday for the company's new pay arrangements and its slate of four new independent directors.

But concerns linger. Three of the eight Canadian pension funds that rejected Mr. Thornton's pay last year voted against the new plan on Wednesday, citing continued concerns about the executive chairman's compensation. One of the funds, the Ontario Teachers' Pension Plan, withheld votes for members of Barrick's compensation committee.

Before the outcome of the votes was announced, Mr. Munk said he was "hurt and confused" by the outrage over Mr. Thornton's pay.

Mr. Munk spent part of his farewell speech defending his decision to hire Mr. Thornton, at one point saying it was easy to find a chairman for Tim Hortons or a guy to run Subway.

"But for god's sake, this is a different job qualification, it's a different kind of persona, it's a different kind of international standing that Barrick needs today to take it to the next plateau," Mr. Munk said.

He saved some of his highest praise for Barrick's chief executive officer Jamie Sokalsky, who was appointed CEO in a surprise management shuffle in 2012 and has been charged with cleaning up the company's mistakes. It is unclear what will happen to Mr. Sokalsky under Mr. Thornton.

As he neared the end of his 30-minute speech, Mr. Munk's voice softened and he gripped both sides of the lectern. He told the meeting that it was time to go and said: "I shall remain very involved with Barrick."

A consummate deal maker, Mr. Munk had aimed to broker one final deal by acquiring Barrick's biggest rival, Newmont Mining Corp.

But the discussions fell apart and long-simmering hostilities between the gold giants spilled into the public realm this week, with Barrick and Newmont blaming each other for its demise.

Newmont publicized a confidential letter sent to Barrick, which criticized Mr. Thornton for not being constructive, which has added to the banker's controversy just as he begins his tenure at the gold miner.

Along with Mr. Munk, two of Barrick's longest-serving directors, former Canadian prime minister Brian Mulroney and lawyer Howard Beck, also retired from the company.

Mr. Munk's retirement comes the same day Barrick reported a 90-per-cent drop in first-quarter profit owing to weaker bullion prices and lower sales. The company also cut copper production because of the partial collapse of equipment at its mine in Africa.