Editor's note: This story has been updated regarding the voting recommendation of Institutional Shareholder Services.
As shareholders rebel against Barrick Gold Corp.'s pay plans, there is more than just symbolism at stake.
The opposition of the group of huge pension funds, if they can swing enough votes from sympathizers, could cost some directors at Barrick their jobs.
The funds are planning to vote no on the say on pay resolution at Barrick, an "advisory" resolution that is not binding. But they are also planning to vote against the election of the directors on the compensation committee who awarded the pay package.
And under Barrick's majority voting policy, any nominee that does not get a majority of votes cast in favour of their election must tender their resignation to the chairman of the board.
Who could face that penalty? There's been a fair bit of turnover on the compensation committee. Currently, according to Barrick's proxy materials, it includes Gustavo Cisneros, J. Brett Harvey and Steven Shapiro. John Thornton, the co-chairman whose pay is at issue, was on the committee until May 2 of last year. And Mr. Cisneros was off the committee for about three months last year.
The pension funds who are upset about pay are not specific about which of those people, current and past, will be targeted.
The board members have one big factor in their favour: Institutional Shareholder Services. ISS has huge influence because its recommendations on how to vote guide the ballots of many big shareholders, especially in the index fund world.
ISS came out against Barrick's pay, recommending that investors vote no on the say on pay resolution, with the pay for Mr. Thornton being a big part of the reasoning.
"At a time when shareholder returns have lagged peer companies, the payment of such a large sign-on payment goes well beyond attracting talent and provides significant value to the recipient even if performance is stagnant," ISS said in its report, adding that "At this point in time, the company is paying for the expectation of performance rather than the delivery of performance and shareholder value."
Despite that condemnation of the pay package, ISS did not recommend voting against any directors, saying there are "no significant corporate governance concerns."
Still, the pension funds carry a lot of weight. If they can rally more opposition to the board members on the compensation committee there is an outside chance the majority voting policy could come into play.
Even then, there is wiggle room. And here's where it gets really interesting.
A close read of the language in Barrick's policy reveals that a director who does not get a majority must tender his or her resignation. However, nowhere does it say the board has to accept that resignation.
"The Corporate Governance and Nominating Committee will expeditiously consider the director's offer to resign and make a recommendation to the Board on whether to accept it. The Board will have 90 days to make a final decision and announce it by way of press release. The director will not participate in any Committee or Board deliberations on the resignation offer."
(Boyd Erman is a Globe and Mail Reporter & Streetwise Columnist.)
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