2019 Compensation of the Named Executive Officers

2019 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. Our Named Partners are also subject to industry-leading share ownership requirements, which reflects a deep commitment to long-term ownership at the heart of our partnership culture.

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 2019, the API Scorecards for our Named Partners, other than the President and Chief Executive Officer, were developed in consultation with the President and Chief Executive Officer. Performance was holistically evaluated by the President and Chief Executive Officer at the end of the year, based on accomplishments against the API Scorecards.

In 2019, the API Scorecard for the President and Chief Executive Officer was developed in consultation with the Executive Chairman and the Lead Director. Performance was holistically evaluated by the Executive Chairman, with input from the Lead Director, based on accomplishments against the API Scorecard.

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.

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.

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 may also make adjustments to the performance measures in each API Scorecard to reflect significant one-time items which occur during the performance period. Any such adjustments will be fully disclosed in our information circular each year. See “2019 Annual Performance Incentive Considerations for our Named Partners” for detailed pay and performance highlights for our Named Partners.

API Scorecard Performance Result (0-100%) × API Opportunity (Capped at 300% of salary) = API Payout ($) (Delivery determined annually by the Compensation Committee)

2020 Annual Performance Incentive Scorecards

The table below summarizes our 2020 strategic priorities and how they will apply in the development the 2020 API Scorecards for our Named Partners. Each year, API Scorecards, which include financial goals and non-financial annual initiatives, are customized by role for our Partners, including our President and Chief Executive Officer; Senior Executive Vice-President, Chief Financial Officer; Senior Executive Vice-President, Strategic Matters; and the regional Chief Operating Officers. The 2020 strategic priorities underpin the annual initiatives and goals developed for the 2020 API Scorecards and are weighted to reflect individual scope of accountability. Individual performance against each of our 2020 strategic priorities will be assessed at the end of the year and disclosed for our 2020 Named Partners in our 2021 information circular.

Our 2020 Strategic Priorities President
and CEO
SEVP,
CFO
SEVP, Strategic
Matters
Regional COOs
Strategic Initiatives
  • Progress our objective of becoming the world’s most valued gold company
  • Optimize our portfolio and unlock our resource value and mineral inventory
  • Consider opportunities to add to our portfolio, focused on Tier One Gold Assets(1)
  • Dispose of non-core assets
Check mark Check mark Check mark Check mark
Operational Excellence
  • Execute our 2020 plans through delivery of all production and growth projects
  • Embed our DNA at all levels of the organization
  • Maintain ESG as a high priority in all our activities
  • Motivate employees to take personal responsibility for safety
  • Integrate business systems with fit for purpose processes to ensure effective decision-making and execution
Check mark Check mark Check mark Check mark
Sustainable Profitability
  • Deliver a ten-year production outlook based on a long-term gold price of $1,200 per ounce
  • Deliver value for all our stakeholders through discovering, developing, and operating Tier One Gold Assets(1)
  • Become the mining partner of preference for host countries
  • Drive unit cost efficiencies throughout the business
  • Attract, retain, and develop an effective multicultural, multigenerational workforce that is agile, integrated, and able to deliver on our plans
  • Maintain a sustainable dividend policy that delivers returns to shareholders
  • Refine and measure leadership effectiveness
Check mark Check mark Check mark Check mark
  1. Barrick’s investment criteria are: (i) with respect to Tier One Gold Assets, assets with a reserve potential greater than five million ounces of gold that will generate an IRR of at least 15%; and (ii) with respect to Tier Two Gold Assets, assets with a reserve potential of greater than three million ounces of gold that will generate an IRR of at least 20% (in each case, based on our long-term gold price assumptions).

Performance Granted Share Units (PGSUs)

The cornerstone of our Partnership Plan is the innovative PGSU Plan, which was introduced in 2015 to ensure that our Named Partners and other Partnership Plan participants are financially and emotionally invested in Barrick’s long-term success. The PGSU Plan was reviewed and updated following the completion of the Merger on January 1, 2019 to ensure that it continues to instill the values that are key to Barrick.

Named Partners receive 100% of their annual LTI, if earned based on performance, in the form of PGSUs, which are share-based units that convert into Barrick Shares upon vesting. PGSUs, even after they convert to Barrick Shares, are subject to further holding requirements. Barrick Shares resulting from the conversion of PGSUs granted before January 1, 2020 (Legacy PGSUs) must be held until a Named Partner retires or leaves the Company. Barrick Shares from PGSUs granted after January 1, 2020 (New PGSUs) must be held until a Named Partner meets his or her share ownership requirement (in which case only Barrick Shares in excess of the share ownership requirement may be sold) or until he or she retires or leaves the Company.

Each year, PGSUs are awarded based on the Compensation Committee’s assessment of the Company’s performance against our Long-Term Company Scorecard, which includes financial and non-financial metrics. 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.

Long-Term Company Scorecard Performance Result (0 – 100%) × LTI Opportunity (Capped at 100 – 600% of salary based on role) = PGSU Grant ($) (Subject to post-vesting restrictions on sale and transfer until retirement or termination and/or until share ownership requirements are met, as applicable)

 

Illustrative Life Cycle of New PGSUs

The following diagram illustrates the life cycle of New PGSUs, from grant to payout, following termination of employment or retirement. The key characteristics of the New PGSU awards are included in Schedule C of this Circular. See “2019 Performance Considerations for Named Partners – 2019 Long-Term Company Scorecard (for 2019 PGSU Awards)” for the results of the 2019 Long-Term Company Scorecard and “2019 Compensation of our Named Partners – Performance Granted Share Units (PGSUs) – 2020 Long-Term Company Scorecard” for prospective disclosure of the 2020 Long-Term Company Scorecard.

The life cycle of New PGSUs

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.

A three-year performance period will be applied for certain financial measures included in the Long-Term Company Scorecard with full effect from 2021. For 2020, the three-year performance period will be phased in and assessed on a two-year lookback basis (i.e., 2019 and 2020 performance will be evaluated).

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

New PGSUs vest in three equal tranches on the 12-month, 24-month, and 33-month anniversary of 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 upon the vesting of New PGSUs (Restricted Shares) cannot be sold until the partner meets his or her share ownership requirement (in which case only those Barrick Shares in excess of the requirement can be sold), or until the partner retires or leaves the Company. 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 New PGSUs will be forfeited except in the event of termination without cause, retirement at or above the age of 60, death or disability, or a double trigger Change in Control.

Restrictions on Restricted Shares will generally lapse and cease to apply when a Partner leaves the Company, provided that the partner does not resign or retire from the Company to join, or provide services to, a defined competitor, or is not terminated for cause.

When a Partner resigns, retires from the Company to join, or provide services to, a defined competitor, or is terminated for cause, 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 Legacy PGSU awards are included in Schedule D of this Circular.

2020 Long-Term Company Scorecard

Following the completion of the Merger in 2019, Barrick reviewed the design of the Long-Term Company Scorecard, including the performance measures selected, to ensure alignment with the Company’s long-term strategy. The review process included an assessment of the evolution of Barrick’s strategy and whether the current performance measures continue to be robust measures of success, as well as a review of additional enhancements based on shareholder feedback and how our peers define and measure success. Key changes to our 2020 Long-Term Company Scorecard include:

  • The introduction of Relative TSR to support our ongoing commitment to shareholder value creation and to align evaluation metrics among the Named Partners and the Executive Chairman
  • A reinforced focus on the Company’s long-term dividend per share to support Barrick’s journey to becoming the world’s most valued gold mining business
  • The elimination of Strong Capital Structure as a measure in consideration of Barrick now having one of the strongest balance sheets in the gold industry
  • An increased weighting on ESG and License to Operate (25%) to reinforce the belief that our ability to operate successfully is acutely dependent on our ability to deliver long-term value to all our stakeholders and to proactively manage our impact on the wider environment

To enable the evaluation of a longer term trend in our financial performance and specifically our performance trajectory under the leadership of our President and Chief Executive Officer since the completion of the Merger, certain financial measures, including Relative TSR, Positive Free Cash Flow per Share, and Robust Dividend per Share, will be evaluated on a multi-year lookback basis. For 2020, a two-year lookback performance period will apply. A three-year performance period will be phased in for these financial measures with full effect from 2021.

