2018 Compensation of the Named Executive Officers

2018 Compensation of the Executive Chairman

Following feedback from our shareholders, in 2016, the Board of Directors approved, on the recommendation of the Compensation Committee, the following unique four-step performance and compensation framework for our Executive Chairman.

Four-Step Compensation Framework

Step 1 The Executive Chairman’s total compensation range is reviewed, set, and disclosed annually. This provides a clear guideline for determining the range of LTI opportunities for the Executive Chairman.
Step 2 We employ a structured performance assessment that ties actual compensation to measurable strategic and financial goals.
Step 3 We conduct a formal review of the Company’s short- and long-term total shareholder return to ensure that the Executive Chairman’s compensation reflects the overall shareholder experience.
Step 4 A majority of the after-tax value of the Executive Chairman’s LTI award is used to purchase After-Tax Shares that are subject to clawback and holding requirements until the later of three years and the date he retires or leaves the Company, even when share ownership requirements are fully met.

Application of the Four-Step Performance and Compensation Framework

We applied our framework to the 2018 performance year which was an exceptional year in a number of fundamental respects. First, during 2018, the Executive Chairman executed Barrick’s transformational nil-premium merger with Randgold, following years of deliberate planning and execution of a number of longer term initiatives that made the transformational merger possible. Second, in addition to executing on his strategic objectives, in 2018 the Executive Chairman also successfully discharged many of the day-to-day functions of our most senior management team member following the resignation of our former President.

The results of our assessment of the Executive Chairman and his significant achievements in 2018 against the compensation framework developed in 2016 are further described under the heading “Assessment of the Executive Chairman’s 2018 Performance”.

As a result of the transformational merger with Randgold, Barrick is now led by the most well-respected Chief Executive Officer in the mining industry, with an unparalleled track record of value creation. The appointment of Mark Bristow as President and Chief Executive Officer on closing of the Randgold merger on January 1, 2019 heralds a new era for Barrick and a return to a more traditional management structure. As a result, in the coming months, the Compensation Committee will be redesigning the compensation framework for our Executive Chairman who will return to his core responsibilities of guiding and driving Barrick’s global strategic initiatives, at compensation levels that will be materially lower than 2018. This redesign will ensure that Barrick’s compensation practices for 2019 properly reflect the contributions of the Executive Chairman and the Named Partners.

Step 1: Review and set total compensation range

The total compensation range is reviewed and set annually by the Compensation Committee. Actual total compensation awarded varies within the range based on company and individual performance. Total compensation in excess of the range will only be considered, on an exceptional basis, in the context of the overall shareholder experience, for superior performance, including absolute and peer relative total shareholder return (TSR) outperformance.

To set the total compensation range for our Executive Chairman in 2018, the Compensation Committee reviewed median and 75th percentile global top executive pay from our Mining Peer Group and the broader market. The Lead Director also considered supplemental benchmarking information on median and 75th percentile compensation levels for Chief Executive Officers and Executive Chairmen at other international mining and S&P 500 companies, among others, in recognition of the caliber of talent, experience, and skills needed to lead Barrick to becoming the world’s most valuable gold mining company.

In addition to the typical factors considered in setting the total compensation range for our Executive Chairman, the Compensation Committee also took into account extraordinary factors applicable to 2018. Specifically, additional factors considered in 2018 included the Executive Chairman’s enhanced role and workload leading up to and following the resignation of the former President in July with effect on August 31, 2018, the corresponding significant reduction in compensation paid to our former President as a result of his mid-year departure and the resulting overall compensation levels for our Executive Chairman and Named Partners, the significant effort, time, and commitment undertaken by our Executive Chairman in personally developing, executing, and confirming shareholder support for the widely acclaimed nil-premium merger with Randgold, the shareholder experience in 2018 from the announcement to the closing of the Randgold merger, including in particular the 29% increase in our share price on the NYSE and the creation of $3.6 billion in market value during that period, together with the value of the Executive Chairman’s other individual contributions, without placing specific emphasis on any one factor.

Taking into account these multiple factors, the Compensation Committee approved an updated total compensation range for 2018 up to $13 million for the Executive Chairman. The Executive Chairman’s LTI range (2018: up to $9.8 million) equals the total compensation range, less base salary, pension, and other benefits and perquisites (totaling approximately $3.1 million).

 

Step 2: Evaluate performance within framework

Our framework assesses the Executive Chairman’s performance based on strategic and financial goals that are pre-determined and measurable. We disclose these goals in advance to our shareholders each year.

  • Strategic Goals (50%): Strategic goals for the Executive Chairman include annual initiatives comprised of specific and concrete objectives that support the achievement of Barrick’s strategic goals, which are designed to create long-term value for our shareholders. They also include the Executive Chairman’s direct involvement in other significant and consequential matters, as requested by the Board throughout the year. Progress against these initiatives is assessed by the Corporate Governance & Nominating Committee, in consultation with the Lead Director, for the most recently completed financial year. The Compensation Committee considers the results of this assessment in the process of determining the Executive Chairman’s LTI award. Please see the “Assessment of the Executive Chairman’s 2018 Performance” for the Executive Chairman’s performance against his 2018 annual initiatives, and his 2019 annual initiatives which will be assessed in 2020 as part of the Executive Chairman’s redesigned compensation framework.
  • Financial Goal (50%): The Compensation Committee determined that ROCE is the most comprehensive reflection of the Executive Chairman’s strategic oversight role. ROCE measures the return generated by all sources of capital funding for Barrick’s pipeline and portfolio, including capital allocated for our operating mines and non-operating exploration and growth projects. It is broader than the ROIC measure used for our Named Partners, which deliberately focuses on returns generated from capital invested in the Company’s existing operating mines.

    The target rate of return for the Executive Chairman is stress-tested each year to ensure that it is an appropriate stretch goal. In 2018, the target rate of return was determined to be 7%. That takes into consideration Barrick’s cost of capital and is based on the Committee’s view that the Executive Chairman should be rewarded for the oversight of Barrick’s pipeline and portfolio, as well as for the delivery of strong returns over the long-term. At the end of each year, the Compensation Committee considers the actual ROCE result relative to the target rate, and the progress that has been made in strengthening Barrick’s pipeline and portfolio, in accordance with the strategic priorities set by the Board. Our ROCE result and assessment considerations are disclosed to shareholders each year.

The Executive Chairman’s LTI award is determined based on the Compensation Committee’s review of his progress against strategic initiatives and the ROCE achieved each year, relative to the LTI range for that year. No LTI award is guaranteed.

 

  1. ROCE is an internal performance measure used to manage performance. ROCE measures return on capital employed by taking Adjusted EBIT (Adjusted EBITDA less depreciation) and dividing by Average Capital Employed. Capital Employed is defined as total consolidated assets, as represented on the company’s reported balance sheet. Adjusted EBIT and Adjusted EBITDA are non-GAAP financial measures 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”.

Step 3: Review and recommend compensation in the context of the overall shareholder experience, for approval by the Board of Directors

Our framework ensures that the Executive Chairman’s total compensation reflects the overall shareholder experience. The Compensation Committee may, in its discretion, positively or negatively modify the LTI award for the Executive Chairman, based on the Committee’s assessment of his compensation in the context of the overall shareholder experience, including its review of Barrick’s TSR on an absolute basis and relative to our Mining Peer Group, sector peers, and other broad market indices over a one- to three-year performance period. The Compensation Committee may also take into consideration the accomplishment of critical strategic achievements that significantly enhance the overall position, performance, and stability of the Company as it seeks to become the world’s most valuable gold mining business. This step in the compensation framework is a fundamental feature to ensure that the Compensation Committee can make appropriate compensation decisions in circumstances where there are significant positive or negative shareholder experiences. Ultimately, total compensation in excess of the total compensation range will only be considered on an exceptional basis. The final compensation decision and its rationale are disclosed to our shareholders each year. The Executive Chairman’s compensation is approved by the independent directors of the Board on the recommendation of the Compensation Committee.

 

Step 4: Award a majority of the Executive Chairman’s LTI in “After-Tax Shares” that are subject to market-leading holding requirements and clawback

The Executive Chairman’s compensation is structured to maintain a strong focus on creating sustainable, long-term shareholder value. A majority of the after-tax value of the Executive Chairman’s LTI award is used to purchase After-Tax Shares. These After-Tax Shares cannot be sold or otherwise disposed of until the later of: (a) three years from the date of purchase, and (b) the date the Executive Chairman retires or leaves the Company. Holding restrictions will continue to apply to all Barrick Shares awarded to our Executive Chairman as LTI, even though our Executive Chairman has already exceeded his share ownership requirement. These holding requirements far exceed the long-term compensation holding requirements of our peers. In our view, these long-term holding requirements, combined with our Executive Chairman’s already significant share ownership position, provide him with significant motivation to create value for our fellow owners, now and over the long-term. These industry leading holding requirements also diminish the intrinsic value to the Executive Chairman of the After-Tax Shares purchased by the Executive Chairman.

Our Executive Chairman’s incentive compensation is subject to forfeiture under Barrick’s robust Clawback Policy, which goes beyond the yet-to-be implemented provisions of the U.S. Dodd-Frank Act, as described under the heading “Managing Compensation Risks –Enhanced Clawback Policy”.

2019 Annual Initiatives for our Executive Chairman

In consultation with the Lead Director, the Executive Chairman has defined a series of specific and concrete initiatives for 2019. On the recommendations of the Corporate Governance & Nominating Committee and the Compensation Committee, the Board has approved these initiatives. The Executive Chairman’s performance against these initiatives will be evaluated by the Corporate Governance & Nominating Committee, in consultation with the Lead Director.

