Barrick Gold revamping executive compensation plan, focussing on long-term

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TORONTO – Barrick Gold Corp. (TSX:ABX) is revamping its executive compensation, shrinking the annual bonuses it pays and increasing the focus on long-term results and increasing the number of shares in the company the chief executive must own.

The moves come as the gold miner reported that its top executives were paid less last year compared with 2012, as the gold miner struggled with big losses.

Chief executive Jamie Sokalsky received total compensation of $7.7 million last year, down from $11.4 million in 2012, as he received fewer share-based awards and no options.

Co-chairman John Thornton also saw his compensation, which included a $12-million signing bonus last year, fall from $17 million to roughly $9.5 million.

Chairman Peter Munk, who will retire at the next annual meeting, took home $3.9 million, down from about $4.3 million in 2012.

Under the executive compensation changes announced Monday, Barrick said executives will be assessed on their collective performance against a scorecard that will disclosed to shareholders in advance.

The scorecard will include eight performance measures including return on invested capital, dividends to shareholders, capital project performance and free cash flow.

Barrick said a majority of compensation will be in units that eventually convert into Barrick shares, but cannot be sold until the executive retires or leaves the company.

The company said annual bonuses will also make up a smaller portion of an executive’s compensation.

Barrick also increased the minimum share ownership requirements for its chief executives to 10 times their base salary, up from four times.

The gold miner came under fire last year when shareholders voted against a largely symbolic motion to approve the company’s approach to executive compensation at its annual meeting.

A group of institutional investors, led by Caisse de depot et placement du Quebec, were concerned about the signing bonus awarded to Thornton.

Since then, Barrick has been working to improve its corporate governance and address the shareholder concerns.

Late last year, Barrick announced Munk would retire at annual meeting in April and the board would be reworked to add several new faces and increase the number of independent directors.

Barrick also struggled outside of the boardroom last year, hammered by a sharp drop in gold prices.

The company took billions in writedowns, slashed its dividend and started to slim down its organization.

In addition, Barrick was forced to suspend work at its massive Pascua-Lama mine it is building in South America due to court and government decisions.

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