Investors reject Barrick Gold's management pay plan

Investors in Barrick Gold, the world's largest gold producer by output, have delivered a sharp rebuke to the company by voting against its management pay plan, including a $13m package for executive chairman John Thornton.

Mr Thornton pledged on Tuesday the Canadian miner would rethink its pay policies after he disclosed about 75 per cent of shareholders had voted against the company's 2014 remuneration for top managers in a "say on pay" vote.

Investor anger at the amount that Barrick pays its top executives comes as the miner has struggled to adapt to a downturn in the gold market over the past two years, writing billions of dollars off the value of some projects. Shares in Barrick are down about 75 per cent over the past four years.

Mr Thornton's pay has been a particular focus of investor concern since the former Goldman Sachs banker was given a share package worth $11.8m when he joined Barrick's board in 2012. He took over as executive chairman one year ago from Peter Munk, the octogenarian entrepreneur who founded Barrick in the 1980s.

The shareholder vote on Barrick's management pay plan is advisory and non-binding, but Mr Thornton said the miner had heard investors "loud and clear".

"This is not where we want to be," he told Barrick's annual meeting in Toronto on Tuesday. "We will go back and revise our system, particularly as it relates to me."

In an interview last month, Mr Thornton acknowledged that Barrick's pay policies could seem "counterintuitive" when compared with the limited improvement in the company's financial performance or share price.

Investor advisory services including ISS and Glass Lewis had recommended that shareholders should reject Barrick's 2014 pay plan, including $12.9m for Mr Thornton, while some influential pension funds had also said they would vote against.

Mr Thornton has said he wants to instil a "partnership culture" at Barrick, in which dozens of top executives get a large portion of their pay in shares that they would have to hold while at the company.

Barrick "designed a compensation system that would breed emotional and financial ownership among its decision makers", the company said ahead of the annual meeting, while Mr Thornton's pay was "appropriate given his extraordinary contributions to rebuilding long-term value for owners".

On Wednesday Barrick reported net earnings for the three months to March 31 of $57m, compared with $88m in the same period last year.

Operating cash flow came to $316m in the quarter, down from $585m one year ago.

Barrick, which has vowed to cut net debt by $3bn, or about 30 per cent, this year, confirmed its intention to sell a stake in its Zaldivar copper mine in Chile.

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