The 2019 initiatives include: (a) provide leadership and oversight for the effective functioning of the Board of Directors, paying particular attention to diversity; (b) serve as a voice of owners by maintaining strong, constructive, and ongoing relationships with existing and future investors and strategic partners, including host governments; (c) work with the Board and the President and Chief Executive Officer to develop strategies for the Company’s future growth by reinforcing the focus on discerning portfolio management, acquisitions, joint ventures, asset dispositions, disciplined capital allocation and investments; (d) work with the President and Chief Executive Officer to advance the resolution of outstanding issues with governments and complex projects; (e) build and manage stakeholder relationships and strategic alliances, including and especially with China; (f) drive Board oversight of talent and succession planning, including further integrating our partnership and ownership culture throughout the organization.

Throughout the year, the Board may also request the Executive Chairman’s direct involvement in significant and consequential matters as needed.

Going forward, given the more traditional management structure now in place with Mr. Bristow as President and Chief Executive Officer driving Barrick’s day-today business, the Executive Chairman’s performance against these initiatives will be assessed in the context of a redesigned compensation framework for our Executive Chairman for 2019 that ensures that his compensation is commensurate with his involvement and contribution to Barrick. The Executive Chairman’s compensation level in 2019 is expected to be materially lower than the level in 2018.

Assessment of the Executive Chairman’s 2018 Performance

John L. ThorntonThe Compensation Committee applied the Performance and Compensation Framework and considered the overall shareholder experience to determine the Executive Chairman’s 2018 incentive compensation award. The Executive Chairman’s performance was evaluated prior to the closing of the Merger by the Corporate Governance & Nominating Committee in consultation with the Lead Director and Compensation Committee based on this framework.

In 2018, the Executive Chairman delivered against the annual initiatives we set out for him in our 2018 Circular. In addition, in 2018, Barrick achieved a ROCE of 6.8%, which is marginally below the target rate of 7%, but contributes to a three-year average ROCE of 8.3%, which is well within the long-term performance range of 7% to 12% and is a strong reflection of our commitment to deliver sustainable shareholder returns.

Achievement of the Executive Chairman’s annual initiatives was, however, only one aspect of his accomplishments in 2018. In addition to delivering against the annual initiatives and financial performance initiatives set for the Executive Chairman in our 2018 Circular, the Executive Chairman led and completed Barrick’s transformational, nil-premium merger with Randgold, which meaningfully advances many of Barrick’s strategic goals and enhances Barrick’s prospects of becoming the world’s most valuable gold mining business.

The transformational Randgold merger was the culmination of a number of key initiatives effectively executed by the Executive Chairman following his appointment in 2014. When first appointed, the Executive Chairman’s principal role was to restructure Barrick’s balance sheet and return the Company to financial stability. Under the Executive Chairman’s leadership, Barrick successfully completed a series of non-core asset sales between 2015 and 2018, allowing the Company to repay approximately $10 billion of debt over the past five-and-a-half years. In addition to restructuring Barrick’s balance sheet, the Executive Chairman successfully implemented a decentralized management model and made significant investments in acquiring top talent while significantly reducing Barrick’s overhead. During this same period, the Executive Chairman also engaged extensively with shareholders and established critical strategic partnerships with leading Chinese gold companies and host governments, playing a key role in the path to resolving Barrick’s majority-owned subsidiary’s dispute in Tanzania.

Having restored Barrick’s balance sheet to one of the strongest in the industry and with a lean decentralized management team and strong partnerships in place, the Executive Chairman determined that Barrick’s portfolio of world class gold assets demanded a best-in-class leader to take Barrick’s operational business to the next level. The Executive Chairman canvassed a number of highly respected industry leaders to source a highly respected Chief Executive Officer with attributes needed to drive the Company’s business to the next level. After this extensive consultation, it became apparent that Mark Bristow, who was widely regarded as a talented and respected Chief Executive Officer keenly focused on the relentless pursuit of excellence, cost savings, operational excellence, and talent, was the Chief Executive Officer Barrick needed to achieve its goals.

In February 2018, the Executive Chairman engaged in discussions with Mr. Bristow regarding a variety of strategic opportunities involving Barrick and Randgold, including the possibility of a merger transaction. In the months that followed, the Executive Chairman travelled extensively to meet with Mr. Bristow at various places around the world to ensure a common understanding of the merits and goals of a potential merged company. With a common understanding established, the Executive Chairman personally assembled and led a deal team to undertake the significant technical, financial, and legal diligence and structuring work required to complete a transaction of this nature. Importantly, the Executive Chairman pioneered the novel nil-premium structure that allowed the transaction to proceed. The Executive Chairman was also instrumental in convincing an overwhelming majority of shareholders of both Barrick and Randgold of the significant merits of the Merger.

The Executive Chairman’s vision, determination and drive resulted in the industry-changing announcement of the Merger on September 24, 2018. The positive results of the Merger were discernible immediately.

Following the announcement of Barrick’s nil-premium merger with Randgold on September 24, 2018, our share price on the NYSE increased 29% up until completion of the transaction on January 1, 2019. This equated to an increase in our market capitalization of $3.6 billion. By comparison over the same period, the share price on the NYSE and the Australian Securities Exchange (ASX) of the Senior Gold Peers increased by an average of 7%, while the average market gold price also only increased by 7%.

Given the significant ordinary course and extraordinary achievements of the Executive Chairman in 2018, and the assumption by the Executive Chairman of additional responsibilities following the resignation of the former President in July, on the recommendation of the Compensation Committee, the independent directors approved an LTI award of $9.735 million for the Executive Chairman. To further underscore our ownership culture, a majority of the after-tax proceeds of the 2018 LTI award was used to purchase 215,000 Barrick Shares for the Executive Chairman which cannot be sold until the later of (a) three years from the date of purchase and (b) the date the Executive Chairman retires or leaves the Company. The Executive Chairman’s LTI award was not accrued to the Executive Retirement Plan. In 2018, the total compensation for the Executive Chairman was $12,859,994.

The Board once again acknowledges the Executive Chairman’s continued commitment to deep, long-term ownership in the Company. The Executive Chairman continues to lead by example ensuring that Barrick is a company of owners having invested significantly more in Barrick shares than he has received in after-tax compensation from Barrick. Demonstrating his commitment to ownership as a core element of Barrick’s partnership culture, following announcement of the Merger, the Executive Chairman purchased more than 2.2 million Barrick Shares, nearly doubling his total shareholding in Barrick to five million shares. Including the shares purchased with a majority of the after-tax proceeds of the 2018 LTI award, he now holds 5,215,000 Barrick Shares, worth nearly 29 times his base salary as at March 28, 2019.

The Compensation Committee’s considerations, including the specific assessment of the Executive Chairman’s performance highlights against his annual initiatives and financial initiatives disclosed in our 2018 Circular, are summarized below.

 

A Strategic Goals 50%

2018 Initiatives as disclosed in 2018 Circular and Performance Highlights Achieved?
a) Provide leadership and oversight for the effective functioning of the Board of Directors, paying particular attention to size and composition

  • Completed the Company’s continuance to British Columbia, which gives Barrick the flexibility to attract a truly international Board with the expertise required by our global business operating in a diverse range of jurisdictions across five continents
  • In connection with the Merger, optimized and streamlined the composition of the Board to ensure a balance of skills and geographic expertise
Check mark
b) Drive Board oversight of talent and succession planning, including advancing our partnership and ownership culture through a decentralized model

  • Worked with the Human Resources Executive to launch the Barrick Share Purchase Plan, which provides a simple and accessible way for people across the entire Barrick organization to purchase Barrick Shares on the open market
  • Led by example and increased personal shareholdings in the Company to 5,000,000 Barrick Shares on October 1, 2018 through open market purchases, and encouraged all partners to increase their ownership in the Company through the combined purchase of more than 235,000 Barrick Shares with personal funds in 2018
  • Worked with the 2018 Executive Committee to enhance the rigor of the Talent Review process for key operational and management roles. These changes increased operator responsibility, accountability, and agility, which ensured further decentralization of Barrick’s operations and enhanced Barrick’s readiness for the Merger and integration with Randgold
  • Advanced Barrick’s succession plans with the appointment of Mark Bristow as President and Chief Executive Officer, a leader with the industry’s best track record of shareholder value creation and operational execution, and combined top talent from Barrick and Randgold to materially strengthen the overall capabilities of Barrick management
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c) Enforce financial rigor and prudence, as evidenced by discerning portfolio management, disciplined capital allocation and investments, and a stronger balance sheet

  • Worked with the 2018 Executive Committee to further strengthen the Company’s balance sheet by repurchasing debt and maintaining strict discipline in our capital allocation decisions. The latter included increasing investments in organic projects (Fourmile and Turquoise Ridge) and increasing our annualized dividend from 12 cents per Barrick Share in 2017 to 16 cents per Barrick Share in 2018
  • Worked with the management team to enhance the capital allocation criteria and investment filters for Barrick
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d) Reinforce and drive the focus on growing free cash flow per share over the long-term through operational excellence – focusing on the fundamentals and superior execution

  • In connection with the Merger, Barrick expects to have significantly enhanced free cash flow generation, driven by the lowest total cash costs among its Senior Gold Peers(1)
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e) Drive the development of a long-term growth plan

  • Oversaw intensive efforts to meticulously plan and develop every dimension of the Merger, including the negotiation, structuring, and rapid execution of the Merger
  • As a result of the Merger, Barrick now has the industry’s largest portfolio of Tier One Gold Assets with superior operating metrics relative to the Senior Gold Peers, and investment optionality for long-term growth
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f) Advance the resolution of outstanding issues with governments and complex projects