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 2020 PGSU awards, as well as a description of why each performance measure is important to Barrick.

Scorecard Metrics Long-Term Performance Basis Performance Horizon Weighting Why we selected the metric
Relative TSR 50th percentile to 75th percentile of the constituent companies in the MSCI World Metals & Mining Index 3 years (2 years for 2020) 15% To measure our ability to outperform our peers and to deliver sustainable returns to our fellow owners
Positive Free Cash Flow per Share(1) Deliver positive free cash flow per share 3 years (2 years for 2020) 15% To measure our ability to deliver industry-leading margins and generate cash that may be returned to shareholders or further invested in the business to deliver industry-leading margins
Robust Dividend per Share(2) Payout ratio of 25% – 35% of adjusted net earnings 3 years (2 years for 2020) 10% To evaluate our ability to create and consistently deliver excess returns to our fellow owners
Capital Project Execution(3) Major projects deliver benefits as planned, in addition to delivery on time and on budget 1 year and historical trending 10% To evaluate our ability to deliver major capital projects to the planned cost and schedule established
Strategic Execution(4) Achievement of key priorities and milestones tracked to advance the execution of our strategy 1 year and historical trending 15% To assess our progress with achieving our goal of becoming the world’s most valued gold mining business, how we addressed critical issues facing the business, and whether important strategic milestones were met
ESG and License to Operate(5) A new ESG Scorecard that tracks our performance against safety, social and economic development, human rights, environment, and compliance indicators 1 year and historical trending 25% To assess the effectiveness of the governance of our sustainability framework and our environmental and social impact
Human Capital(6) Achievement of key human capital priorities tracked to advance the evolution of our human capital strategy 1 year and historical trending 10% To evaluate the degree to which we upgrade and develop our talent and the evolution of our human capital strategy
  1. We expect our business to operate at margins that allow us to reinvest in those assets and deliver positive free cash flow through the commodity price cycle. Therefore, we will evaluate achievement based on realized free cash flow per share. 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, see Other Information – Use of Non-GAAP Financial Performance Measures.
  2. Dividends will be based on Barrick’s 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 our dividend yield, and 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.
  3. 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 and will consider quantitative and qualitative dimensions, including achievement versus internal cost and performance schedule indices developed for each major capital project to assess the extent to which the major capital projects were completed within a targeted timeframe, operational parameters, and operating cost. The assessment will also consider 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, and our ability to deliver on the benefits planned for each major capital project.
  4. 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; executing of plans to deliver free cash flow per share on a sustainable basis and to drive unit cost efficiencies throughout the business; the application of fit for purpose processes to drive effective and efficient execution, including demonstrable actions taken to address critical issues facing the business; and meeting important milestones for strategy execution.
  5. ESG and license to operate will be assessed based on quantitative and qualitative measures using a new scorecard designed to help embed ESG throughout the organization. The new scorecard, which will be disclosed in greater detail in the 2021 information circular, will include quantitative and qualitative measures that track our performance against safety, social and economic development, human rights, environment, and compliance indicators that are important to Barrick. The assessment will also consider our success in building and maintaining strong relationships with core stakeholders to maintain our license to operate around the world.
  6. Our human capital priorities are: to support leadership development and strengthen team effectiveness by building effective, industry-leading processes for attracting, developing, and retaining an effective multicultural, multigenerational workforce that is agile, integrated, and able to deliver on our strategy. Human capital will be qualitatively assessed based on considerations, which include 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 our human capital strategy.

Restricted Share Units

Restricted Share Units (RSUs) 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 RSU Plan was amended and renamed the Long-Term Incentive Plan. Among other things, the Long-Term Incentive Plan 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 RSU Plan. The key characteristics of unvested RSU awards are included in Schedule E of the Circular.

Restructured Retention Award for the President and Chief Executive Officer and the
Senior Executive Vice-President, Chief Financial Officer

In February 2019, the President and Chief Executive Officer was awarded PGSUs (the 2019 CEO Grant) to reflect his pivotal role in the Merger, the importance of his continued leadership to ensure a seamless integration of Barrick and Randgold, and his vision to transform Barrick into the world’s most valued gold mining business. At that time, the Senior Executive Vice-President, Chief Financial Officer was also awarded PGSUs (the 2019 CFO Grant).

Following discussions among the Compensation Committee, the independent directors of the Board, and the President and Chief Executive Officer and having regard to Mr. Bristow’s public commitment to continue in his role for at least five years following the Merger, it was mutually determined that the 2019 CEO Grant should be restructured to more closely align the vesting period and applicable holding conditions with the five-year service commitment period (the Commitment Period) and shareholder value creation over the same period. It was also agreed, following discussion with the Senior Executive Vice-President, Chief Financial Officer that the 2019 CFO Grant should be restructured in a manner consistent with the President and Chief Executive Officer.

Accordingly, on February 11, 2020, one-third of the 2019 CEO Grant was retained and two-thirds were restructured to be delivered and to vest over the remaining Commitment Period (the Restructured Retention Award). The restructuring for two-thirds of the award includes the delivery of the 2020 Grant and the provisional 2021 Grant, if approved, subject to continued employment, as described below.

For the President and Chief Executive Officer, on February 11, 2020, one-third of the original 2019 CEO Grant was replaced with a new grant of 97,670 RSUs with a grant date fair value equal to one-third of the original 2019 CEO Grant ($1,800,049). Similarly, the 2019 CFO Grant was restructured such that one-third of the 2019 CFO Grant was retained and on February 11, 2020, one-third of his original 2019 Grant was replaced with a new grant of 37,016 RSUs with a grant date fair value equal to one-third of the original 2019 CFO Grant ($682,208). The replacement RSU grants awarded on February 11, 2020 to the President and Chief Executive Officer and the Senior Executive Vice-President, Chief Financial Officer are collectively referred to as the 2020 Grants.

Subject to continued employment, the 2020 Grants will vest 33 months from the date of grant and upon vesting, the after-tax value will be used to purchase Barrick Shares that cannot be sold until the later of (a) the date Mr. Bristow or Mr. Shuttleworth, respectively, retires or leaves the Company, and (b) three years following the date of purchase. To ensure a sharp focus on long-term value creation and to align the value of the award with the overall shareholder experience, the President and Chief Executive Officer and the Senior Executive Vice-President, Chief Financial Officer will not actually receive value from the RSUs until the sale and transfer restrictions lapse.

In 2021 and subject to the continued employment of Messrs. Bristow and Shuttleworth, the Compensation Committee and the Board may, in their discretion, elect to grant Messrs. Bristow and Shuttleworth an additional award of RSUs with a grant date value equal to and not exceeding one-third of the original 2019 Grant (the 2021 Grant). This third installment is not guaranteed and, if awarded, will be subject to the same vesting and holding requirements as the 2020 Grants.

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.

