Our Commitment to Corporate Governance
Effective governance is a foundation of our performance and success.
The following sections provide an overview of how we have continued to build the right Board with experience and expertise that complements our strategy, our approach to corporate governance, and how our Board oversees enterprise-wide risks.
Schedule A of this Circular contains a detailed description of our corporate governance practices in accordance with the applicable rules and standards of the Canadian Securities Administrators, the Toronto Stock Exchange (TSX), and the New York Stock Exchange (NYSE). We are committed to our governance practices being state-of-the-art and generally abide by the rules of the NYSE Standards, even though most of them do not directly apply to Barrick as a Canadian company.
Board Composition and Refreshment
Following the merger of Barrick and Randgold, which became effective on January 1, 2019, Barrick’s Board was reconstituted with nine directors, two-thirds of whom were appointed by Barrick and one-third of whom were appointed by Randgold. Regrettably, on February 28, 2019, shortly before this Circular was finalized, Ms. María Ignacia Benítez, an independent director of Barrick since April 2018, passed away. While this unfortunate and untimely event has set back our pursuit of greater gender diversity, the Corporate Governance & Nominating Committee is now actively looking for an equally compelling and qualified female candidate to appoint to the Board. As a result of the passing of Ms. Benítez, Barrick’s Board now consists of eight directors, each of whom is nominated for election at the Meeting. Our new Board includes international business leaders and mining industry professionals with expertise and experience working in all the jurisdictions in which Barrick now operates. The new Board also leverages the experience and knowledge of both Barrick and Randgold to facilitate a more seamless and effective transition at the newly merged company. Our newly reconstituted Board brings together diverse viewpoints and perspectives, and exhibits the skills, professional experience, and backgrounds necessary to best address the opportunities, challenges, and risks of our business.
The Board will continue to advance state-of-the-art governance practices including a rigorous annual evaluation process, which encompasses peer reviews and an assessment of the effectiveness of the Executive Chairman, the Lead Director, and Board committee chairs.
We will also continue our initiative of ongoing Board renewal, with a view to ensuring that our Board continues to represent the necessary mosaic of skills and experience that is relevant to our business, and is comprised of the appropriate individuals who will continue to serve as a voice of owners, by crafting policies to create long-term value per share and ensuring that Barrick successfully carries out those policies. Over time, as Barrick makes further changes to its Board, it will look to increase the Board’s diversity with a particular emphasis on adding additional women. For more details on the director search and selection process, see “Corporate Governance – Board Composition and Nomination of Directors” in Schedule A of this Circular, and for more details on our Diversity Policy, see “Diversity Initiatives” in Schedule A of this Circular.
Board and Senior Leadership Structure
Following completion of the Merger on January 1, 2019, John L. Thornton continued to serve as Executive Chairman of Barrick, providing leadership at the Board level and guiding business decisions on a macro level. Mark Bristow became President and Chief Executive Officer, overseeing the day-to-day operations of the business. Graham Shuttleworth became Senior Executive Vice-President and Chief Financial Officer and Kevin Thomson continued to serve as Senior Executive Vice-President, Strategic Matters.
The respective duties, responsibilities, and relationships among the Board, the Executive Chairman, and the President and Chief Executive Officer are described in greater detail below.
Board of Directors
In carrying out its oversight function, our Board of Directors, as the voice of all owners, reviews with management and sets the Company’s priorities in keeping with our purpose and values. See “Board Mandate and Responsibilities” in Schedule A of this Circular.
The Executive Chairman is appointed by the Board. His primary functions include providing leadership and direction to the Board, facilitating the functions and responsibilities of the Board according to its mandate, and assuming responsibility for the strategic initiatives of Barrick. In addition to the responsibilities applicable to all other directors, the Executive Chairman’s responsibilities include, among other things, working with the Board and the President and Chief Executive Officer to develop strategies for the Company’s future growth, ensuring that Barrick’s operations are managed according to Best-in-Class practices, and that the Company maintains strong and constructive relationships with shareholders, analysts, and other partners, including host governments and communities. See “Our Governance and Leadership Structure – Executive Chairman” in Schedule A of this Circular.
President and Chief Executive Officer
The President and Chief Executive Officer is appointed by the Board and reports to the Executive Chairman. The President and Chief Executive Officer has overall responsibility, subject to the oversight of the Executive Chairman and the Board, for managing the Company’s business on a day-to-day basis and monitoring operational performance, general supervision of the business of the Company and the execution of the Company’s operating plans and, working with the Executive Chairman, execution of the Company’s strategic priorities. The President and Chief Executive Officer is responsible for managing the Company’s internal control framework and reporting to the Corporate Governance & Nominating Committee on Barrick’s progress towards its corporate responsibility objectives. Among other things, the President and Chief Executive Officer is also responsible for overseeing the implementation of our decentralized management ethos with a strong ownership culture, and streamlining management and operations to eliminate non-essential costs. See “Our Governance and Leadership Structure – President and Chief Executive Officer” in Schedule A of this Circular.
