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In 2011, the company set a production goal of 9 million ounces by 2016. It also announced two gold discoveries at a property in Nevada. Though he founded the company and was once chief executive, Munk now shares the board chairman role with John Thornton and owns less than 0.2 per cent of the company.Tibor Kolley/The Globe and Mail

Barrick Gold Corp. shareholders have rubber-stamped the company's rich executive compensation in previous years, but this year sets a high water mark for bonuses at a time when the miner is missing financial and operating targets. Is enough finally enough?

Barrick's circular lays out the largesse from 2012. Six executives at the company were paid a total of $47.4-million (U.S.), one who left got an additional $12-million and the company raised the target size for executive bonuses. This all took place in a year which Barrick called "challenging."

In reality, that is an understatement. Barrick had to fire its chief executive because things were getting so bad. The company didn't meet any of its major operating and financial targets. Barrick unveiled $4.2-billion in impairments in its fourth-quarter earnings, which included a $3-billion writedown on a recently acquired African copper mine. The stock, even after dividends, returned negative 24 per cent.

Longer term, Barrick has also struggled to reward shareholders. The stock is where it was 20 years ago. The company has been in business for 30 years, for much of that time has been one of the world's largest gold miners and has only $3.1-billion in retained earnings. Writedowns have been a consistent feature, destroying value. There was a $773-million charge in 2008 to write down the value of assets. There was a $5.7-billion charge after that to close the company's hedge book, which also required a huge equity sale that diluted earnings per share.

But financial and operating performance is a surprisingly small factor when it comes down to how Barrick pays. There is a large amount of discretion given to the board and a bonus-setting system for executives that puts a lot of emphasis on things that shareholders might argue don't really help them. Moreover, Barrick decided to up the target ranges for bonuses, meaning even if performance dropped, pay was still likely to increase. Maybe this year, when it comes to the say on pay vote, shareholders will be less forgiving.

The biggest number is a $17-million payment to co-chairman John Thornton, including an $11.9-million payout just for joining Barrick. Peter Munk, the company's founder and chairman, got $4.3-million, up from $3.7-million in 2011.

Jamie Sokalsky ,who was promoted mid-year to chief executive officer when Aaron Regent was ousted, got $11.4-million, up from $5.1-million the year before, when he was chief financial officer. And according to Barrick, his pay was pro-rated because he only had half a year in the job.

Two other executives, Kelvin Dushnisky and Ammar Al-Joundi, were paid $6.6-million and $5.6-million, respectively.

Even former Prime Minister Brian Mulroney, a director, was paid almost $2.5-million for being a global affairs adviser and "acting as an ambassador." Oh, and let's not forget that Mr. Regent was paid a total of $12-million, including his severance.

So how did the executives at Barrick earn this money in what was a grim year for the company?

Frankly, it's hard to figure, looking at the circular.

Mr. Thornton and Mr. Munk don't have bonus targets. Their pay is largely discretionary and the rationales offered are scant.

Mr. Thornton needed the money just to take the job, with Barrick saying the signing bonus was "an inducement for Mr. Thornton to assume the Co-Chairman position and make a substantial commitment of his time to Barrick."

Mr. Munk got $2-million extra "in recognition of his continued strong leadership of the Board of Directors and the Company and to further reinforce the alignment of his interests with the interests of shareholders at this important juncture for the Company."

Mr. Sokalsky, Mr. Dushnisky and Mr. Al-Joundi benefited from another generous decision – to raise the range for bonuses. The result was that even though each of the three was paid less than their maximum bonus, it was still much more than they would have gotten under the lower ranges in effect in previous years.

Perhaps what shareholders ought to scrutinize most is the mix of factors that goes into determining what executives get paid. At a time when shareholders most value low costs and solid earnings and cash flow from miners, those numbers account for only 40 per cent of Barrick's annual bonus "scorecard." Growth, which investors have had enough of when it so often leads to overpaying, accounts for 35 per cent. And softer factors such as community health, environment, safety and security make up the rest.

Even using "adjusted" earnings per share that factor out writedowns and gains and losses on acquisitions, Barrick missed targets for earnings per share and operating cash flow. Production of both gold and copper fell short also. And production costs (certainly a controversial metric, but one that Barrick nonetheless uses) overshot targets.

Only high scores in exploration, human rights and avoiding injuries helped Barrick's executives get to their bonus levels.

Human rights as a basis for bonuses, really? Respecting human rights is a basic necessity. If you aren't doing that, you have no business running a company, let alone getting a bonus.

And there's no doubt that growth will one day be a focus again. For now, though, shareholders care first and foremost about operations. Barrick simply did not deliver.

(Boyd Erman is a Globe and Mail Reporter & Streetwise Columnist.)

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