Compensation Governance and Oversight
Barrick’s Compensation Governance Process
The Board is responsible for the oversight of Barrick’s executive compensation principles, practices, and programs and the approval of major compensation programs on the recommendation of the Compensation Committee. In December 2018, prior to the completion of the Merger, the independent directors of the Board approved the compensation of the Executive Chairman and the former President based on the recommendations of the Compensation Committee. The Board also approves director compensation programs.
Role of the Compensation Committee
The Compensation Committee mandate was revised on January 1, 2019, following the completion of the Merger. As the steward of our pay-for-performance philosophy, the Compensation Committee:
- Designs and drives all aspects of Barrick’s compensation policies and plans;
- Develops performance measures and scorecards for Barrick’s long-term and short-term executive compensation programs;
- Evaluates the collective performance of Partnership Plan participants by using the Long-Term Company Scorecard at the end of each year;
- Provides recommendations to the Board regarding compensation for the Executive Chairman based on an assessment of his performance for the year by the Corporate Governance & Nominating Committee, in consultation with the Lead Director, at the end of each year;
- Provides recommendations to the Board regarding compensation for the President and Chief Executive Officer based on an assessment of his performance for the year by the Executive Chairman, in consultation with the Lead Director, at the end of each year;
- Reviews and approves the compensation of our Senior Executive Vice-President and Chief Financial Officer; Senior Executive Vice-President, Strategic Matters; and other senior officers, other than the President and Chief Executive Officer, based on their respective individual API Scorecard evaluations and other relevant factors provided by the President and Chief Executive Officer at the end of each year;
- Considers feedback from shareholders with respect to Barrick’s overall compensation strategy;
- Considers the implications of risks associated with the Company’s executive compensation programs and practices; and
- Reviews the remuneration of the directors from time to time to ensure that it properly reflects the time commitment and responsibilities associated with being an effective director.
In December 2018, prior to the completion of the Merger, the Compensation Committee recommended to the independent directors the approval of the 2018 compensation of the Executive Chairman and former President, and approved the 2018 compensation of the Senior Executive Vice-President, Strategic Matters; former Executive Vice-President and Chief Financial Officer; former Chief Investment Officer; and other 2018 Executive Committee members based on their assessment of performance, the Long-Term Company Scorecard, the API Scorecards, and other relevant factors. For a description of the Compensation Committee’s key activities and accomplishments in 2018, see the discussion under “Committees of the Board – Compensation Committee ”.
Composition of the Compensation Committee
Prior to January 1, 2019, the Compensation Committee was comprised of J. Brett Harvey (Chair), J. Robert S. Prichard, Gustavo A. Cisneros, Steven J. Shapiro, and Ernie L. Thrasher. On January 1, 2019, upon completion of the Merger, the Compensation Committee was reconstituted with Christopher L. Coleman (Chair), Gustavo A. Cisneros, Brian L. Greenspun, and J. Brett Harvey as members. None of the Compensation Committee members is an officer or employee of Barrick or its subsidiaries, and each member of the Committee meets the Board’s independence standards derived from the corporate governance guidelines established by the NYSE Standards and National Instrument 58-101 – Disclosure of Corporate Governance Practices.
Collectively, the Compensation Committee’s members have extensive compensation-related experience in the natural resources and energy sectors as senior executives (past and present) and members of the board of directors and committees of other public and private corporations.
- Mr. Coleman is the Chair of the Compensation Committee. He has extensive experience as a member of the compensation committee of the board of directors of Papa John’s International, Inc. and was the Chairman of the board of directors of Randgold prior to the Merger. He is Group Head of Banking and a Global Partner of Rothschild & Co. He is also the Chairman of Rothschild Bank International and serves on a number of other boards and committees of the Rothschild & Co Group. As such, he draws from his extensive boardroom leadership, management, financial, and international business experience to provide relevant compensation and governance-related insights.
- Mr. Cisneros has extensive experience as the owner and Chairman of Cisneros, a large privately-held conglomerate. As well, Mr. Cisneros is the Chairman of Barrick’s Corporate Governance & Nominating Committee, which assists in consideration of the issues that are relevant to both committee mandates.
- Mr. Greenspun has extensive experience as the Chairman and Chief Executive Officer of Greenspun Media Group. As well, Mr. Greenspun is a member of Barrick’s Corporate Governance & Nominating Committee, which assists in consideration of the issues that are relevant to both committee mandates.