Randgold Legacy Restricted Share Scheme and Long-Term Incentive Plan

Upon completion of the Merger, Barrick assumed certain Randgold legacy Restricted Share Scheme (RSS) and Long-Term Incentive Plan (LTIP) awards that did not vest in connection with closing on January 1, 2019. These awards were exchanged for equivalent awards over Barrick Shares (calculated by reference to the applicable exchange ratio) and in accordance with the rules as applicable to each award. Legacy RSS and LTIP awards will continue to vest in accordance with their terms (the last performance cycle ends on December 31, 2020), following which the RSS and LTIP will be terminated.

No further awards may be issued under the Randgold legacy RSS and LTIP. At December 31, 2019, Messrs. Bristow and Shuttleworth were the only Named Partners who held unvested RSS and LTIP awards. The key characteristics of the unvested Randgold legacy RSS and LTIP awards for Messrs. Bristow and Shuttleworth are included in Schedule F and Schedule G of this Circular, respectively.

Other Executive Compensation Elements

Barrick Share Purchase Plan

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. Following the Merger, as part of the ongoing integration with Randgold, Barrick is reviewing the application of the BSPP in the Africa and Middle East Region.

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.

2019 Performance Considerations for Named Partners

2019 Long-Term Company Scorecard (for 2019 PGSU Awards)

PGSU awards granted in February 2020 in respect of 2019 were determined using the 2019 Long-Term Company Scorecard that was published in the 2019 information circular. The Compensation Committee determined the 2019 PGSU awards based on the following performance considerations:

Long-Term Performance Measure Long-Term Performance Basis Weighting 2019 Performance Assessment Outcome
Return on Invested Capital(1) 10% – 15% 15% 7.7% 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 $1,132 million (1,778 million shares outstanding); $0.64 per share 67% 10%
Robust Dividend per Share(3) 25% – 35% 10% Enhanced annualized dividend to $0.20 cents per share, a 25% increase; 39% of adjusted net earnings(4) 80% 8%
Strong Capital Structure(5) Material improvements to balance sheet progressing towards an A grade credit rating 10% Maintained strong Baa2 and BBB Moody’s and S&P ratings; strong balance sheet with debt net of cash position of $2.2 billion (a 47% reduction versus 2018) and less than $100M of outstanding public notes maturing before 2033 100% 10%
Capital Project Execution(6) Final Investment Decision budget 10% Capital expenditures at low end of 2019 guidance; all major capital growth projects on budget and on schedule 80% 8%
Strategic Execution(7) Judgment 15% Historic joint venture forged with Newmont Corporation; Acacia Mining plc integration; Kalgoorlie Consolidated Gold Mines asset disposition; divestiture of our non-operated 90% interest in Massawa project; Barrick now has six Tier One Gold Assets(8) and the potential for two more 100% 15%
Reputation and License to Operate(9) Judgment 15% No class 1 environmental incidents; LTIFR of 0.50 (above 2019 tolerance limit) 47% 7%
People Development(10) Judgment 10% Integration following the Merger and the formation of Nevada Gold Mines; expanded implementation of the human resources information system in the U.S.; accelerated people development programs; and advanced succession planning 90% 9%
2019 Long-Term Performance Outcome 100% 67%
  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 2019 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, 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, see Other Information – Use of Non-GAAP Financial Performance Measures.
  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 under IFRS and therefore may not be comparable to similar measures presented by other companies. For further details regarding non-GAAP financial performance measures, 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. Barrick’s investment criteria are: (i) with respect to Tier One Gold Assets, assets with a reserve potential greater than five million ounces of gold that will generate an IRR of at least 15%; and (ii) with respect to Tier Two Gold Assets, assets with a reserve potential of greater than three million ounces of gold that will generate an IRR of at least 20% (in each case, based on our long-term gold price assumptions).
  9. 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.
  10. Quality of people development is qualitatively assessed based on considerations which include 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 through a combination of the value enhancing deal in Nevada delivering on our commitments, driving improvements to operational profitability, divestment of assets that do not meet our investment filters, and disciplined capital execution. We continued to grow and invest in our portfolio of Tier One Gold Assets, Tier Two Gold Assets, and Strategic Assets, with an emphasis on organic growth. We gained an additional Tier One Gold Asset with the formation of Nevada Gold Mines, we progressed the study on expanding our Pueblo Viejo plant to maintain the production level required for Tier One Gold Asset status, and we progressed the negotiations to extend the Special Mining Lease for the Porgera mine in Papua New Guinea, which has the potential to become a Tier One Gold Asset. Furthermore, we continued to divest non-core assets that do not meet our strategic filters for investment, which culminated in the disposition of our non-operated 50% interest in Kalgoorlie Consolidated Gold Mines in November 2019 and an agreement for the sale of the Massawa project in Senegal in December 2019, which collectively generated sales proceeds of approximately $1.2 billion. 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 2019 was 7.7%. As a result, there is no payout on this metric.

Growth in Free Cash Flow per Share(2) (15% weighting, assessment: 67%):

We believe that to be the most valued gold mining company, we must deliver positive free cash flow across the gold price cycle and must self-fund our growth opportunities. In 2019, we generated $2,833 million in operating cash flow and $1,132 million in free cash flow(2) (1,777,926,611 shares outstanding). This represents a significant increase in free cash flow(2) generation over 2018 ($365 million in free cash flow and 1,167,846,910 shares outstanding), primarily due to higher sales volume as a result of the Merger and the formation of Nevada Gold Mines combined with higher margins. The increase in our free cash flow(2) enabled us to return more capital to shareholders in 2019, with a 25% increase in our dividend on an annualized basis. In consideration of the above, the payout for this metric is 67%.

Robust Dividend per Share (10% weighting, assessment: 80%):

Barrick places a high priority on returning to shareholders a meaningful portion of our cash margin through dividends. The delivery of a robust dividend per share is consistent with the Company’s stated financial and operating objectives and in line with the commitment to shareholder returns made when the Merger was announced on September 24, 2018. In 2019, following the Merger, we evaluated our dividend strategy and increased our dividend from four cents per share for the first quarter of 2019 to five cents per share for the third quarter of 2019 and to seven cents per share for the fourth quarter of 2019, reflecting Barrick’s profitability and financial strength. Our annualized dividend in respect of 2019 of 20 cents per share was 39% of adjusted net earnings which exceeded our long-term performance range of 25% − 35% of adjusted net earnings. Recognizing that the long-term sustainability of our increased dividend will depend on the successful execution of our strategy, the payout for this metric is 80%.

Strong Capital Structure (10% weighting, assessment: 100%):

When the Long-Term Company Scorecard was introduced in 2014, Barrick committed to materially strengthening the Company’s balance sheet. Since 2014, Barrick has taken significant steps to improve its liquidity through ongoing portfolio optimization and debt reduction to increase financial flexibility. As at December 31, 2014, Barrick’s debt net of cash was $10.4 billion. In 2019, debt net of cash was reduced by a further $1.9 billion to $2.2 billion (a 79% reduction versus 2014 and the lowest level since 2007) and the maturity date on the Company’s undrawn $3.0 billion credit facility was extended to 2025. Barrick’s strong balance sheet will be further supported by the continuation of its asset disposition program in 2020. Current investment grade ratings of Baa2 and BBB from Moody’s Investors Service and S&P Global Ratings, respectively, are reflective of Barrick’s financial discipline and solid delivery against the aspirational goal set five years ago. Therefore, the payout for this metric is 100%.