  • In consultation with the Board and working with the 2018 Executive Committee, advanced an optimization plan on the Chilean side of the Pascua-Lama project to reduce holding costs and clarify the status of the project
  • As part of the Strategic Cooperation Agreement between Barrick and Shandong Gold, Shandong Gold has initiated an independent evaluation of a potential mining project at Lama in Argentina
  • With the support of the former President, Barrick signed a deed of settlement with the Zambian Revenue Authority and the Government of Zambia in October 2018 to advance the resolution of outstanding tax matters
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g) Build and manage stakeholder relationships and strategic alliances, including and especially with China

  • Continued to build distinctive, enduring, and trust-based relationships with China and its largest and most sophisticated institutional investors
  • Oversaw the establishment of two strategic agreements with Shandong Gold: (1) an enhanced strategic cooperation agreement to share knowledge and evaluate future investment opportunities, including for Pascua-Lama, and (2) a mutual investment agreement pursuant to which Barrick and Shandong will each purchase as much as $300 million worth of the other’s shares on the open market
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Overall Assessment of Contribution Exceptional
  1. Free cash flow and lowest total cash cost are non-GAAP financial performance measures with no standardized definition under IFRS and therefore may not be comparable to similar measures presented by other companies and, in the case of lowest total cash cost and highest adjusted EBITDA margin, are based on data from Wood Mackenzie. Financial comparisons between Barrick and its Senior Gold Peers are made on the basis of the data presented by Wood Mackenzie, which may not be calculated in the same manner as Barrick calculates comparable measures. For further details, please see “Other Information – Use of Non-GAAP Financial Performance Measures” and “Other Information – Third Party Data”.

 

B Financial Goal 50%

ROCE
2018 Actual 6.8%
7% target rate set for 2018
Additional consideration: three-year Actual ROCE 8.3%
2018 long-term range (7 – 12%)

The Compensation Committee noted that the 2018 ROCE was marginally below the 7% target rate of return. The Committee also considered the 2018 ROCE result alongside Barrick’s progress in strengthening its pipeline and portfolio. In 2018, Barrick’s portfolio was further optimized as a result of investments in organic growth and explorations projects and in connection with the Merger. The focus on capital discipline and strengthening Barrick’s balance sheet over the past three years allowed Barrick to increase investments in organic growth, while returning more capital to shareholders with a 33% increase in Barrick’s annual dividend, and significantly reducing debt. Barrick’s three-year average ROCE of 8.3% was noted to be well within the long-term performance range of 7 to 12% and was considered to be a positive indication of long-term shareholder value creation. Balancing the considerations above, the Committee determined that an award was warranted to recognize Barrick’s cumulative ROCE performance despite the near miss on the 2018 target rate.

 

C Shareholder Experience Modifier

Overall Shareholder Experience

The overall shareholder experience, which includes an assessment of Barrick’s progress against the achievement of Barrick’s long-term strategic initiatives, using various metrics including absolute and relative TSR performance, was a critical factor in evaluating the Executive Chairman’s performance and determining his LTI award for 2018.

Given the very significant contributions of the Executive Chairman in 2018, including his achievement of all annual objectives together with his pivotal role in bringing the merger with Randgold to fruition which resulted in significant value creation and share price outperformance as described below, and his assumption of additional responsibilities following the resignation of the former President in July, the Compensation Committee considered it appropriate to award the Executive Chairman an LTI award at the top end of the range set for 2018.

1) Long-Term Strategic Initiatives and Value Enhancement

The Executive Chairman personally drove Barrick’s transformational merger with Randgold to create an industry-leading mining company, which received overwhelming support from 99.8% of Barrick’s shareholders.

The Merger established Barrick as an industry-leading gold company with several key advances relative to its Senior Gold Peers, including:

  • Ownership of five of the world’s top 10 Tier One Gold Assets and two Tier One Gold Assets under development or expansion
  • The lowest total cash cost(1) position among Senior Gold Peers
  • Strong cash flow generation to support robust investment and ability to return cash to shareholders
  • Among the largest gold reserves in the industry
  • Extensive land positions in many of the world’s most prolific gold districts

The Merger also provides significant investment optionality for long-term growth.

2) TSR Performance

Following the announcement of Barrick’s nil-premium merger with Randgold on September 24, 2018, our share price on the NYSE increased 29% up until completion of the Merger on January 1, 2019. This equated to an increase in our market capitalization of $3.6 billion. By comparison over the same period, the share price on the NYSE and the ASX of the Senior Gold Peers increased by an average of 7%, while the average market gold price also only increased by 7%. Taking into account the similar increase of the Randgold share price during the same period, the Committee also considered:

  • Barrick’s TSR outperformance versus the Senior Gold Peers from the announcement of the Merger to December 31, 2018
  • Barrick’s TSR outperformance versus the S&P/TSX Global Gold Index and the S&P/TSX Composite Index in 2018
  • The year-over-year improvement in Barrick’s relative TSR positioning on a 1-year basis
  • Barrick’s TSR performance relative to the 2018 Mining Peer Group
2018 Mining Peer Group
(n=11)
Barrick’s Relative TSR(2) Positioning
1-Year TSR(2)
2018
80th Percentile
(2017: 5th Percentile)
3-Year TSR(2)
2016 – 2018
57th Percentile
(2017: 69th Percentile)

 

  1. Lowest total cash cost is a non-GAAP financial performance measure based on data from Wood Mackenzie with no standardized definition under IFRS and therefore may not be comparable to similar measures presented by other companies. Financial comparisons between Barrick and its Senior Gold Peers, and between Tier One Gold Assets, are made on the basis of the data presented by Wood Mackenzie, which may not be calculated in the same manner as Barrick calculates comparable measures. For further details, please see “Other Information – Use of Non-GAAP Financial Performance Measures” and “Other Information – Third Party Data”.
  2. TSR is calculated on a common currency basis (U.S. dollar) to enable a fair comparison with Barrick’s 2018 Mining Peer Group, which includes international peers that are listed outside of North America. To further improve the robustness of the comparison, daily closing prices were averaged for the beginning and ending months of each respective performance period to account for potential short-term movements in the share price of Barrick and that of the 2018 Mining Peer Group.

D 2018 LTI Award for the Executive Chairman

$9,735,000

A majority of the after-tax proceeds were used to purchase 215,000 Barrick Shares on the open market and the remainder was paid in cash(1), in recognition of the Executive Chairman’s continued commitment to deep, long-term ownership in the Company and his purchase of 2,271,029 additional Barrick Shares following the announcement of the Merger.

The Executive Chairman’s LTI award was not accrued to the Executive Retirement Plan.

E 2018 Total Compensation for the Executive Chairman

$12,859,994

 

 

 

  1. The value of these shares is less than their face value because of the long-term, illiquid nature of the investment, which is not reflected in the compensation tables.

2018 Compensation of our Named Partners

Our Named Partners participate in Barrick’s Partnership Plan, which provides eligibility for the API Program, the PGSU Plan, and the Change in Control Plan. Reflecting a deep commitment to long-term ownership at the heart of our partnership culture, our Named Partners are also subject to industry-leading share ownership requirements.

Base Salary

Base salaries are determined based on the scope of individual responsibilities, skills, and performance. The Compensation Committee annually reviews the base salaries of our Named Partners to ensure they remain competitive relative to roles of similar size and scope of responsibilities.

Annual Performance Incentive Program

The API Program is a key component of our Partnership Plan. Named Partners are awarded API based on their achievement of the annual initiatives and goals included in their Annual Performance Incentive scorecards (API Scorecards). In 2018, API Scorecards were developed in consultation with the Executive Chairman and the Lead Director. The performance of our Named Partners was holistically evaluated by the Executive Chairman, with input from the Lead Director, based on accomplishments against the API Scorecards.

Each scorecard is assigned a rating from 0% (minimum) to 100% (maximum), which is multiplied by the API opportunity for each of our Named Partners to determine payouts. Maximum API awards of 300% of salary will only be made in cases of demonstrably superior performance across all scorecard categories.

2019 Annual Performance Incentive Scorecards

While we would typically summarize our 2019 strategic priorities for the Named Partners in 2018, the Merger has resulted in the reorganization of our management structure. Accordingly, we have included below a table which sets out the 2019 strategic priorities for the three Named Partners whom we anticipate to be NEOs in 2019; namely, the President and Chief Executive Officer; the Senior Executive Vice-President and Chief Financial Officer; and the Senior Executive Vice-President, Strategic Matters. The 2019 priorities are weighted in each API Scorecard to reflect individual scope of accountability. Individual performance against each of our 2019 priorities will be assessed at the end of the year and disclosed for our 2019 Named Partners in our 2020 information circular.

