Institutional Shareholder Services has urged Barrick Gold Corporation (USA) (NYSE:ABX) to vote against the $13 million pay package of Chairman, John Thornton. The influential proxy advisor stated that the decision to increase Mr. Thornton’s pay by 36% is “problematic at minimum and seemingly unwarranted” Another proxy advisor, Glass Lweis& Co told the shareholders to vote against the pay hike of John Thornton.
Barrick overhauled its remuneration practices last year due to criticism by investors. The company has now made a set of performance metrics against which executives will now be judged. The overhaul scheme also includes a requirement that top executives use their “long-term incentive compensation” to buy Barrick’s stocks.
The change to the remuneration scheme was lauded by proxy advisors, however, the pay increase of Mr. Thornton was not considered warranted as the company under performed compared to its peers in terms of share returns. According to Glass Lewis, the compensation given to Thornton is excessive and extremely risky.
The news is a blow to the company that spent months listening to investor’s concerns regarding the pay packages of its executives. Shareholders also voted against Mr. Thornton’s $11.9 million signing bonus in 2013.
It is an industry norm that many large shareholders follow the advice of proxy firms. One of the largest shareholders of Barrick, Seymour Schulich, voted in favour of Mr. Thornton’s compensation but agreed that the compensation was inappropriate.
Mr. Schulich is of the opinion that though the compensation is high and insensitive yet Mr. Thornton has done a good job and there should not be many hues and cry raised over the issue.
Mr. Thornton used half his remuneration to buy 1.4 million shares of Barrick. Other executives have also followed the suit. According to Andy Lloyd, a spokesman for Barrick Gold Corporation (USA) (NYSE:ABX), the move by Mr. Thornton signifies his commitment to the company.