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

Executing major capital projects effectively is critical to Barrick’s long-term success, especially to achieve Barrick’s ambitious 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) and more importantly that the projects deliver what the investment was intended to do. Following the completion of the Merger, we installed geological, operational, and technical abilities across our three geographical regions to build our mineral resources management capacity across the group to improve our orebody knowledge and to better support our planning, including drilling and conversion of resources to reserves to support our focus on organic growth. Total attributable capital expenditures for 2019 were $1,701 million compared to $1,400 million in 2018. The higher capital expenditures of $301 million were primarily due to an increase in mine site sustaining capital expenditures as a result of the Merger and the consolidation impact of Nevada Gold Mines. Although capital expenditures were higher in 2019 than in 2018, they were at the low end of the guidance range. All major capital growth projects remain on schedule and budget. The payout for this metric is therefore 80%.

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 strategic focus on Tier One Gold Assets; successfully integrating the operations to maximize value creation; execution of plans to deliver positive free cash flow per share and growth over the long-term; leveraging innovation and technology to drive industry-leading efficiencies; maintaining a license to operate throughout the life of the mines, including by addressing critical issues facing the business through demonstrable action; and meeting important milestones for strategy execution. Our strategic initiatives for 2019 were to focus on asset quality, operational excellence, and sustainable profitability, and we have made significant progress on each of these strategic initiatives in 2019. Following our Merger on January 1, 2019, we have transformed the new company while creating the world’s largest gold mining complex in Nevada in a transaction that had been unsuccessfully pursued for two decades. The formation of Nevada Gold Mines enabled us to drive free cash flow through synergies without issuing additional shares. The Acacia Mining plc minority buyout enabled us to settle that company’s long-running dispute with the Tanzanian government and to integrate its assets into our operations. We have also progressed our $1.5 billion asset disposition program with the disposal of our stakes in the Kalgoorlie Consolidated Gold Mines in Australia and the Massawa project in Senegal. The payout for this metric is therefore 100%.

Reputation and License to Operate (15% weighting, assessment: 47%):

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. In 2019, there were no fatalities or high-impact environmental incidents at any of our sites. We recycled more than 70% of the water we used and we made significant progress in curbing our carbon emissions, phasing in solar power at Loulo-Gounkoto, converting the power plant at Pueblo Viejo to natural gas and commencing construction of a power line to link Veladero to grid power. We also developed and implemented biodiversity action plans at our priority sites and we are on track to roll out these plans across the group by 2021. In most jurisdictions, strong government and community relations translated into a stable operating environment for the Company. We resolved the legacy disputes with the Government of Tanzania with the signing of a framework agreement that heralds a new partnership. We also made significant progress in resolving tax-related issues in Mali to pave the way for further investment in the country. Our investment in community development projects exceeded $23 million for the year and our sustainability progress is being recognized externally. We were named to the Dow Jones Sustainability World Index for the twelfth consecutive year, which further evidences this recognition.

Despite our notable progress towards achieving our sustainability vision, we nonetheless fell short of the challenging safety standard we had set the for year, with a total recordable long-term injury frequency rate of 0.50 which was above our tolerance limit. Our safety performance in 2019 demonstrates that we still have work to do to achieve our commitment to a zero-harm work environment with a safety culture based on personal responsibility and international best practice. Recognizing that we still have work to do, the payout for this metric is therefore 47%.

People Development (10% weighting, assessment: 90%):

Following our transformational Merger on January 1, 2019, we implemented a flat, operationally focused, and agile management structure capable not only of executing complex, industry-leading corporate transactions, but also of running our operations efficiently while pursuing new growth opportunities. We have a strengthened management team led by one of the world’s most respected and successful chief executive officers. We also refocused the global business with three regions led by separate regional leadership teams and rationalized the corporate office in Toronto, in line with our strategy of moving people, skills, and decision-making out of the corporate office and into the operations. We filled a number of strategic roles with best-in-class people, including the Group Sustainability Executive, the Executive General Manager of Nevada Gold Mines, the appointment of mineral resource management expertise to each of the regional leadership teams, the Deputy General Counsel and filling leadership roles internally for Nevada Gold Mines and for the integration with Acacia Mining plc’s operations, to support our strategic priorities. We expanded the implementation of a cloud-based human resource information system in the United States, following the formation of Nevada Gold Mines to accelerate our integration efforts. We continued to offer executive and management development programs at leading universities, scholarship and mentorship opportunities to young professionals through rotational training, and internship programs for college graduates to develop the next generation of leaders and to advance our broader succession planning efforts. We are also promoting a culture of inclusion across the organization to reinforce the commitment to our high performance ethos at every level. Recognizing the significant progress achieved since the Merger to establish a solid foundation for Barrick’s continued growth, the payout for this metric is 90%.


  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 2019 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, 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, see Other Information – Use of Non-GAAP Financial Performance Measures.

2019 Annual Performance Incentive Considerations for our Named Partners

The 2019 API award for the President and Chief Executive Officer was determined based on the Executive Chairman’s review of his accomplishments against the API Scorecard, with input from the Lead Director. The 2019 API awards for our other Named Partners were determined based on the President and Chief Executive Officer’s review of their accomplishments against their respective API scorecards.

The API Scorecards for our Named Partners were published in the 2019 information circular, which included the short-term priorities and initiatives related to Asset Quality (renamed as Strategic Initiatives to align with the prospective disclosure of our 2020 API Scorecards), Operational Excellence, and Sustainable Profitability.

President and Chief Executive Officer

Mark Bristow, President and Chief Executive Officer of Barrick

Mr. Mark Bristow was appointed President and Chief Executive Officer of Barrick on January 1, 2019. On the Executive Chairman’s recommendation and the Compensation Committee’s advice, and in consideration of Mr. Bristow’s exceptional contributions during 2019 to advance our strategic priorities, including the integration of Barrick and Randgold, the value delivered to shareholders since the completion of the Merger, the notable enhancement in our annual dividend, and his solid versus the initiatives that were set for him at the beginning of the year, the independent directors of the Board determined that an API award based on an API Scorecard result of 100% and an API of $5,400,000 was appropriate. The considerations of the Compensation Committee and the independent directors of the Board are summarized in the table below.

The President and Chief Executive Officer’s 2019 Initiatives

Strategic Initiatives
  • Deliver on Barrick’s 2019 business plan
  • Right-size general and administrative expenses and settle organization structures
  • Review and integrate the leadership teams of Barrick and Randgold following the Merger
  • Develop ore body knowledge
  • Pursue new opportunities with a focus on consolidating Nevada
  • Review assets to optimize or divest and develop a solution for outstanding issues impacting Acacia Mining plc
  • Integration and change management to simplify processes and systems
  • Stabilize and develop social license
  • Review all joint venture Board structures, agreements, and contracts
Operational
Excellence
  • Facilitate strategic and team effectiveness workshops at all core operations
  • Streamline the corporate and operational structure to ensure it is fit for purpose
  • Drive ESG and sustainability as a “most valued” business objective
  • Invest in automation technologies and real-time data integration capabilities to deliver industry-leading mining efficiencies
  • Drive employee engagement across the Company by identifying training development needs and managing Barrick’s talent pipeline
  • Further strengthen Barrick’s reputation and presence around the world
Sustainable Profitability
  • Deliver a five-year business plan and Life of Mine Plan based on a long-term gold price of $1,200 per ounce
  • Develop a sustainable business strategy with a focus on best people, best assets to deliver long-term value for all stakeholders
  • Refocus the business planning based on optimized orebody models