Our 2019 Strategic Priorities President
and CEO
SEVP and
CFO
SEVP, Strategic
Matters
Asset Quality
  • Grow and invest in a portfolio of tier one assets, tier two assets and strategic assets, with an emphasis on organic growth and on identifying, investing in and developing assets that meet Barrick’s investment criteria(1)
  • Maximize value-creation opportunities from the Barrick-Newmont Nevada Joint Venture
  • Sell non-core assets over time in a disciplined manner
  • Focus on brownfield exploration at Goldstrike, the Loulo-Gounkoto Complex, and Kibali
  • Invest in exploration across extensive land positions in many of the world’s most prolific gold districts
  • Maximize the long-term value of a strategic copper business
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Operational Excellence
  • Fully implement a flat management structure with a strong ownership culture
  • Streamline management and operations, and hold management accountable for the businesses they manage
  • Leverage innovation and technology to drive industry-leading efficiencies
  • Build trust-based partnerships with host governments, business partners, and local communities to drive shared long-term value
  • Strive for zero harm workplaces
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Sustainable Profitability
  • Disciplined approach to growth, emphasizing long-term value for all stakeholders
  • Increased returns to shareholders driven by focus on return on capital, IRR, and free cash flow(2)
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  1. Barrrick’s investment criteria are: (i) with respect to tier one assets, assets with a reserve potential greater than five million ounces of gold expected to generate an IRR of at least 15% (at a long-term gold price calculated with reference to a standard reference gold mine model using current input costs); and (ii) with respect to tier two assets, assets with a reserve potential of greater than three million ounces of gold expected to generate an IRR of at least 20% (at a long-term gold price calculated with reference to a standard reference gold mine model using current input costs). Near-term portfolio priorities include advancing projects at Goldrush, Fourmile and Turquoise Ridge and the Company’s strategic partnership with Shandong Gold in the El Indio belt.
  2. Free cash flow is a non-GAAP financial measure that does not have any standardized definition under IFRS and may not be comparable to similar measures of performance presented by other companies. It should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. For further details regarding non-GAAP financial measures, please see Other Information – Use of Non-GAAP Financial Performance Measures.

API recommendations are considered by the Compensation Committee at the end of each year and decisions are generally made in February after the end of each year, once audited financial statements are approved by the Board. For 2018, API recommendations were considered and decisions were made by the Compensation Committee in December, prior to the completion of the Merger. These API decisions were confirmed by the Compensation Committee in February 2019, following review of the full-year financial statements approved by the Board.

API payouts are generally delivered in cash, unless otherwise determined by the Compensation Committee. The payout formula is intended as a guideline, and the Compensation Committee has the discretion to approve and/or recommend to the Board a different payout from the value determined by the API Scorecards. The Compensation Committee also reserves the right to make adjustments to the performance measures in each API Scorecard to reflect significant one-time items which occur during the measurement period. Any such adjustments will be fully disclosed in our information circular each year.

See “2018 Performance Considerations for Named Partners” for detailed pay and performance highlights for our Named Partners.

Performance Granted Share Units (PGSUs)

The cornerstone of our Partnership Plan is the innovative PGSU Plan, which is designed to ensure that our Named Partners and other Partnership Plan participants are financially and emotionally invested in Barrick’s long-term success. Named Partners receive 100% of their LTI in the form of PGSUs, which are share-based units that convert into Barrick Shares following a vesting period of 33 months. PGSUs, even after they convert to Barrick Shares, cannot be sold until a Named Partner retires or leaves the Company. Our emphasis on long-term ownership for our executives and all of our other partners means that our leaders invest a significant portion of their earned compensation in Barrick Shares which they cannot sell until they retire or leave the Company. Over time, this investment in Barrick Shares will represent a meaningful part of their wealth. The value of those shares is less than their face value because of the long-term, illiquid nature of the investment, which is not reflected in the compensation tables.

Each year, PGSUs are awarded based on the Compensation Committee’s assessment of the Company’s performance against the financial and non-financial metrics included in our Long-Term Company Scorecard. These metrics were carefully selected in consultation with our shareholders to drive long-term shareholder value. The dollar value of PGSUs granted to each of our partners is determined based on the result of the Long-Term Company Scorecard (ranging from 0% to 100%), multiplied by each partner’s LTI opportunity (capped at 100% to 600% of salary, which varies based on role). The number of PGSUs granted is determined by taking the dollar value of the PGSUs granted, divided by the closing share price of Barrick Shares on the date prior to grant or, if the grant date occurs during a Blackout Period, the closing share price of the first trading day after the Blackout Period, whichever is greater (as defined in the PGSU Plan). The payout formula is intended as a guideline, and the Compensation Committee has the discretion to approve and/or recommend to the Board that a Named Partner receive a different payout from the value determined by the Long-Term Company Scorecard. Maximum LTI awards will only be granted in cases of sustained long-term superior performance across all scorecard categories.

 

Illustrative Life Cycle of a PGSU Award

The following diagram illustrates the life cycle of a PGSU award, from grant to payout, following termination of employment or retirement.

Compensation Committee evaluates performance against Long-Term Company Scorecard

The Compensation Committee takes a multi-year lens when assessing Barrick’s performance against the Long-Term Company Scorecard to ensure that partners are only rewarded for sustainable performance and shareholder value creation.

Based on its assessment, the Compensation Committee assigns an overall score, which can range from 0% to 100%.

Compensation Committee determines PGSU grants based on Long-Term Company Scorecard Performance

The Compensation Committee determines PGSU grants using the Long-Term Company Scorecard result.

The dollar value of each PGSU grant is determined by multiplying the Long-Term Company Scorecard result and the LTI opportunity, which varies by partner from one to six times base salary, depending on position and level of responsibility.

The number of PGSUs granted is determined by dividing the dollar value of the PGSU award, by the closing price of Barrick Shares on the date prior to grant or, if the grant date occurs during a Blackout Period, the first trading day following the Blackout Period, whichever is greater.

PGSUs vest, Barrick Shares are purchased in the market by a third-party administrator on behalf of each partner

PGSUs vest 33 months from the date of grant. The total number of PGSUs vesting would include the initial grant, plus dividends accrued during the vesting period. At vesting, the value of the PGSUs is equal to the closing price of Barrick Shares on the vesting date multiplied by the number of PGSUs having vested. The after-tax proceeds of the vested PGSUs are then used by a third- party administrative agent to purchase Barrick Shares on the open market, on behalf of the partner.

Barrick Shares purchased (Restricted Shares) cannot be sold until the partner retires or leaves the Company (up to two years longer if the partner leaves to join, or provide services to, a defined competitor). Partners receive dividends on their Restricted Shares in cash, when and as declared.

Partners can realize cash value from unvested PGSU awards or sale of Restricted Shares once restrictions lapse

Generally, when a partner leaves the Company, unvested PGSUs will continue to vest per the normal schedule, which will be paid in cash when and as vested. Restrictions on Restricted Shares will lapse and cease to apply.

When a partner leaves the Company to join, or provide services to, a defined competitor, unvested PGSU awards will be forfeited and restrictions on Restricted Shares will lapse in three tranches (50% on termination or retirement and 25% on each of the first and second anniversary of termination or retirement).

The key characteristics of the PGSU Plan are included in Schedule C of this Circular. See below for the results of the 2018 Long-Term Company Scorecard and for prospective disclosure of the 2019 Long-Term Company Scorecard.

2019 Long-Term Company Scorecard

The Long-Term Company Scorecard set out below includes the Company performance measures and weightings that will be used by the Compensation Committee to determine the 2019 PGSU awards, as well as a description of why each performance measure is important to Barrick. The Board’s assessment will focus on the past year’s performance as well as the trend in performance over the last three years (i.e., the past year and the two preceding years). The financial and non-financial scorecard measures have been carefully considered, with extensive shareholder input, to ensure alignment with our long-term strategy.

Scorecard Metrics Long-Term Performance Basis Weighting Why we selected the metric
Financial Metrics (60%)
 

 

 

 

 

 

 

 

 

Return on Invested Capital(1) 10 – 15% 15% To measure the returns generated from capital invested in the Company’s existing operating mines
Growth in Free Cash Flow per Share(2) Deliver positive and growing free cash flow per share 15% To measure our ability to grow free cash flow per share and deliver industry-leading margins
Robust Dividend per Share(3) 25% – 35% 10% To evaluate our ability to create and deliver excess returns to our fellow owners
Strong Capital Structure(4) Material improvements to balance sheet progressing towards an A grade credit rating 10% To evaluate actions taken to strengthen our balance sheet, which would enable strategic alternatives for future growth
Capital Project Execution(5) Final Investment Decision budget 10% To evaluate our ability to deliver major capital projects to the planned cost and schedule established
Non-Financial Metrics (40%)
 

 

 

 

 

 