- Mr. Harvey has held a number of positions with CONSOL Energy Inc., including Chairman Emeritus, Chairman, and Chief Executive Officer. As such, he draws from his previous committee leadership experience and his management experience to provide relevant compensation and governance-related insights. Mr. Harvey is the Chairman of the Audit & Risk Committee, which assists in consideration of the issues that are relevant to both committee mandates. In addition, Mr. Harvey is the Lead Director of Barrick’s Board of Directors and served as Chair of Barrick’s Compensation Committee prior to its reconstitution on January 1, 2019.
The Board is confident that the Compensation Committee collectively has the knowledge, experience, and background necessary to carry out the Committee’s mandate effectively and to make executive compensation decisions in the best interests of the Company and its shareholders.
Independent Compensation Consultant
The Compensation Committee has sought the views of an independent compensation consultant on executive compensation-related matters from time to time. In May 2016, Pay Governance was selected by the Compensation Committee as its independent consultant to assist with refining the Executive Chairman’s compensation structure, on the basis of its broad experience advising the compensation committees of a number of S&P/TSX60 cross-listed companies. In 2017, Pay Governance provided benchmarking advice and data relating to the compensation of the Executive Chairman. In 2018, Pay Governance provided benchmarking advice and data relating to the compensation of the Executive Chairman and completed a Compensation Risk Assessment for Barrick’s executive compensation programs. The chart below summarizes the fees paid to Pay Governance in 2018 and 2017 for services provided to the Compensation Committee. Pay Governance provides advisory services exclusively to the Compensation Committee and does not advise management.
|Pay Governance(1)||Executive Compensation-Related Fees||All Other Fees for services provided to management||Total Fees|
- Pay Governance’s consulting fees are paid in U.S. dollars.
The Compensation Committee reviews and approves all fees and terms of consulting services provided by independent compensation consultants that are mandated by the Compensation Committee or commissioned by management. As provided in the Compensation Committee’s mandate, the Chair of the Committee must pre-approve any non-compensation services provided by the organization of the independent compensation consultants to ensure that the independence of such consultants is not compromised.
On March 1, 2019, the Compensation Committee appointed Willis Towers Watson (WTW) as its new independent consultant to review and advise the Committee on compensation and governance trends, provide input on specific issues related to executive compensation programs, and provide market compensation benchmark data. The Compensation Committee has reviewed WTW’s protocols and is satisfied that the appropriate safeguards are in place to ensure the soundness, objectivity, and independence of WTW’s consulting advice.
Compensation Peer Group and Benchmarking
The competitive positioning of executive compensation is assessed using our Mining Peer Group. Our Mining Peer Group is comprised of global mining companies that Barrick competes with for investors, capital, and mining properties, as well as qualified and experienced executive talent in the mining industry, selected based on the criteria below:
Each year, the Compensation Committee evaluates and, if appropriate, updates the composition of the Mining Peer Group. In completing this annual review, the Compensation Committee considers:
- The Mining Peer Group’s long-term alignment to the peer selection criteria;
- Feedback received from shareholders on its composition; and
- Gold and mining companies that are subject to similar long-term commodity cycle and price pressures.
Changes to the Mining Peer Group are carefully considered and generally made infrequently to assure continuity from year to year.
2018 Mining Peer Group
In 2018, prior to the Merger, the Compensation Committee approved changes to the Mining Peer Group to improve its overall alignment. Our 2018 Mining Peer Group is comprised of eleven global mining companies that Barrick competes with for investors, capital, and mining properties, as well as qualified and experienced executive talent in the mining industry.
Overall, we position our total compensation opportunities between the median and 75th percentile of the Mining Peer Group. Total compensation awarded may be higher or lower than the median to 75th percentile range to reflect performance. Total compensation in excess of the 75th percentile will only be awarded for superior outperformance. In 2018, the Compensation Committee reviewed benchmarking data for the Executive Chairman and the 2018 Executive Committee, including our former President; Senior Executive Vice-President, Strategic Matters; former Executive Vice-President and Chief Financial Officer; and former Chief Investment Officer.
The benchmarking data was referenced alongside other considerations, including the scope, responsibilities, and accountability of our Executive Chairman and 2018 Executive Committee, which at times may be broader than their respective job titles indicate. When determining executive compensation levels, the Compensation Committee also considered shareholder and governance views, the overall economic climate and business environment, retention needs, experience and potential for future advancement. Additionally, the Committee considered Barrick’s TSR performance on an absolute and relative basis to ensure pay decisions reflect the overall shareholder experience. TSR performance is reviewed annually against the Mining Peer Group, sector peers, and other broad market indices. TSR performance is assessed for companies outside of our Mining Peer Group as Barrick Shares are widely-held by institutional and retail shareholders who have shareholding interests beyond companies that operate in the mining industry.