2019 Accomplishments

Strategic Initiatives
  • Delivered at the top end of the gold production guidance range and bottom end of cost guidance range and exceeded copper production guidance
  • Rationalized the corporate office and reduced general and administrative expenses
  • Integrated the Barrick and Randgold teams, created three regional executive leadership structures in a fit for purpose corporate structure
  • Rationalized and re-energized the Group’s legal division
  • Completed the historic Nevada Gold Mines joint venture transaction and delivered on synergies
  • Engaged in ongoing negotiations to secure the Special Mining Lease in Papua New Guinea for Porgera
  • Initiated Barrick’s $1.5 billion asset disposition program, including the disposal of non-operated 50% interest in Kalgoorlie Consolidated Gold Mines in November 2019 and an agreement for the disposal of a 90% interest in the Massawa Project, which collectively generated sales proceeds of approximately $1.2 billion
  • Acquired minority interest in Acacia Mining plc
  • Re-established brownfield and greenfield exploration teams across the key regions
Operational
Excellence
  • Secured Board support for and rolled out the Group corporate strategy to operations
  • Installed new management across operations and rationalized operational structures and reporting
  • Introduced integrated planning platforms based on orebody and grade control models
  • Re-integrated automation and digital programs back into operations with a clear strategy to deliver efficiency improvements
  • Led the development and implementation of a Group sustainability and ESG strategy to retain and, in some cases, rebuild Barrick’s license to operate
  • Advanced Barrick’s succession planning efforts by combining top talent from Barrick and Randgold, rationalized the Partnership Plan, and launched business management and executive development programs for the Company’s top talent
Sustainable Profitability
  • Produced a five-year plan for the Group and each region, based on life of mine plans
  • Reduced debt net of cash and increased liquidity
  • Moved ownership of developing and maintaining rolling business and mine plans to the operations
  • As at December 31, 2019, achieved a 78% increase in our share price on the NYSE since the announcement of the Merger and outperformance versus broader market indices in Canada and the U.S. over the last five years
  • Increased annual dividend from 12 cents per share to a new annualized target of 28 cents per share
  • Maintained Barrick’s listing on the Dow Jones Sustainability Index for the twelfth consecutive year

Five-Year Reported and Realized Pay Comparison for the President and Chief Executive Officer

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 President and Chief Executive Officer 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 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.

2019 Reported: 16,289,000; 2019 Realized: 7,253,000

The graph (expressed in thousands of dollars) compares the compensation reported for our President and Chief Executive Officer in the “Summary Compensation Table” with the compensation that he actually received in 2019. Only one year of comparison is shown as the President and Chief Executive Officer was appointed on January 1, 2019.

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 President and Chief Executive Officer will not actually receive value from these awards until they vest or when the sale and transfer restrictions lapse. 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.

In 2019, the compensation that our President and Chief Executive Officer actually received (Realized Pay) included his base salary, API award paid in cash, and benefits and perquisites as incurred. Realized Pay was 55% less than the Reported Pay in the “Summary Compensation Table”. To ensure a sharp focus on long-term value creation and to align the value of the LTI awards with the overall shareholder experience, the President and Chief Executive Officer has not realized any value from the PGSU awards that were granted but have not yet vested. These PGSU awards, upon vesting, are subject to further sale and transfer restrictions and no value will be realized until these sale and transfer restrictions lapse.

Senior Executive Vice-President, Chief Financial Officer

Mr. Graham Shuttleworth was appointed Senior Executive Vice-President and Chief Financial Officer on January 1, 2019. In determining Mr. Shuttleworth’s API award, the Compensation Committee considered the President and Chief Executive Officer’s recommendations and Mr. Shuttleworth’s contributions in advancing our 2019 priorities, which are described in greater detail below. The Compensation Committee determined that an API Scorecard result of 78% was appropriate and awarded Mr. Shuttleworth an API of $1,717,531. The Compensation Committee’s considerations are summarized in the table below.

The Senior Executive Vice-President, Chief Financial Officer’s 2019 Initiatives

Strategic Initiatives
  • Progress value realization opportunities by providing tax planning, financial modelling, and accounting support to assist with the evaluation of strategic transactions and the ongoing optimization of Barrick’s asset portfolio, including the investment evaluation process for organic growth and exploration opportunities, the disposal of non-core assets, and planning for closure properties
  • Maximize value creation from Nevada Gold Mines and capture the identified synergies by integrating the business operations, including teams, systems, planning, and risk management processes across the portfolio of operating assets
  • Maximize the long-term value of the strategic copper business through ongoing optimization and rationalization to enhance asset value
Operational
Excellence
  • Drive cost reduction by streamlining and reviewing the supply chain, including the sourcing strategy for global commodities, ensuring the procurement model benefits from economies of scale, and optimizing working capital through inventory management
  • Enhance Barrick’s balance sheet through analysis and execution of liability management opportunities to reduce overall leverage and interest expense
  • Lead the review, rationalization, and integration of the finance and information technology teams to improve business agility, upgrade capabilities, reduce costs, and promote an ownership mindset
  • Drive the integration of the legacy Barrick and Randgold enterprise-level information technology systems, and leverage technological advances in enterprise resource planning and enterprise performance management systems to unify communications, enable data sharing, and improve operational efficiency
  • Review the management of capital projects, aligning Group processes, and implement appropriate systems to control expenditure and implement appropriate systems and controls to monitor, report, and analyze community grievances, whistleblowing, and other feedback to improve the Group’s overall performance
Sustainable Profitability
  • Review capital allocation decisions and growth options, as well as closure strategies to ensure that future work is appropriately and cost efficiently planned, measured, and/or implemented
  • Identify risks that inhibit our license to operate successfully (including climate change and cybersecurity) and design and monitor appropriate controls to mitigate such risks
  • Lead the review of legacy tax issues and address these by working constructively with host country tax authorities

2019 Accomplishments

Strategic Initiatives
  • Significant portfolio optimization achieved over the course of 2019 including the formation of Nevada Gold Mines using a tax efficient structure, acquisition of minority interest in Acacia Mining plc, resolution of all outstanding disputes with the Government of Tanzania and integration of Tanzania assets under Barrick management, tax efficient divestiture of Kalgoorlie Consolidated Gold Mines and our 90% interest in the Massawa project, identifying the roadmap for other assets to move to Tier One and Tier Two status, and moving Lagunas Norte, Morila, and Golden Sunlight into care and maintenance
  • Captured synergies at Nevada Gold Mines by rapidly integrating teams and deploying integrated planning as illustrated by the achievement of the joint venture’s 2019 cost guidance, inclusive of the synergies identified
  • Improved operating performance at Lumwana and Pueblo Viejo through cost reductions and project optimization and reversals of $1.8 billion of past impairments
Operational
Excellence
  • Further strengthened our balance sheet by extending our $3 billion credit facility while lowering fees, and overseeing a 47% reduction in debt net of cash, including repurchasing $248 million of debt (2020 Notes) in July 2019, bringing Barrick’s total debt reduction over the past six-and-a-half years to over $10 billion
  • Accelerated the consolidation of the Barrick, Randgold, and Newmont legacy networks and enterprise information technology systems to unify communications, enable data sharing and cross organizational application access, and drive operational efficiency and cost reduction
  • Standardized and streamlined the financial planning and reporting processes, as well as internal financing mechanisms and Barrick’s legal entities, to reduce complexity, remove tax inefficiencies, increase agility in decision making, and drive cost reduction
  • Rationalized the finance function and the information technology team to further reinforce an ownership mindset and reduce costs
  • Implemented new enterprise risk management governance model across the Group to support further embedding of risk management and oversight across the organization, including new risk criteria and associated policies and reporting requirements
  • Developed a roadmap and commenced work to rollout to an upgraded Enterprise Resource Planning system across the Group by 2021, starting with Nevada Gold Mines in 2020
  • Restructured and created a fit for purpose cybersecurity function and implemented an integrated cybersecurity program to facilitate ongoing defenses and compliance in an evolving risk area
  • Drove a 50% reduction in general and administrative expenses relative to 2018 guidance of $275 million through integration and rationalization efforts, including right-sizing of the finance and information technology teams
  • Reduced mine operating supplies by more than $180 million representing a 22% decrease over the prior year
Sustainable Profitability
  • Achieved in excess of $1 billion in free cash flow(1) for 2019, an increase of 210% on 2018
  • Evaluated Barrick’s dividend strategy and enhanced our annualized dividend from 16 cents per share for 2018 to a new annualized dividend target of 28 cents per share, following the increases in our quarterly dividend during 2019 from four cents per share for the first quarter of 2019, to five cents for the third quarter of 2019, and to seven cents per share for the fourth quarter of 2019, reflecting Barrick’s profitability and financial strength following the Merger
  • Significantly reduced key tax risks around the world through cooperative engagement with our host countries, including in Tanzania, Mali, Zambia, Chile, Peru, Papua New Guinea and the United States
  • Significantly reduced closure liabilities across the Group
  1. 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, see “Other Information – Use of Non-GAAP Financial Performance Measures”.

