« Barrick Gold unveils new pay scheme, may add directors »
Allison Martell | Reuters[…] « Yvan Allaire, executive chairman of the board of the Institute for Governance of Private and Public Organizations, was positive about the plan overall
« It’s a giant step in the right direction, » said Allaire, praising the move towards share awards over stock options.
Options have fallen out of favor in recent years in part because of concerns they encourage short-term thinking, and offer executives gains if their company’s stock rises without downside risk if it falls.
But Allaire also said the plan could cause retention issues.
In an emailed statement, Harvey said the system is meant to create a management team « personally vested » in Barrick’s success.
« In developing our new system, we looked at other companies who use a similar approach and they have found that it is actually a motivating factor in the retention of key executives, » he said.
« WE HEARD THE SHAREHOLDERS »
Thornton’s total compensation was $9.5 million in 2013, including a $5 million cash award that he has committed to use to buy and hold Barrick shares. Last year, he bought shares with his controversial $11.9 million signing bonus.
Barrick said all shares awarded under the long-term compensation plan will be bought on the open market to avoid dilution. It also laid out new minimum ownership requirements, which among other things will require the chief executive to own shares worth 10 times base salary by 2020.
Last year, proxy advisory firm Glass Lewis had recommended that its clients withhold votes from three Barrick directors at the annual meeting, criticizing Thornton’s signing bonus and the severance paid to outgoing Chief Executive Aaron Regent, among other things.
« In terms of large, discretionary packages, I think we heard the shareholders on that, » Harvey said. « I think we’ll be very hesitant to do that kind of thing. » (Editing by Jeffrey Hodgson, Andre Grenon, Peter Galloway and Lisa Shumaker). »