Strategic Execution(6) Judgment 15% To assess our progress in maximizing the value of our asset portfolio, how we addressed critical issues facing the business, and whether important strategic milestones were met
Reputation and License to Operate(7) Judgment 15% To assess Barrick’s environmental and safety performance trajectory over time, our compliance record, Corporate Social Responsibility performance, and success in building and developing deep partnerships with our stakeholders
People Development(8) Judgment 10% To evaluate the degree to which we upgrade and develop our talent across the organization
  1. ROIC is an internal performance measure used to manage performance. ROIC measures return on invested capital by taking Adjusted EBIT (Adjusted EBITDA less depreciation) less cash taxes as disclosed in the consolidated statements of cash flow and removing the impact of foreign currency translation gains/losses as disclosed in the consolidated income statements and dividing by average invested capital. Invested capital is calculated by taking consolidated assets as reported on our balance sheet net of assets not subject to depreciation as reported in Note 19 Property, Plant and Equipment of the financial statements in our 2018 Annual Report. Adjusted EBIT and Adjusted EBITDA are non-GAAP financial measures with no standardized definition under IFRS and therefore may not be comparable to similar measures presented by other companies. For further information and a detailed reconciliation of these non-GAAP measures to the most directly comparable IFRS measures, please see Other Information – Use of Non-GAAP Financial Performance Measures.
  2. We expect our business to operate at margins that provide strong free cash flow per share and will therefore evaluate achievement based on realized free cash flow per share and the growth trajectory over time. Free cash flow 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.
  3. Dividends will be based on an annual dividend payout ratio (defined as a percentage of after-tax profit). Achievement will be based on the size of the dividend, while taking into account alternative uses of cash (e.g., share buybacks, debt repayment, re-investment, acquisitions, etc.) to ensure that there is a focus on delivering excess returns.
  4. Strong capital structure will be determined based on material actions taken to improve the balance sheet and Barrick’s investment grade rating as determined by major debt rating agencies, and we will continue to hold a very high standard for our aspired capital structure.
  5. Capital project execution will be determined based on delivery of major capital projects to the planned cost and schedule established at the time of Board approval. The assessment will be performed on a project-by-project basis (weighted by project size) and will consider quantitative and qualitative dimensions. The assessment will be based on whether we meet overall capital budget targets, our adherence to plan by spending capital dollars at the level approved for each individual project, the cumulative spend on any individual project over time, our realization of value for capital dollars spent through earned value analysis, and our ability to bring projects to completion within a targeted timeframe, operational parameters, and operating cost.
  6. Successful strategy execution will be qualitatively assessed based on considerations such as: ongoing portfolio optimization through asset divestitures and development of growth opportunities consistent with our targeted returns on invested capital and strategic focus; execution of plans to grow free cash flow per share on a sustainable basis; the application of processes, governance, people, and technology to drive sustainable company performance, including demonstrable actions taken to address critical issues facing the business; and meeting important milestones for strategy execution.
  7. Reputation and license to operate will be assessed based on quantitative and qualitative measures. We will measure our performance trajectory over time for environmental (e.g., incidences) and safety (e.g., fatalities, Total Reportable Injury Frequency Rate). Qualitative measures include our overall compliance record, independent assessments of our corporate social responsibility related performance (e.g., International Council on Metals and Mining Assurance review, Dow Jones Sustainability Index listing), success in building and maintaining strong relationships with core stakeholders, and the quality of license to operate risk assessments.
  8. Our people development priorities are: to strengthen and renew the senior leadership of the Company by attracting external talent and moving people into optimal roles; drive an equivalent level of renewal across all areas of our business through Barrick’s partnership program and selective new hiring; and build effective, industry-leading processes for attracting, developing, evaluating, and retaining people at all levels of the Company. People development will be qualitatively assessed based on considerations including the ability to attract top performers, the retention rate for A-rated performers in the organization, succession readiness for top roles, internal promotion rate to top roles, and evolution of talent management processes.

Restricted Share Units

Restricted Share Units (RSUs) that are settled in After-Tax Shares may be awarded to newly-hired officers in recognition of forfeited compensation upon joining Barrick or may be granted from time to time in recognition of a promotion and/or long-term retention needs. RSUs vest up to three years from the date of grant (as specified by the Compensation Committee at the time of the grant), and are settled in After-Tax Shares unless otherwise determined by the Compensation Committee. RSUs are granted on a case-by-case basis.

In 2018, the Restricted Share Unit Plan was amended and renamed the Long-Term Incentive Plan. Among other things, the Long-Term Incentive Plan now provides the Compensation Committee with the flexibility to grant LTI in the form of After-Tax Shares; however, previously granted RSUs continue to be subject to the Plan. At December 31, 2018, Mark F. Hill was the only Named Partner who still held unvested RSUs. The key characteristics of Mr. Hill’s unvested RSU awards subject to the Long-Term Incentive Plan are included in Schedule D of the Circular.

Previous Compensation Policies that Continue to Apply

We no longer grant stock options and deferred cash awards, including cash-settled RSUs for executive compensation purposes, to further underscore long-term ownership as the basis of our LTI awards.

None of the NEOs has outstanding stock options. Certain officers of the Company continue to hold stock options granted prior to 2013 (in respect of the 2012 performance year). Please refer to Other Information – Equity Compensation Plan Information for terms applicable to all outstanding option grants.

Other Executive Compensation Elements

Barrick Share Purchase Plan

We created a new program on April 1, 2018 to incentivize our people to increase their ownership of Barrick Shares. The Barrick Share Purchase Plan (BSPP) allows our people to purchase Barrick Shares through payroll deduction and be rewarded for doing so by a matching Company purchase up to a value of $4,000 (Cdn $5,000) per year. The value of the matching Company purchase is reviewed annually and is subject to change from time to time. These matching Barrick Shares must be held for as long as an individual remains with the Company.

Executive Retirement Plans

We administer two supplemental defined contribution Executive Retirement Plans that provide for annual employer contributions equal to 15% of each eligible officer’s annual earned salary and API, which accrue with interest until termination of employment (before the participant’s retirement date) or until retirement, as applicable. The accumulated contributions are paid to the eligible officer in cash upon termination or retirement, as applicable.

Currently, we administer one plan for officers based outside of the United States (including Canada) and another for officers primarily based in the United States. All NEOs participate in an Executive Retirement Plan and do not participate in any other Barrick retirement plan. See “Executive Retirement Plans” for a detailed description of the Executive Retirement Plans.

Other Benefits and Perquisites

We provide competitive benefits and perquisites to our people. Barrick’s group benefits package for individuals who work full-time includes health, dental, life, disability, and accidental death and dismemberment coverage. Our executives, including our NEOs, are also eligible for additional benefits and perquisites which generally include a leased vehicle or car allowance, parking benefits, financial counselling, and executive medicals. Certain individuals are eligible for additional perquisites, including additional life, accidental death and dismemberment and long-term disability coverage, as well as ground and air transport.

Barrick is committed to ensuring that the best people are in the right positions throughout our global business. To facilitate this core commitment to retaining the best available talent regardless of borders, relocation support is provided to employees, including our executives, when they are relocated on hire or promotion. Relocation benefits may include relocation expenses, home finding and destination services, home sale and purchase assistance, housing allowances, moving allowances, as well as certain cash allowances recognizing cost of living differences in the host location. Our international relocation program facilitates global mobility and enables us to quickly meet our business needs around the world and develop our employees into the next generation of industry leaders.

2018 Performance Considerations for Named Partners

2018 Long-Term Company Scorecard (for 2018 PGSU Awards)

PGSU awards granted in February 2019 in respect of 2018 were determined using the 2018 Long-Term Company Scorecard that was published in the 2018 information circular. The Compensation Committee determined the 2018 PGSU awards based on the following performance considerations:

Long-Term Performance Measure Long-Term Performance Basis Weighting 2018 Performance Assessment Outcome
Return on Invested Capital(1) 10% – 15% 15% 5.7% 0% 0%
Growth in Free Cash Flow per Share(2) Deliver positive and growing free cash flow per share 15% Free cash flow(2) of $365M (1,167M shares outstanding); $0.31 per share 33% 5%
Robust Dividend per Share(3) 25% – 35% 10% 46% of adjusted net earnings(4); $0.16 per share 60% 6%
Strong Capital Structure(5) Material improvements to balance sheet progressing towards an A grade credit rating 10% Credit rating upgraded by Moody’s to Baa2 (stable) and by S&P to BBB (stable); $685M debt reduction below 2018 target 60% 6%
Capital Project Execution(6) Final Investment Decision budget 10% Capital expenditures at low end of 2018 guidance; all major capital growth projects on schedule and budget 80% 8%
Strategic Execution(7) Judgment 15% Announced Merger; Shandong Gold mutual investment agreement of up to $300M 100% 15%
Reputation and License to Operate(8) Judgment 15% 7 Reportable Environmental Incidents (above 2018 tolerance limit of 4); TRIFR at 0.32 (at 2018 tolerance limit) 27% 4%
People Development(9) Judgment 10% Driving decentralization activities; global talent assessment and review; progressing Human Resources Information System implementation 60% 6%
2018 Long-Term Performance Outcome 100% 50%
  1. ROIC is an internal performance measure used to manage performance. ROIC measures return on invested capital by taking Adjusted EBIT (Adjusted EBITDA less depreciation) less cash taxes as disclosed in the consolidated statements of cash flow and removing the impact of foreign currency translation gains/losses as disclosed in the consolidated income statements and dividing by average invested capital. Invested capital is calculated by taking consolidated assets as reported on our balance sheet net of assets not subject to depreciation as reported in Note 19 Property, Plant and Equipment of the financial statements in our 2018 Annual Report. Adjusted EBIT and Adjusted EBITDA are non-GAAP financial measures with no standardized definition under IFRS and therefore may not be comparable to similar measures presented by other companies. For further information and a detailed reconciliation of these non-GAAP measures to the most directly comparable IFRS measures, please see Other Information – Use of Non-GAAP Financial Performance Measures”.
  2. Free cash flow 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. For the purposes of the scorecard, free cash flow will be adjusted for commodity prices.
  3. Dividends to shareholders are based on the annual dividend payout ratio (defined as a percentage of after-tax profit). Achievement will be based on the size of the dividend, while taking into account alternative uses of cash (e.g., acquisitions, debt repayment, share buybacks, etc.) to ensure that there is a focus on delivering excess returns.
  4. Adjusted net earnings is a non-GAAP financial performance measure with no standardized definition until 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.
  5. Strong capital structure is determined based on material actions taken to improve Barrick’s balance sheet and investment grade rating as determined by major debt rating agencies.
  6. Capital projects performance is determined based on delivery of approved projects at planned cost and schedule. The assessment will be quantitative and qualitative, because projects often span several years, and it is important to evaluate schedule and quality, in addition to cost. The assessment will be based on whether we meet overall capital budget targets, our adherence to plan by spending capital dollars at the level approved for each individual project, our realization of value for capital dollars spend through earned value analysis, and our ability to bring projects to completion within a targeted timeframe, operational parameters, and operating cost. All projects must meet a hurdle rate of 15%.
  7. Successful strategy execution is qualitatively assessed based on considerations such as: ongoing portfolio optimization through asset divestitures and development of growth opportunities consistent with our targeted ROIC and strategic focus; execution of plans to grow free cash flow per share on a sustainable basis; the application of processes, governance, people, and technology to drive sustainable company performance, including demonstrable actions taken to address critical issues facing the business; and meeting important milestones for strategy execution. See footnote 1 for a description of ROIC. For a description of free cash flow, see footnote 2 and Other Information – Use of Non-GAAP Financial Performance Measures – Free Cash Flow”.
  8. Reputation and license to operate is qualitatively assessed based on considerations including our overall compliance record, independent assessments of our corporate social responsibility related performance (e.g., International Council on Metals and Mining Assurance review, Dow Jones Sustainability Index listing), success in building and maintaining strong relationships with core stakeholders, and the quality of license to operate risk assessments.
  9. Quality of people development is qualitatively assessed based on considerations including the ability to attract top performers, the retention rate for A-rated performers in the organization, succession readiness for top roles, internal promotion rate to top roles, and evolution of talent management processes.