Senior Executive Vice-President, Strategic Matters

Kevin Thomson

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 President and Chief Executive Officer’s recommendations and Mr. Thomson’s contributions in advancing our 2019 priorities, which are described in greater detail below. The Compensation Committee determined that an API Scorecard result of 70% was appropriate and awarded Mr. Thomson an API of $1,574,647. The Compensation Committee’s considerations are summarized in the table below.

The Senior Executive Vice-President, Strategic Matters’ 2019 Initiatives

Strategic Initiatives
  • Complete corporate and legal integration of the Merger
  • Develop a strategy for the disposal of assets, rationalize associated corporate structures, and advance the sale process with the aim of raising $1.5 billion
  • Drive the consolidation of Nevada and deliver Nevada Gold Mines
  • Sell Kalgoorlie Consolidated Gold Mines
  • Bring to account the Massawa project in a value-creating deal
  • Drive the strategic oversight of the Special Mining Lease negotiations at Porgera
  • Rationalize the corporate investment portfolio and monetize non-strategic investments
  • Drive the Acacia Mining plc minority buyout
  • Find and evaluate value creation opportunities
  • Maintain Barrick’s position as a value business in the mining industry
Operational Excellence
  • Develop a revised business development strategy by integrating the Group technical and financial expertise
  • Oversee the rationalization and design of Group legal and compliance functions
  • Provide strategic oversight to litigation and risk
Sustainable Profitability
  • Develop a clear long-term strategy for China, including supply chain optimization opportunities

2019 Accomplishments

Strategic Initiatives
  • Successful Barrick-Randgold Merger and resolution of all related legal and commercial issues
  • Drove the announced bid for Newmont and the negotiation and closing of the historical Nevada Gold Mines joint venture transaction
  • Drove the process that led to the successful sale of Kalgoorlie Consolidated Gold Mines
  • Drove the process that led to the execution of multi-party agreements providing the combination of the Massawa project in Senegal with Teranga’s Sabadala mine in Senegal
  • Sold Barrick’s investment in Royal Roads Minerals Limited
  • Disposed of other non-core assets, including our metallurgical services business, AuTec, our legacy assets in Russia, Acacia Mining plc’s exploration assets in Burkina Faso, and assets in Papua New Guinea, and divested and optioned dormant closure sites in Canada and the U.S. to various counterparties
  • Drove efforts to capture value from the $5.8 billion damages award granted to Barrick and Antofagasta against the Government of Pakistan
  • Successfully renegotiated Barrick’s investment agreements with Midas Gold
  • Concluded the Acacia minorities buyout
  • Progressed Porgera Special Mining Lease negotiations
  • Provided strategic oversight regarding various litigation matters in Canada, the U.S., and elsewhere
  • Provided oversight and guidance regarding various risk management initiatives
  • Reviewed and prioritized external growth options in support of Barrick’s growth strategy
Operational Excellence
  • Provided strategic guidance and counsel to the President and Chief Executive Officer and the executive leadership team in a busy year, without any material negative incidents
  • Facilitated the appointment of the Group General Counsel and Deputy General Counsel
  • Streamlined Group corporate governance practices and disclosure
  • Provided guidance to Barrick’s Corporate Secretary regarding various governance and disclosure issues throughout the year
Sustainable Profitability
  • Advanced key initiatives with Chinese counterparties
  • Played a key role in the delivery of the Group’s 2019 strategic and operational objectives

Chief Operating Officer, Latin America and Asia Pacific

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 Asia Pacific. In determining Mr. Hill’s API award for 2019, the Compensation Committee considered the President and Chief Executive Officer’s recommendations and Mr. Hill’s contributions in advancing our 2019 priorities, which are described in greater detail below. The Compensation Committee determined that an API Scorecard result of 72% was appropriate and awarded Mr. Hill an API of $1,464,998. The Compensation Committee’s considerations are summarized in the table below.

The Chief Operating Officer, Latin America and Asia Pacific’s 2019 Initiatives

Strategic Initiatives
  • Deliver on Barrick’s 2019 business plan for the Latin America and Asia Pacific region
  • Identify risks and liabilities, and design strategies to capitalize on opportunities
  • Lead the strategic review and team effectiveness workshops across the region
  • Build a flat and agile organizational structure
  • Review the Latin America and Asia Pacific asset portfolio to support the disposal of non-core assets and place underperforming assets into care and maintenance to maximize value realization and free cash flow(1)
Operational
Excellence
  • Restructure operational teams and ensure team effectiveness
  • Rationalize operational and corporate structure across the region
  • Review Barrick’s legal entities in Latin America and Asia Pacific and simplify the corporate structure to reduce holding costs and better align with the operating businesses
  • Right-size the team and upgrade team capabilities with a focus on mineral resource management
  • Transition Lagunas Norte and Pierina into care and maintenance to reduce cost
  • Identify automation opportunities across the region to improve efficiencies and drive cost reductions
  • Develop and implement capital improvement plans to optimize spend and accelerate project completion
  • Manage and improve environmental and safety performance across all mine sites
Sustainable Profitability
  • Engage with host governments to secure Barrick’s license to operate across the region and to address legacy tax issues
  • Ensure ESG and sustainability are operational imperatives
  • Develop and implement plans to lower the holding costs at Pascua-Lama and liabilities for closure properties in the region
  • Progress expansion studies at Pueblo Viejo to support the long-term potential of this asset
  • Expand the Life of Mine plan for Veladero and Porgera by funding exploration and infrastructure expansion and investing in plant, stripping, and equipment
  • Increase cash flow from operations