Regionally-Focused Leadership Teams
Under the oversight of the President and Chief Executive Officer, Barrick is implementing a flat management structure with a strong ownership culture through the establishment of regionally-focused leadership teams in each of the geographies where Barrick operates (i.e., North America, Latin America and Australia Pacific, and Africa and the Middle East). By delegating authority to the executives and teams that are directly responsible for overseeing these regions, while streamlining management and operations to eliminate non-essential costs, Barrick expects to be better-positioned to deliver long-term value to its shareholders.
In addition, Barrick has established leadership teams whose responsibility is to focus on: (i) finance; (ii) strategic matters; (iii) exploration & geology; (iv) mineral resource management; (v) metallurgy, engineering & capital projects; (vi) health, safety and environment & sustainability; (vii) human resources; and (viii) corporate office and corporate communications. Each of these teams, together with the regional operating teams, reports directly to the President and Chief Executive Officer whose objective is to ensure the seamless operation of the entire organization with a view to driving value creation.
Streamlining of Standing Board Committees
Following the Merger, the Board determined to streamline and reconstitute the number of its standing committees. The Board combined the Audit and Risk Committees to form the Audit & Risk Committee, and the Corporate Governance & Nominating Committee assumed the responsibilities of the Corporate Responsibility Committee, which was dissolved. The reduction in the number of Board committees in no way alters the overall responsibilities of the Board and its committees or the importance that the Board ascribes to the tasks carried out by the Board and its committees. It merely allocates these responsibilities to fewer committees comprised of independent directors with the necessary skills and experience to oversee those functions, consistent with our streamlined Board structure.
Director Search Process
We identify director candidates through a rigorous search and selection process overseen by our Corporate Governance & Nominating Committee. As required, Barrick retains an external search firm to identify potential candidates. The aim of this process is to supplement the Board with individuals possessing complementary skills. In particular, consistent with our Diversity Policy, Barrick expects to increase the gender diversity of its Board as it continues to seek out directors whose skills, professional experiences, and backgrounds are able to best address the opportunities, challenges, and risks of our business. See “Board Composition and Refreshment”.
Our Approach to Corporate Governance
Our Board is independent.
- Board Independence: We adopted a minimum independence standard of two-thirds for our Board.
- Committee Independence: All of our Board committees are comprised entirely of independent directors.
- Independent Sessions: Our Corporate Governance Guidelines mandate that an in camera session follows every Board meeting (including special meetings) at which the independent directors meet without the non-independent directors and without any other officers or employees present.
- Enhanced Board Interlocks Policy: Our guidelines limit the number of board interlocks that can exist at any time to no more than two, and prohibit any senior executive of Barrick from serving on the board of directors of another public company if any senior executive of such other company serves on the Board of Barrick. A Board interlock occurs when two or more of Barrick’s directors also serve together as directors of another public company.
Our Board is effective.
- Board Assessment: Generally, the Board, its committees, and individual directors participate in an annual assessment process in which the Lead Director and the Chair of the Corporate Governance & Nominating Committee jointly interview each of the directors. The interview process includes director peer reviews and specific questions relating to the effectiveness of the Executive Chairman, the Lead Director, and the Committee Chairs. The results of the assessment process are reviewed with the entire Board, and the Lead Director and Chair of the Corporate Governance & Nominating Committee meet with the individual directors to share feedback from the peer reviews. Due to the ongoing Merger process and associated governance changes, formal annual performance assessments were not conducted in 2018. The newly-constituted Board plans to recommence the annual performance assessment process in 2019.
- Continuing Education for Directors: We continue to enhance the ongoing education of our directors. Continuing education sessions are incorporated into regularly scheduled Board meetings. For further details on the education program for 2018, see “Board Orientation and Continuing Education” in Schedule A of this Circular.
Our Board is responsive.
- Shareholder Engagement Policy: The Board has adopted a formal Shareholder Engagement Policy. The Shareholder Engagement Policy is designed to facilitate an open dialogue and exchange of ideas between our Board and our shareholders. We encourage our shareholders to review the policy and to reach out to our directors to discuss matters of significance. The Shareholder Engagement Policy is available on our website at www.barrick.com/about/governance.
- Majority Voting Policy: Any nominee proposed for election as a director who receives a greater number of votes withheld than votes in favor of his or her election, in an uncontested election, must promptly tender his or her resignation to the Executive Chairman, or in the case of the Executive Chairman, to the Lead Director. The resignation will be accepted absent exceptional circumstances.