Financial Performance Measures (60% weighting)

Return on Invested Capital(1) (15% weighting, assessment: 0%):

Barrick has made substantial progress in upgrading its portfolio of mines, driving improvements to operational profitability, and reallocating capital to only those projects that meet target returns. In 2018, we advanced our pipeline of high-confidence projects at or near our existing operations with potential to contribute more than one million ounces of annual production to Barrick at costs well below our current portfolio average. These actions will produce higher ROIC(1) over time, but we have not yet achieved our long-term performance range of 10% – 15% ROIC(1). ROIC(1) for 2018 was 5.7% and our 3-year average ROIC(1) was 7.3%. As a result there is no payout on this metric.

Growth in Free Cash Flow per Share(2) (15% weighting, assessment: 33%):

We believe that a healthy, high-performing mining business must deliver positive free cash flow across the gold price cycle and be self-funding for growth. In 2018, we generated $1.77 billion in operating cash flow and $365 million in free cash flow(2)(1,167,846,910 shares outstanding). This represents robust free cash flow for 2018, but is a reduction from the $669 million in free cash flow(2) generated in 2017 (1,165,577,478 shares outstanding). However, Barrick’s demonstrable progress with maintaining strong capital discipline and improving free cash flow(2) since 2014 enabled us to return more capital to shareholders in 2018 with a 33% increase in our annual dividend, In consideration of the above, the payout for this metric is 33%.

Robust Dividend per Share (10% weighting, assessment: 60%):

Barrick places a high priority on returning to shareholders a meaningful portion of our cash margin through dividends. We aim to increase dividends over time across a wide range of gold prices. Reflecting our commitment to shareholder returns, we increased our annual dividend by 33%, from 12 cents per share in 2017 to 16 cents per share in 2018. Our dividend was 46% of adjusted net earnings(2) which exceeds our long-term performance range of 25% – 35% of adjusted net earnings(2). Therefore the payout for this metric is 60%.

Strong Capital Structure (10% weighting, assessment: 60%):

Barrick is focused on continuing to strengthen its balance sheet as measured by improved financial flexibility and credit rating. In 2018, we reduced our total debt by $685 million, or 11%. With more than 85% of our outstanding total debt of $5.7 billion due after 2032, Barrick now has one of the strongest balance sheets in the industry. Moody’s Investors Service upgraded the senior unsecured credit ratings of Barrick and all rated subsidiaries to Baa2 from Baa3, with a stable outlook and S&P Global Ratings upgraded Barrick’s long-term corporate credit rating to BBB from BBB-, also with a stable outlook. Our liquidity position is strong and continues to improve, with robust cash flow generation, modest near-term debt repayment obligations, a $3 billion undrawn credit facility, debt net of cash of $4.2 billion and a consolidated cash balance of approximately $1.6 billion. The payout for this metric is therefore 60%.

Capital Project Execution (10% weighting, assessment: 80%):

Executing major capital projects effectively is critical to Barrick’s long-term success, especially in achieving capital return targets. We therefore set a very high, and absolute, performance standard requiring all major capital projects to achieve the cost and schedule estimates presented at the time of Board approval (Final Investment Decision). Total attributable capital expenditures for 2018 were $1.41 billion, at the low end of the guidance range, and in line with 2017, with an increase in project capital expenditures offset by a decrease in mine site sustaining capital expenditures. All major capital growth projects remain on schedule and budget, as a result of the 2018 focus on further optimizing critical path schedules, which in turn, has changed the timing of spend throughout the year. All significant capital expenditures were independently reviewed prior to Investment Committee approval and no projects that failed to meet our investment criteria were approved. An ongoing focus to identify, evaluate, and channel capital to high return projects continues, while maintaining growth project critical path schedules. The payout for this metric is therefore 80%.


  1. ROIC is an internal performance measure used to manage performance. ROIC measures return on invested capital by taking Adjusted EBIT (Adjusted EBITDA less depreciation) less cash taxes as disclosed in the consolidated statements of cash flow and removing the impact of foreign currency translation gains/losses as disclosed in the consolidated income statements and dividing by average invested capital. Invested capital is calculated by taking consolidated assets as reported on our balance sheet net of assets not subject to depreciation as reported in Note 19 Property, Plant and Equipment of the financial statements in our 2018 Annual Report. Adjusted EBIT and Adjusted EBITDA are non-GAAP financial measures with no standardized definition under IFRS and therefore may not be comparable to similar measures presented by other companies. For further information and a detailed reconciliation of these non-GAAP measures to the most recently comparable IFRS measures, please see Other Information – Use of Non-GAAP Financial Performance Measures.
  2. Free cash flow and adjusted net earnings are non-GAAP financial performance measures 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.

Non-Financial Performance Measures (40% weighting)

Strategic Execution (15% weighting, assessment: 100%):

Successful strategy execution is qualitatively assessed based on considerations such as: ongoing portfolio optimization through asset divestitures and development of growth opportunities consistent with our targeted ROIC(1) and strategic focus; execution of plans to grow free cash flow per share on a sustainable basis; leveraging innovation and technology to drive industry-leading efficiencies; addressing critical issues facing the business through demonstrable action; and meeting important milestones for strategy execution. Our strategic initiatives for 2018 were to focus on free cash flow per share, evolve our operations, strengthen our balance sheet while delivering shareholder returns, maximize the value of our portfolio, and build partnerships and develop talent to deliver on our decentralized operating vision. We made significant progress on each of these strategic initiatives in 2018, including the announcement of an enhanced strategic cooperation agreement and the establishment of a mutual investment agreement with Shandong Gold, one of China’s leading mining companies. Most significantly, we completed our transformational nil-premium share-for-share merger with Randgold on January 1, 2019, creating an industry-leading gold company with a vision for long-term value creation. The Merger significantly strengthened Barrick’s position across key metrics relative to the Senior Gold Peers, including: ownership of five of the world’s top ten Tier One Gold Assets and two potential Tier One Gold Assets under development; the lowest total cash costs(2), high quality gold reserves and extensive land positions in many of the world’s most prolific gold districts, positioning the Company for sustainable growth. The payout for this metric is therefore 100%.

Reputation and License to Operate (15% weighting, assessment: 27%):

Our license to operate depends on the combined strength of our safety performance, compliance record (environmental, human rights, anti-corruption, etc.), and stakeholder relations. Shortcomings, even when due to rare events, can have a significant effect on our stakeholders and business; we therefore set a high absolute standard and evaluate consistency and improvement over time. We continued to improve our safety performance in 2018, achieving a total reportable injury frequency rate of 0.32, which is the best result in the Company’s history and a 9% improvement compared to 2017. Since 2014, Barrick has also achieved an 87% reduction in reportable environmental incidents, with seven incidents at our operations last year, down from eight in 2017, reflecting a long-term improvement trend.  While there were fewer reportable environmental incidents compared to 2017, we nonetheless fell short of the challenging threshold limit of four reportable environmental incidents we had set for the year, demonstrating that we still have work to do to achieve Best-in-Class performance. In most jurisdictions, strong government and community relations translated into a stable operating environment for the Company. Barrick reports to the Global Reporting Initiative’s Sustainability Reporting Standards, in accordance with the Core option, and Barrick’s 2017 Sustainability Report was independently assured by a third-party consistent with International Council on Mining and Metals requirements. Our progress in these areas is being recognized externally. Recognizing that we still have work to do to improve our reputation in Argentina, Chile, and Tanzania, the payout for this metric is therefore 27%.

People Development (10% weighting, assessment: 60%):

In 2018, we supported our strategic priorities by filling a number of strategic roles with top global talent, deepening the Company’s talent pool. These positions included Head of Mineral Resource Management for North America, Executive General Manager for Nevada, General Manager of the Porgera mine, General Manager of the Jabal Sayid mine and Executive Director for Argentina. We also strengthened and consolidated our Corporate Finance team with the appointment of a Senior Vice-President, Deputy Chief Financial Officer and a Senior Vice-President for Tax & Treasury.

We streamlined the corporate office and reduced staff at a number of satellite offices as we redeployed skills and capacity at the site and country level, closer to the needs of the business. We also implemented a new global operational talent review and succession planning process and advanced the design and implementation of a cloud-based Human Resource Information System.

Consistent with our belief that all employees should be personally invested in the long-term success of Barrick, we provided a third grant of Barrick Shares to all of our employees under the Global Employee Share Plan and we introduced the Global Barrick Share Purchase Plan, a program that incentivizes our employees to increase their ownership of Barrick Shares by providing a Company match up to a prescribed annual limit for employees who purchase Barrick Shares. The payout for this metric is therefore 60%.