2019 Accomplishments

Strategic Initiatives
  • Achieved gold and copper production at the top end of production guidance and at the bottom end of cost guidance
  • Continued uninterrupted operations at Porgera in Papua New Guinea following the expiry of the Special Mining Lease in August 2019 and directed negotiations with the aim to extend the Special Mining Lease
  • Expanded resources at Veladero in 2019 to extend the Life of Mine to ten years and initiated grid power and leach pad expansion projects to drive down the cost structure and extend the life of the asset
  • Supported the disposal of Barrick’s 50% interest in Kalgoorlie Consolidated Gold Mines in November 2019
  • Completed a desktop study and updated the closure plan for Pascua-Lama to resolve the geology gaps identified and reduce the closure liability
  • Placed Lagunas Norte on care and maintenance, suspended disposal plans for the Peruvian operations, and reviewed the closure plans resulted in a reduction of closure liabilities
  • Started a large-scale project to identify assets with the potential to become Tier One Gold Assets in the Latin America and Asia Pacific region
Operational
Excellence
  • Replaced and restructured management teams to align with Group strategic plan
  • Established mineral resource managers and process across all Latin America and Asia Pacific sites, resulting in increased orebody knowledge and increased mine life
  • Reduced the headcount in the regional offices by approximately 50%
  • Reviewed all major contracts in the region and strengthened partnerships with key contractors resulting in significant cost reductions
  • Actively managed inventory and reduced holding costs by 26%
  • Recorded no fatalities or class 1 environmental incidents recorded in the Latin America and Asia Pacific region and achieved ISO 14001 certification for all sites in the region
  • Secured support from the Dominican Republic government for the expansion of the Pueblo Viejo mine and associated infrastructure, as well as approval from the San Juan province for the expansion of the leach pad at Veladero
  • Delivered a business plan to support the Porgera Special Mining Lease extension applications
Sustainable Profitability
  • Addressed outstanding issues impacting license to operate at Veladero
  • Ensured all permitting in place for ongoing operations across the regions
  • Reduced general and administrative expenses by more than 50% in the Latin America and Asia Pacific region through rationalization
  • Delivered a 5-year plan for the Latin America and Asia Pacific region
  • Reduced holding costs and business complexity by simplifying the legal entities in the region
  • Reduced holding costs by approximately 35% for Pascua-Lama and assembled a dedicated team to update our geological understanding of the orebody in 2020
  1. 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, see “Other Information – Use of Non-GAAP Financial Performance Measures”.

2019 Compensation of the Executive Chairman

At the last annual meeting, following the merger of Barrick and Randgold and Barrick’s transition to a more traditional management structure, we committed to redesigning the compensation framework for our Executive Chairman for 2019 to ensure that his compensation is commensurate with his ongoing involvement and contribution to Barrick.

Since then, the Compensation Committee undertook an extensive review of the executive compensation philosophy and programs, including for the Executive Chairman, to ensure that they continue to be aligned with the strategic goals and interests of our shareholders. The Lead Director and the Chair of the Compensation Committee have also consulted extensively with a number of our largest shareholders to obtain feedback on a number of enhancements and modifications which were developed in keeping with our core principles of simplicity, transparency, pay for performance and shareholder alignment.

Balancing these priorities and feedback from our shareholders, the Board of Directors approved, on the recommendation of the Compensation Committee, a new approach to LTI delivery for the Executive Chairman in 2019. The new approach incorporates two important changes in response to the feedback we received from our shareholders which are set out in two simple framework elements.

Two simple framework elements

 

 

The compensation framework for 2019 recognizes that in 2019 our Executive Chairman transitioned to his core responsibilities of guiding Barrick’s business decisions on a macro level, and ensuring Board commitment to, and oversight of, management’s execution of the transactions and initiatives that furthered those objectives.

In 2020, to further align the Executive Chairman’s compensation with the shareholder experience, the Executive Chairman’s LTI award will be measured entirely against Barrick’s TSR performance. Accordingly, there are no annual initiatives being disclosed for 2020 in this Circular.

As a result of the compensation framework redesign, the 2019 total compensation for our Executive Chairman is materially lower than 2018.

Overview of the New and Simplified LTI Approach for the Executive Chairman

The redesigned framework ties the value of the Executive Chairman’s LTI award to the experience of long-term shareholders, and links the ultimate compensation value to long-term shareholder value creation. This redesigned LTI approach which includes a capped incentive opportunity, a performance-based LTI value determined at grant, and market-leading holding requirements, is consistent with our approach to compensation for Named Partners.

1 LTI opportunity is capped at 175% of salary

In 2019, the Compensation Committee, in consultation with its independent compensation consultant, Willis Towers Watson, reviewed 25th percentile, median and 75th percentile top executive pay from our Global Peer Group and the broader market, including companies with both Chief Executive Officer and Executive Chairman roles.

The Compensation Committee considered several factors to determine the appropriate LTI opportunity for the Executive Chairman, including the return to his core responsibilities of guiding Barrick’s business decisions on a macro level, the value of his individual contributions, and benchmarking data, without placing specific emphasis on any one factor.

Balancing these considerations, the Executive Chairman’s 2019 LTI opportunity was capped at 175% of base salary or $4.38M, a level that is materially lower than 2018 per the commitment we made to our shareholders last year. The maximum LTI opportunity is reviewed annually to ensure that it remains commensurate with the Executive Chairman’s role and contribution to Barrick.

Base Salary ($2.5M) × Capped LTI Opportunity (175% of Salary) = Maximum LTI ($4.38M)

 

2 LTI award is determined based on 3-year relative and absolute TSR performance versus the MSCI Index

The value of LTI delivered to the Executive Chairman is determined by Barrick’s 3-year relative and absolute TSR performance versus the MSCI Index. We set the highest performance standards and therefore LTI is only awarded if Barrick both outperforms the median TSR of the MSCI Index and delivers positive total shareholder returns over a 3-year performance period. We believe that the satisfaction of both of these requirements reflects the long-term nature of Barrick’s business model and investment horizon. Above median performance is incrementally rewarded using a straight-line vesting schedule to promote a shared experience between our Executive Chairman and our fellow owners. LTI awards are not guaranteed.

Highlights of how relative and absolute TSR will drive the Executive Chairman’s LTI:

Barrick's relative TSR percentile ranking versus the MSCI Index

  • No LTI is awarded if Barrick’s relative TSR performance is below the median of the MSCI Index.
  • Full vesting is only achieved if Barrick’s relative TSR significantly outperforms the median TSR of MSCI Index constituents (i.e., at 75th percentile or greater).
  • LTI awards are capped at 50% of maximum if Barrick outperforms the median TSR of the MSCI Index constituents, but does not deliver positive TSR over the same 3-year performance period.

For 2019 only, 25% of the Executive Chairman’s LTI award was based on an evaluation of the annual strategic initiatives that were prospectively disclosed for the Executive Chairman in our 2019 Circular. The balance of the Executive Chairman’s LTI award (75%) is tied to relative TSR as described above. See “Assessment of the Executive Chairman’s 2019 Performance” for the results of our assessment for the 2019 performance year.

In 2020, 100% of the Executive Chairman’s LTI award will be tied to relative TSR.

3 At least 60% of the LTI award is delivered in After-Tax Shares that are subject to market-leading holding requirements and clawback

Ensuring that the Executive Chairman’s compensation continues to be structured to maintain a strong focus on creating sustainable, long-term shareholder value was another priority throughout the redesign process for the framework. 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, which apply through the commodity price cycle and potentially into retirement, result in required ownership that far exceeds 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, encourages our Executive Chairman to take a long-term view and to deliver sustainable value for our fellow owners.

Assessment of the Executive Chairman’s 2019 Performance

John L. Thornton

The Compensation Committee applied the new Performance and Compensation Framework consisting of a 75% weighting for relative TSR and a 25% weighting for annual initiatives to determine the Executive Chairman’s 2019 incentive compensation award. Because 25% of the Executive Chairman’s LTI award is tied to his performance relative to his 2019 annual initiatives as disclosed in our 2019 Circular, the Executive Chairman’s performance was evaluated following the first year of the Merger by the Corporate Governance & Nominating Committee in consultation with the Lead Director and Compensation Committee based on this new framework.