- 2018 Investor Day: On February 22, 2018, Barrick hosted its second Investor Day which was attended by significant shareholders and key analysts, and was broadcast via live audio webcast for those who could not attend in person. Our Executive Chairman opened the session by highlighting Barrick’s long-term vision for generating shareholder value. He was followed by senior executives and general managers of our core mines who provided financial and operational updates.
- 2018 Sustainability Briefing and Sustainability Engagement: On June 6, 2018, Barrick hosted its second Sustainability Briefing for investors, which was broadcast via live video webcast for those unable to attend in person. Online attendees also had the ability to submit questions electronically. Speakers included the then Chair of the Corporate Responsibility Committee, along with our then Chief Sustainability Officer and other leaders from across the organization. This session focused on Barrick’s commitment to responsible mining in partnership with host governments and communities in which we operate.
- 2018 Barrick and Randgold Joint Investor Days: In November 2018, Barrick and Randgold hosted joint investor days in New York, United States; Toronto, Canada, and in London, United Kingdom which were attended by a group of significant shareholders and key analysts. Mark Bristow, who was the President and Chief Executive Officer of Randgold prior to the Merger and was appointed President and Chief Executive Officer of Barrick following the Merger on January 1, 2019, led the session by highlighting Barrick’s long-term vision to be the world’s most valued gold mining business. He was joined by Barrick and Randgold executives who provided further updates on the strategy and organizational structure for each region in which Barrick operates following the Merger.
Our approach to corporate governance evolves with state-of-the-art practices.
- Enhanced Clawback Policy: Our Clawback Policy was recently amended to subject incentive compensation paid or granted to the Executive Chairman; President and Chief Executive Officer; Senior Executive Vice-President and Chief Financial Officer; Senior Executive Vice-President, Strategic Matters; other Named Partners; and other select senior employees to clawback in cases of a material financial misstatement or a determination by the Board that wrongful conduct has occurred, in each case, that resulted in a participant receiving a higher amount of incentive compensation than would have been received absent the material misstatement or wrongful conduct, as applicable.
- Share Ownership Policies for Non-Executive Directors and Executives: Barrick maintains minimum share ownership requirements for its directors, executives, and other officers. Within five years of joining the Board, non-executive directors are required to hold at least three times the value of their annual Board retainer in Barrick Shares and/or Deferred Share Units (DSUs). Within three years of joining Barrick, our Executive Chairman is required to hold at least four times his salary in Barrick Shares and DSUs. Within five years from the date of his appointment, our President and Chief Executive Officer is required to hold ten times his salary in Barrick Shares and/or other long-term incentive awards. Within five years of joining Barrick, our Named Partners are required to hold five times their salary in Barrick Shares, RSUs, and PGSUs. See “Report on Director Compensation and Equity Ownership – Director Share Ownership Requirements” and “Managing Compensation Risks – NEO Share Ownership Requirements ”.
- Anti-hedging Policy: Barrick has adopted a formal anti-hedging policy prohibiting all officers and directors from hedging the economic exposure of their ownership of Barrick Shares and equity-based LTI compensation.
- Enhanced Approach to Disclosure: In March 2018, Barrick launched an online digital information circular (Digital Circular) to modernize the way that proxy materials are presented to shareholders and make proxy-related information more accessible. In November 2018, Barrick was recognized by the Governance Professionals of Canada for the “Best Engagement by a Governance Team (Publicly Listed)” at the 2018 Excellence in Governance Awards. This award is given to publicly listed companies that demonstrate exemplary quality across six judging categories, namely: (1) clarity, completeness, and accuracy of written disclosures; (2) discussion of director appropriateness and the skills and experience of the board; (3) enhanced disclosures, including but not limited to the proxy circular and the compensation discussion and analysis; (4) online, interactive or other innovative mediums for shareholder communication, including virtual forums; (5) mechanisms for access to board members and senior management, both collectively and individually; and (6) the effectiveness of investor outreach activities and accessibility of the board in terms of the level of responsiveness to shareholders, including the degree to which the engagement program is proactive.
- Enhanced Shareholder Communication: Barrick established a designated Investor Relations hotline to supplement the existing email address. The hotline provides shareholders with improved access to the Company and facilitates shareholder engagement. Shareholders may communicate their views to management through the Company’s Investor Relations Department at:
Attention: Investor Relations
Barrick Gold Corporation
TD Canada Trust Tower
161 Bay Street, Suite 3700
P.O. Box 212
Toronto, Ontario M5J 2S1
Phone: (416) 307-7474
The Board believes that an enterprise-wide approach to risk management allows the Company to assess and mitigate risks most efficiently and effectively. The Board therefore expects management to:
- maintain a framework that ensures we manage and mitigate risk effectively and in a manner that creates the greatest value;
- integrate procedures for managing and mitigating risk into all of our important decision-making processes so that we reduce the effect of uncertainty on achieving our objectives;
- ensure that the key controls we rely on to achieve the Company’s objectives are actively monitored so that they remain effective; and
- provide assurance to the executives and relevant Committees of the Board of Directors on the effectiveness of key control activities.