  1. ROIC is an internal performance measure used to manage performance. ROIC measures return on invested capital by taking Adjusted EBIT (Adjusted EBITDA less depreciation) less cash taxes as disclosed in the consolidated statements of cash flow and removing the impact of foreign currency translation gains/losses as disclosed in the consolidated income statements and dividing by average invested capital. Invested capital is calculated by taking consolidated assets as reported on our balance sheet net of assets not subject to depreciation as reported in Note 19 Property, Plant and Equipment of the financial statements in our 2018 Annual Report. Adjusted EBIT and Adjusted EBITDA are non-GAAP financial measures with no standardized definition under IFRS and therefore may not be comparable to similar measures presented by other companies. For further information and a detailed reconciliation of these non-GAAP measures to the most recently comparable IFRS measures, please see Other Information – Use of Non-GAAP Financial Performance Measures.
  2. Lowest total cash cost is non-GAAP financial performance measure based on data from Wood Mackenzie with no standardized definition under IFRS and therefore may not be comparable to similar measures presented by other companies. For further details, please see “Other Information – Use of Non-GAAP Financial Performance Measures” and “Other Information – Third Party Data”.

2018 Annual Performance Incentive Considerations for our Named Partners

2018 API awards for our Named Partners were determined based on the Compensation Committee’s review of their performance against the short-term priorities and initiatives that were published in the 2018 information circular.

Former President

Mr. Kelvin Dushnisky was appointed President of Barrick on August 17, 2015. He resigned from Barrick effective August 31, 2018. On the Executive Chairman’s recommendation and the Compensation Committee’s advice, and in consideration of Mr. Dushnisky’s contributions during 2018 in advancing our 2018 priorities versus the initiatives that were set for him at the beginning of the year, the independent directors of the Board determined that a prorated API award based on an API Scorecard result of 50% and an API of $926,160 was appropriate. The considerations of the Compensation Committee and the independent directors of the Board are summarized in the table below.

The former President’s 2018 Initiatives

Focus
  • In collaboration with the Executive Chairman and the Senior Executive Vice-President, Strategic Matters, support the evaluation process for all potential asset partnerships and strategic alternatives by overseeing matters relating to political risks and mitigating factors
  • Continue to oversee the governance of Acacia Mining plc (Acacia Mining) as Chairman of the Board of Directors
Mining Excellence
  • Oversee and provide strategic direction for all license to operate matters
  • Support all aspects of government relations related to Barrick Nevada
  • Progress the extension of the Special Mining Lease at the Porgera Joint Venture
People
  • Create a culture of integrity and ownership that supports our Company values at all levels throughout the Company
Financial Flexibility
  • Provide leadership to ensure the Company meets financial and operational guidance
  • Provide governance and oversight to the Company’s responsibilities, compliance, assurance, and disclosure requirements
Growth
  • Continue to provide leadership to advance the comprehensive permitting process for the Donlin Gold project
Partnership
  • Protect and enhance the “Barrick Brand”, including with current and new host governments, the investor community (shareholders, analysts, media, etc.), associations, and the general public
  • Develop a detailed Global Relationship Management Plan to further strengthen Barrick’s reputation and presence around the world
  • Collaborate with the former Executive Vice-President and Chief Financial Officer to continuously improve the quality of Barrick’s Investor Relations and shareholder engagement efforts

2018 Accomplishments

  • Initiated discussions with the Zambian Revenue Authority and the Government of Zambia to advance the resolution of outstanding tax matters; Barrick signed a deed of settlement in October 2018 following constructive engagement throughout 2018 with the Zambian Revenue Authority and the Government of Zambia
  • As former Chairman of Acacia Mining, continued to represent Barrick and support ongoing discussions concerning the proposed framework for Acacia Mining’s operations in Tanzania
  • In partnership with the Executive Vice-President, Exploration and Growth, led constructive engagements with the U.S. Army Corps of Engineers and the U.S. Bureau of Land Management to maintain political support for the Donlin Gold project throughout 2018, which contributed to the issuance of a federal Record of Decision for the Donlin Gold project in August 2018
  • In partnership with the Zijin Mining Group and with the support of the former Senior Vice-President, Operational and Technical Excellence, established a local team to seek an extension of the Special Mining Lease at the Porgera Joint Venture
  • Led political risk diligence and mitigation assessments for multiple strategic opportunities to inform the decision-making process
  • Materially improved the quality of geopolitical and country risk tracking and reporting to further elevate the importance of license to operate matters considered throughout the organization, and especially at the Board level
  • Represented the Company with media and investors and on the World Gold Council and the International Council on Mining and Metals
  • Maintained Barrick’s listing in the Dow Jones Sustainability Index for the eleventh consecutive year

 

Five-Year Reported and Realized Pay Comparison for Former President

Reported pay (excluding pension value) includes base salary, API earned, the grant date fair value of LTI awarded but not yet vested, and all other compensation as reported in the Summary Compensation Table.
Realized pay is the compensation actually received by the former President during the year, including base salary, API earned and all other compensation, as reported in the Summary Compensation Table. Additionally, it includes the value of stock options exercised and LTI awards that vested during the year and for which there are no post-vesting holding restrictions, as reported in the Value Vested or Earned During the Year table for each respective year. It also includes all Restricted Share awards for which sale and transfer restrictions have lapsed upon the termination of his employment.

Five-Year Reported and Realized Pay Comparison for Former President

The graph (expressed in thousands of dollars) compares the compensation reported for our former President in the Summary Compensation Table from 2014, the year that Mr. Dushnisky was appointed to the role, to August 31, 2018, the date of termination of his employment, with the compensation that he actually received for the same period from earned and vested awards.

We award a significant portion of our executive compensation in LTI to ensure a sharp focus on long-term value creation. Although LTI awards are reported in the Summary Compensation Table, our former President did not actually receive value from these awards until they vested or when the sale and transfer restrictions lapsed. The value of these LTI awards at that point may differ from the initially reported value due to changes in our share price and company performance, which ensures the value of the awards reflects the overall shareholder experience over the long-term. The value of the LTI awards reported in the Summary Compensation Table therefore represents a future compensation opportunity, rather than an in-year compensation value.

During 2014 to 2017, the amount of compensation actually received (Realized Pay) by our former President was, on average, 28% less than the Reported Pay in the “Summary Compensation Table”. In 2018, Realized Pay was significantly higher than the reported pay for the former President due to the vesting of the February 2016 PGSU award, which was paid in cash and the Restricted Shares from the February 2015 PGSU Award that vested in 2017 for which the sale and transfer restrictions lapsed in connection with his resignation on August 31, 2018.

Senior Executive Vice-President, Strategic Matters

Mr. Kevin Thomson was appointed Senior Executive Vice-President, Strategic Matters on October 14, 2014. In determining Mr. Thomson’s API award, the Compensation Committee considered the Executive Chairman’s recommendations and Mr. Thomson’s contributions in advancing our 2018 priorities, which are described in greater detail below. The Compensation Committee determined that an API Scorecard result of 80% was appropriate and awarded Mr. Thomson an API of $1,667,088. The Compensation Committee’s considerations are summarized in the table below.

The Senior Executive Vice-President, Strategic Matters’ 2018 Initiatives

Focus
  • Continue to identify and drive strategic initiatives for Barrick, including growth opportunities and the process of divesting assets considered non-core to Barrick
  • Work with our 2018 Executive Committee and internal lawyers, bankers, external counsel, advisors, and others to execute strategic transactions in a world-class manner
Financial
Flexibility
People
  • Continue to drive a high performance culture across the organization to ensure Best-in-Class and cost efficient performance
  • Work with our communications, investor relations, and legal teams to communicate the work of our Strategic Matters group in a clear and transparent manner
  • In collaboration with the Human Resources Executive, restructure and lead the compliance function
Growth
  • Work with bankers, lawyers, and other advisors to quarterback thorough and professional assessments of various external growth options
  • For external growth options that are approved by the Executive Chairman, oversee and coordinate internal teams of various disciplines (e.g., evaluations, technical services, tax, accounting) and external advisors (e.g., bankers, lawyers, accountants) to assess and execute those options in a professional and timely manner
Partnership
  • Work with our Executive Chairman; Human Resources Executive; Vice-President, Corporate Secretary and Associate General Counsel; members of our Corporate Governance & Nominating Committee; and other independent directors to deal with concerns that may be raised by shareholders from time to time, to ensure that Barrick’s approach to corporate governance is Best-in-Class, and that our governance structure and approach to compensation are clearly communicated to our shareholders in this Circular and elsewhere
  • Work to establish joint ventures with other mining companies for assets in Barrick’s portfolio or in connection with external growth opportunities
  • Work with our Executive Chairman and other members of our 2018 Executive Committee to support strategic negotiations, including providing support on aspects related to government relations

2018 Accomplishments

  • Drove the successful execution of strategic transactions, investments, and divestitures of assets considered non-core to Barrick, including:
    • On January 1, 2019, completing the transformational nil-premium, share-for-share merger with Randgold, which was awarded the prize for Best Large Cap Deal at the 16th Annual Mines and Money Awards for Outstanding Achievement
    • In December 2018, completing a private placement investment in Reunion Gold Corporation, an exploration and development company focused on acquiring, exploring, and developing gold projects in the highly prospective Guiana Shield of South America
    • In October 2018, divesting Barrick’s remaining interest in the Bald Mountain Exploration Joint Venture to an affiliate of Kinross Gold Corporation
    • In September 2018, establishing a mutual investment agreement with Shandong Gold, further strengthening Barrick’s partnership with one of China’s leading mining companies
    • In July 2018, acquiring a 2.5% Gross Revenue Royalty for $14.9 million on certain surface and mineral lands adjacent to the Hemlo property in Ontario; the area covered by the royalty could represent potentially significant mine life extensions
    • In May 2018, acquiring a 19.9% interest in Midas Gold Corp. and its world class Stibnite Gold Project in Idaho, United States, with potential for production over 300,000 ounces of gold per year at competitive operating costs, exploration upside, and low geopolitical risk
  • Continued to facilitate discussions with the Government of Tanzania concerning the proposed framework for Acacia Mining’s operations in Tanzania
  • Continued to embed Best-in-Class standards in the Strategic Matters group and in all other functions at Barrick essential for the success of our strategic transactions
  • Collaborated with the Human Resources Executive; former Executive Vice-President and Chief Financial Officer, Vice-President, Corporate Secretary and Associate General Counsel and others to ensure that Barrick embraces industry-leading corporate governance practices and disclosure
  • Provided strategic guidance and counsel to ensure clear, consistent, and compelling messaging for investor relations and other corporate communications, including our ongoing shareholder engagement strategy for which the Governance Professionals of Canada has recognized Barrick for the “Best Engagement by a Governance Team (Publicly Listed)” at the 2018 Excellence in Governance Awards