In 2019, Barrick’s share price on the NYSE increased by 37.3%. Barrick’s 3-year TSR performance scored in the 56th percentile against the constituents of the MSCI World Metals & Mining Index, which is above the median of the MSCI Index. Applying the relative TSR vesting curve (which provides for straight-line vesting for above-median performance), the Compensation Committee determined a 43% vesting outcome for 75% of the Executive Chairman’s LTI opportunity which is tied to relative TSR.

In addition, the Executive Chairman successfully delivered against the annual initiatives we set out for him in our 2019 Circular.

In 2019, Barrick continued its strategy of delivering sustainable growth by reinforcing the focus on discerning portfolio management, disciplined capital allocation and investments. This focus continues the ethos embedded in the Company through the Executive Chairman’s execution of key initiatives following his appointment in 2014, including the restructuring of the Company’s balance sheet achieved through a series of non-core asset sales and more than $10 billion of debt repayment, together with a commitment to operational excellence across the Company. Throughout 2019, the Executive Chairman worked with the President and Chief Executive Officer to maintain that keen focus by guiding business decisions on a macro level and ensuring Board commitment to, and oversight of, management’s execution of the transactions and initiatives that furthered those objectives, including the historic joint venture forged with Newmont Corporation in Nevada to create the world’s largest gold mining complex, the privatization and re-integration of Acacia Mining plc assets in Africa, the sale of Barrick’s 50% interest in the Kalgoorlie Consolidated Gold Mines in Australia and the disposal of Barrick’s interest in the Massawa project in Senegal.

In addition, in 2019 under the Executive Chairman’s leadership the Company continued its commitment to maintaining strong and constructive relationships with shareholders and other key stakeholders, including host governments. The Executive Chairman’s efforts over the last three-year period were instrumental in facilitating the historic agreement with the Government of Tanzania to create Twiga Minerals and the Executive Chairman has played a continuing strategic role in the ongoing discussions with the Government of Papua New Guinea in connection with the mining lease renewal by Barrick’s Porgera joint venture.

Following his proactive recruitment of our new President and Chief Executive Officer through the Merger, the Executive Chairman continued to support Barrick’s distinctive ownership culture and decentralized management structure as the President and Chief Executive Officer took over day-to-day operations and implemented our flat management structure through the establishment of regionally-focused leadership teams in each of the geographies where Barrick operates.

Also in 2019, the Executive Chairman focused on the effective and efficient functioning of the streamlined Board of the merged entity as well as on the Board’s three reconstituted standing committees. Following the tragic passing of María Ignacia Benítez shortly before the 2019 Circular was filed, the Executive Chairman assisted the Corporate Governance & Nominating Committee with the rigorous search and selection process which led to the appointment of Ms. Loreto Silva in August 2019. In furtherance of Barrick’s goal to increase Board diversity, the Executive Chairman also played an integral role in our ongoing search for a second highly qualified female director who is expected to be an African with the appropriate experience to bring an independent view as well as an understanding of doing business in Africa to the Board.

The specific assessment of the Executive Chairman’s performance highlights against his annual initiatives and financial initiatives disclosed in our 2019 Circular, are summarized below.

A Strategic Goals 25%

2019 Initiatives as Disclosed in 2019 Circular and Performance Highlights Achieved?
a) Provide leadership and oversight for the effective functioning of the Board, paying particular attention to diversity

  • In conjunction with the Merger, oversaw the streamlining of the Board and the reconstitution of three standing committees to enhance dialogue and promote accountability
  • Following the untimely passing of María Ignacia Benítez shortly before the publication of the 2019 information circular, oversaw the addition of a qualified female candidate to our Board, and the ongoing search for an additional female director:
    • Appointment to the Board of Ms. Loreto Silva, a Chilean citizen, who brings to the Board significant knowledge of large-scale infrastructure projects and wide-ranging experience in legal and government affairs with a specific focus in South America; and
    • Integrally involved in the recruitment of an additional female director with experience in Africa
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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

  • Principal liaison with Barrick’s International Advisory Board, working to deepen relationships with host governments and potential strategic partners
  • As part of the historic agreement with the Government of Tanzania finalized in 2019, oversaw the Company’s commitment to partner with the University of Dar es Salaam through a 10-year funding commitment of up to $10 million for training and skills development in the mining industry and to fund up to $40 million to upgrade the road between the Bulyanhulu Mine and the city of Mwanza as well as construction of a housing compound and related infrastructure
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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

  • In consultation with the Board, increased our quarterly dividend during 2019 from four cents per share for the first quarter of 2019, to five cents per share for the third quarter of 2019, and to seven cents per share for the fourth quarter of 2019, reflecting Barrick’s profitability and financial strength
  • Provided strategic direction on the formation of Nevada Gold Mines with Newmont Corporation, providing Barrick with control of the world’s largest gold producing complex, and is realizing the synergies we committed to delivering
  • Provided macro strategic advice in connection with management’s execution of Barrick’s 2019 asset disposal program for non-core assets, including the divestiture of Barrick’s 50% interest in Kalgoorlie Consolidated Gold Mines and the sale by Barrick and its Senegalese partner of their aggregate 90% interest in the Massawa Project, which collectively generated sales proceeds to Barrick of approximately $1.2 billion
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d) Work with the President and Chief Executive Officer to advance the resolution of outstanding issues with governments and complex projects

  • Oversaw intensive efforts to advance the resolution of legacy challenges with the Government of Tanzania, which involved the minority buyout of Acacia Mining plc and the formation of Twiga Minerals Corporation, heralding a new partnership between Barrick and the Government of Tanzania
  • Provided high level strategic counsel regarding ongoing discussions with the Government of Papua New Guinea in connection with the renewal of the Porgera Special Mining Lease
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e) Build and manage stakeholder relationships and strategic alliances, including and especially with China

  • Provided ongoing leadership with respect to relationships with key stakeholders in China, including Zijin Mining and senior government leaders
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f) Drive Board oversight of talent and succession planning, including further integrating our partnership and ownership culture throughout the organization

  • Working with the President and Chief Executive Officer, updated and amended our cornerstone PGSU Plan to ensure continued reinforcement of our distinctive ownership culture throughout the organization
    • Accelerated share ownership through a phased vesting schedule which provides faster access to awards earned
    • Provide ability to sell Restricted Shares that are in excess of our share ownership requirements allowing our people financial flexibility while maintaining market-leading share ownership requirements
    • Oversaw the President and Chief Executive Officer’s continued implementation of a decentralized management model through the regional leadership structure
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Overall Assessment of Contribution Achieved

B Relative and Absolute TSR 75%

Application of the relative TSR vesting curve

Barrick's relative TSR percentile ranking versus the MSCI Index

The Compensation Committee noted that Barrick’s 3-year TSR performance from January 1, 2016 to December 31, 2019 was positioned at the 56th percentile of the constituents of the MSCI Index, which qualifies for vesting at 43% of maximum based on the vesting curve. The Compensation Committee also noted that Barrick delivered an absolute TSR of 20% over the same period, which was considered to be a positive indication of long-term shareholder value creation. Balancing these considerations, the Compensation Committee determined that a 43% award was warranted for the TSR-based portion of the Executive Chairman’s LTI award.

3-year Relative TSR performance 56th percentile
3-year Absolute TSR performance +20%
TSR vesting outcome based on the vesting curve 43%

C 2019 LTI Award for the Executive Chairman

LTI award formula

60% of the after-tax proceeds were used to purchase 59,280 Barrick Shares on the open market and the remainder was paid in cash, in recognition of the Executive Chairman’s continued commitment to deep, long-term ownership in the Company.

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

 

2019 Total Compensation for the Executive Chairman

$5,551,655