By further decentralizing our corporate office, we have continued to accelerate the pace at which information flows between leadership and our mines. This nimble structure enhances our risk management processes by promoting faster information sharing and greater transparency. In late 2018, the weekly Business Plan Review (BPR) meeting transitioned to a Weekly Executive Review, which is now the main forum for senior management to raise and discuss risks facing the operations and organization more broadly. The Weekly Executive Review is held among the President and Chief Executive Officer and other key executives and other senior management, including our regional Chief Operating Officers.
The Board and its Committees are responsible for overseeing the Company’s enterprise risk and internal control frameworks, risk management and major financial risks and financial reporting exposures, the alignment of Barrick’s executive compensation programs with strategic priorities, and the development of risk management programs relating to Barrick’s environmental, health and safety, corporate social responsibility, security, and human rights exposures. The Audit & Risk Committee assists the Board in, among other things, overseeing the Company’s management of enterprise risks as well as the implementation of policies and standards for monitoring and mitigating such risks.
During 2018, we continued to improve the quality of risk information provided to the Risk Committee, including concise and relevant risk information that facilitates meaningful discussions about key risks facing the organization and how they are being managed. In-depth briefings were provided on specific topics to provide a more detailed understanding of risks, and management’s risk mitigation strategies, where appropriate. For example, during 2018, in-depth briefings were provided to the Risk Committee on a range of topics, including Barrick’s tailings storage facility stewardship program, Pascua-Lama, the Porgera earthquake, decentralization, Barrick’s insurance programs, integration risks related to the Merger, and talent management for mine general managers. Effective January 1, 2019, the duties and responsibilities of the Risk Committee were assumed by the Audit & Risk Committee, and the Risk Committee was dissolved. The Audit & Risk Committee will continue to hold these in-depth briefings and receive this enhanced quality of risk information going forward.
For a more detailed description of our risk oversight processes, please see “Risk Oversight” in Schedule A of this Circular.
Our Commitment to Managing Climate Change Risks
Barrick considers climate change, including shifts in temperature and precipitation and more frequent severe weather events, to be a company, community and global concern. In 2018, Barrick continued to implement the climate change strategy it developed in 2017, which is aligned with Barrick’s overall business strategy to grow free cash flow per share(1) through safe and responsible mining.
Barrick’s climate change strategy has three pillars: (i) understand and mitigate the risks associated with climate change, (ii) reduce Barrick’s impact on climate change, and (iii) improve our disclosure on climate change. Governance over climate-related risks and opportunities is provided at both the Board and management level.
Prior to the completion of the Merger, the Corporate Responsibility Committee, which met quarterly, was responsible for overseeing Barrick’s policies, programs, and performance relating to the environment, including climate change. The Risk Committee assisted the Board in overseeing the Company’s management of enterprise risks as well as the implementation of policies and standards for monitoring and mitigating such risks. Climate change is built into Barrick’s formal risk management process, outputs of which were reviewed by the Risk Committee throughout 2018. In addition, the Audit Committee reviewed the Company’s approach to climate change in the context of Barrick’s public disclosure.
Following completion of the Merger and the changes to Board and committee composition, the Corporate Governance & Nominating Committee assumed the responsibilities of the Corporate Responsibility Committee with respect to its oversight of environmental matters, as described above, while the respective responsibilities of the Audit Committee and the Risk Committee prior to the Merger were assumed by the Audit & Risk Committee. In addition, Barrick reaffirmed its commitment to sustainability by establishing an Environmental & Social Oversight Committee (E&S Committee). The E&S Committee is chaired by the President and Chief Executive Officer, and includes each of the regional Chief Operating Officers, Mine General Managers and health, safety, and environment and closure leads, as well as the Group Sustainability Executive and an independent sustainability consultant. The E&S Committee meets each quarter to review the Company’s sustainability performance and compliance with its sustainability policies, as well as to identify concerns and opportunities at the Company’s operations at an early stage. The President and Chief Executive Officer reviews the reports of the E&S Committee with the Corporate Governance & Nominating Committee on a quarterly basis as part of the Committee’s mandate to oversee Barrick’s environmental, safety and health, corporate social responsibility, and human rights programs, policies and performance.
- Free cash flow per share is a non-GAAP financial performance measure with no standardized definition under IFRS and therefore may not be comparable to similar measures presented by other companies. For further details regarding non-GAAP financial performance measures, please see “Other Information – Use of Non-GAAP Financial Performance Measures”.