Chief Operating Officer, North America (formerly Executive Vice-President and Chief Financial Officer)

Ms. Catherine Raw was appointed the Executive Vice-President and Chief Financial Officer on April 26, 2016 and held that position until December 31, 2018. Following the Merger, on January 1, 2019, she was appointed Chief Operating Officer, North America. In determining Ms. Raw’s API award for 2018, the Compensation Committee considered the Executive Chairman’s recommendations and Ms. Raw’s contributions in advancing our 2018 priorities, which are described in greater detail below. The Compensation Committee determined that an API Scorecard result of 80% was appropriate and awarded Ms. Raw an API of $1,667,088. The Compensation Committee’s considerations are summarized in the table below.

The former Executive Vice-President & Chief Financial Officer’s 2018 Initiatives

Focus
  • Support the Senior Executive Vice-President, Strategic Matters, and former Chief Investment Officer with the evaluation of strategic transactions, including supporting the process with regard to tax planning, financial modelling, and accounting
Mining Excellence
  • Together with the Executive Committee, identify general and administrative expense savings and advance the implementation of Barrick’s decentralized operating model
  • In collaboration with the former Chief Investment Officer and the former Senior Vice-President, Operational and Technical Excellence, further improve the quality of the Life of Mine planning and budgeting processes
  • Support the continued digitization of Barrick’s finance capabilities, with the aim to provide real-time access to high quality data and to accelerate further operational improvements across the organization
People
  • Collaborate with the Human Resources Executive to upgrade and develop Finance talent at head office and at site, and to accelerate the decentralization of the finance function
  • Actively coach site Chief Financial Officers to enable more effective decentralization across the organization
Financial Flexibility
  • Evaluate and implement cash flow and market volatility management strategies and deliver on debt reduction targets as cost efficiently as possible
  • Formulate a long-term dividend strategy that is appropriate and affordable, in the context of Barrick’s overall growth and investment plan
Growth
  • Collaborate with the Senior Executive Vice-President, Strategic Matters and the former Chief Investment Officer to review capital allocation decisions and growth options
Partnership
  • Articulate delivery of Barrick’s focus on long-term value creation from core assets
  • Collaborate with the Communications and Investor Relations Departments to strengthen relationships with the investment community, including with credit rating agencies, and improve the quality of investor engagement efforts

2018 Accomplishments

  • Collaborated with the Executive Chairman, Senior Executive Vice-President, Strategic Matters, and other members of the 2018 Executive Committee to ensure the successful closing of the Merger
  • Led efforts to continue strengthening our balance sheet by restructuring and reducing our credit facility from $4 billion to $3 billion and by repurchasing $629 million of debt (2021 Notes) in July 2018, bringing Barrick’s total debt repayments over the past five-and-a-half years to approximately $10 billion
  • Evaluated Barrick’s dividend payout strategy and enhanced our annualized dividend from 12 cents per share in 2017 to 16 cents per share in 2018, a 33% increase in our annual dividend
  • Collaborated with the Senior Executive Vice-President, Strategic Matters and the former Chief Investment Officer to analyze potential strategic investment, asset divestiture, and partnership opportunities
  • Collaborated with the 2018 Executive Committee to advance the implementation of our decentralized operating model and identify corporate administration cost savings across the organization; 2018 corporate administration costs of $212 million were significantly below 2018 guidance
  • Strengthened financial leadership by placing a new Senior Vice-President, Deputy Chief Financial Officer at head office, as well as new Chief Financial Officers in Chile and at Hemlo, Lumwana, and Pueblo Viejo
  • Combined the planning and risk functions and appointed the Senior Vice-President, Deputy Chief Financial Officer to improve quality of financial planning and oversight
  • Combined the tax and treasury functions and appointed the Senior Vice-President, Tax & Treasury to further streamline financial planning
  • Continued to modernize the finance function by implementing Robotic Process Automation for multiple finance processes at Henderson and in Peru, by digitizing and centralizing tax records, to increase organizational efficiency and agility
  • Collaborated with the Human Resources Executive to complete an extensive review of all finance roles, which resulted in the reallocation and/or elimination of those no longer required, the closure of some of our smaller offices, and improved overall team effectiveness
  • Collaborated with the former Chief Investment Officer and our former Senior Vice-President, Operational and Technical Excellence to improve the Life of Mine planning and budgeting processes
  • Strengthened the quality of investor communications in collaboration with the Senior Vice-President, Investor Relations and Senior Vice-President, Communications
  • Oversaw the organization of and content development for Barrick’s Investor Day in February 2018
  • Continued to strengthen relationships with new and existing investors through active outreach and marketing in Asia, Europe (including the United Kingdom), and North America
  • In the fourth quarter of 2018, directly led engagement efforts with the investor community (shareholders, analysts, media, etc.) and the general public to reinforce Barrick’s strategic vision and clear focus on value creation from our core assets

Chief Operating Officer, Latin America and Australia Pacific (formerly Chief Investment Officer)

Mr. Mark Hill was the Chief Investment Officer on September 12, 2016 and held that position until December 31, 2018. Following the Merger, on January 1, 2019, Mr. Hill was appointed Chief Operating Officer, Latin America and Australia Pacific. In determining Mr. Hill’s API award for 2018, the Compensation Committee considered the Executive Chairman’s recommendations and Mr. Hill’s contributions in advancing our 2018 priorities, which are described in greater detail below. The Compensation Committee determined that an API Scorecard result of 88% was appropriate and awarded Mr. Hill an API of $1,833,797. The Compensation Committee’s considerations are summarized in the table below.

The former Chief Investment Officer’s 2018 Initiatives

Focus
  • Invest in high return projects that generate maximum free cash flow(1) in the near- and long-term, while increasing optionality and growing long-term Net Asset Value
  • Collaborate with the Senior Executive Vice-President, Strategic Matters to evaluate and support the due diligence process for strategic transactions
Mining Excellence
  • Collaborate with the 2018 Executive Committee to develop Company-wide and asset-level free cash flow(1) targets in order to drive an even greater focus on growing and sustainably delivering free cash flow(1) per share
People
  • Upgrade talent, ensure robust succession planning, and develop capabilities across the Capital group
  • Collaborate with the Human Resources Executive to reinforce the focus on growing free cash flow(1) per share over time at all levels across the organization through the short-term incentive plan
Financial Flexibility
  • Minimize sustaining capital expenditures through optimal mine sequencing, superior execution, and capital discipline to enable capital deployment for growth opportunities that are expected to meet or exceed Barrick’s 15% investment hurdle rate
Growth
  • In collaboration with the Senior Executive Vice-President, Strategic Matters and the Executive Vice-President, Exploration and Growth, identify, evaluate, and progress all organic and external growth opportunities that meet or exceed Barrick’s 15% investment hurdle rate
Partnership
  • Develop strategic partnerships to strengthen optionality for Barrick’s portfolio of projects

2018 Accomplishments

  • Led the completion of reciprocal due diligence for the merger with Randgold
  • Reduced mine site sustaining capital expenditures by optimizing the Life of Mine planning cycle through ongoing monitoring; Barrick’s sustaining capital efficiency profile has improved plan-on-plan and capital expenditures were at the low end of our 2018 guidance
  • Maintained focus on maximizing the value of Barrick’s portfolio by advancing the evaluation of organic growth opportunities in low risk jurisdictions, including:
    • Initiating and funding the technical evaluation and additional resource drilling to define the growth potential in Goldstrike’s underground mining operations
    • Initiating a prefeasibility study on the benefits of adding processing capacity in Nevada
    • Funding and completing a technical evaluation on the processing option trade-offs for the Turquoise Ridge Joint Venture and Goldstrike autoclave optimization
    • Initiating the Pueblo Viejo plant expansion, including the pre-oxidization heap leach pad project and pilot floatation plant
  • Led a rigorous investment review process and secured Board approval for a total estimated capital cost of $300 – $325 million (100% basis) to construct a third shaft at Turquoise Ridge, which is expected to increase annual production to more than 500,000 ounces per year, with initial production beginning in 2022 and sustained production from 2023
  • Continued to evaluate new and previous capital allocation decisions with discipline and rigor, which resulted in reprioritizing certain capital projects which no longer meet Barrick’s investment criteria, including Alturas, the refractory sulphide ore project (PMR) at Lagunas Norte, restarting the underground operations at Pascua-Lama, and Phase 6 of the Open Pit expansion at Hemlo
  • Implemented a post-investment review process for all capital projects to improve decision-making on the use of capital
  • In collaboration with the Human Resources Executive, increased site accountability to grow free cash flow(1) per share over time by introducing asset-level short-term incentive targets
  • Collaborated with the Human Resources Executive to complete an extensive review of all roles in the Capital group to drive greater efficiency and accountability
  • Continued to identify external partnership and growth opportunities through active outreach

  1. Free cash flow and adjusted net earnings are non-GAAP financial performance measures 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”.