Compensation Governance and Oversight
Barrick’s Compensation Governance Process
The Board is responsible for the oversight of Barrick’s executive compensation principles, practices, and programs and the approval of major compensation programs on the recommendation of the Compensation Committee. The independent directors of the Board approved the compensation of the Executive Chairman and the President and Chief Executive Officer based on the recommendations of the Compensation Committee. The Board also approves director compensation programs.
Role of the Compensation Committee
As the steward of our pay-for-performance philosophy, the Compensation Committee:
- Designs and drives all aspects of Barrick’s compensation policies and plans;
- Develops performance measures and scorecards for Barrick’s long-term and short-term executive compensation programs;
- Evaluates the collective performance of Partnership Plan participants by using the Long-Term Company Scorecard at the end of each year;
- Provides recommendations to the Board regarding compensation for the Executive Chairman based on an assessment of his performance for the year by the Corporate Governance & Nominating Committee, in consultation with the Lead Director, at the end of each year;
- Provides recommendations to the Board regarding compensation for the President and Chief Executive Officer based on an assessment of his performance for the year by the Executive Chairman, in consultation with the Lead Director, at the end of each year;
- Reviews and approves the compensation of our Senior Executive Vice-President, Chief Financial Officer; Senior Executive Vice-President, Strategic Matters; Chief Operating Officer; Latin America and Asia Pacific; and other senior officers, other than the President and Chief Executive Officer, based on their respective individual API Scorecard evaluations and other relevant factors provided by the President and Chief Executive Officer at the end of each year;
- Considers feedback from shareholders with respect to Barrick’s overall compensation strategy;
- Considers the implications of risks associated with the Company’s executive compensation programs and practices; and
- Reviews the remuneration of the directors from time to time to ensure that it properly reflects the time commitment and responsibilities associated with being an effective director.
For a description of the Compensation Committee’s key activities and accomplishments in 2019, see the discussion under “Committees of the Board – Compensation Committee”.
Composition of the Compensation Committee
The Compensation Committee is comprised of Christopher L. Coleman (Chair), Gustavo A. Cisneros, Brian L. Greenspun, and J. Brett Harvey. None of the Compensation Committee members is an officer or employee of Barrick or its subsidiaries, and each member of the Compensation Committee meets the Board’s independence standards derived from the corporate governance guidelines established by the NYSE Standards and National Instrument 58-101 – Disclosure of Corporate Governance Practices.
Collectively, the Compensation Committee’s members have extensive compensation-related experience in the natural resources and energy sectors as senior executives (past and present) and members of the board of directors and committees of other public and private corporations.
- Mr. Coleman is the Chair of the Compensation Committee. He has extensive experience as a member of the compensation committee of the board of directors of Papa John’s International, Inc. and was the Chairman of the board of directors of Randgold prior to the Merger. He is Group Head of Banking and a Global Partner of Rothschild & Co. He is also the Chairman of Rothschild Bank International and serves on a number of other boards and committees of the Rothschild & Co Group. As such, he draws from his extensive boardroom leadership, management, financial, and international business experience to provide relevant compensation and governance-related insights.
- Mr. Cisneros has extensive experience as the owner and Chairman of Cisneros, a large privately-held conglomerate. As well, Mr. Cisneros is the Chairman of Barrick’s Corporate Governance & Nominating Committee, which assists in consideration of the issues that are relevant to both committee mandates.
- Mr. Greenspun has extensive experience as the Chairman and Chief Executive Officer of Greenspun Media Group. As well, Mr. Greenspun is a member of Barrick’s Corporate Governance & Nominating Committee, which assists in consideration of the issues that are relevant to both committee mandates.
- Mr. Harvey has held a number of positions with CONSOL Energy Inc., including Chairman Emeritus, Chairman, and Chief Executive Officer. As such, he draws from his previous committee leadership experience and his management experience to provide relevant compensation and governance-related insights. Mr. Harvey is the Chairman of the Audit & Risk Committee, which assists in consideration of the issues that are relevant to both committee mandates. In addition, Mr. Harvey is the Lead Director of Barrick’s Board of Directors and served as Chair of Barrick’s Compensation Committee prior to its reconstitution on January 1, 2019.
The Board is confident that the Compensation Committee collectively has the knowledge, experience, and background necessary to carry out the Compensation Committee’s mandate effectively and to make executive compensation decisions in the best interests of the Company and its shareholders.
Independent Compensation Consultant
The Compensation Committee has sought the views of an independent compensation consultant on executive compensation-related matters from time to time. In May 2016, the Compensation Committee appointed Pay Governance as its independent compensation consultant and on March 1, 2019, the Compensation Committee appointed Willis Towers Watson as its new independent consultant to review and advise the Compensation Committee on compensation and governance trends, provide input on specific issues related to director and executive compensation programs, and provide market compensation benchmark data. The Compensation Committee has reviewed Willis Towers Watson’s protocols and is satisfied that the appropriate safeguards are in place to ensure the objectivity and independence of Willis Towers Watson’s consulting advice.
In 2019, Willis Towers Watson undertook a review of Barrick’s director compensation arrangements and executive compensation philosophy, including the compensation peer group and incentive plans. Willis Towers Watson also provided executive compensation benchmarking data and completed a compensation risk assessment for Barrick’s executive compensation programs, which confirmed that our executive compensation plans and programs do not encourage unnecessary and excessive risk-taking and do not create significant risks that are reasonably likely to have a material adverse effect on Barrick.
In 2018, Pay Governance provided independent benchmarking advice and data relating to the compensation of the Executive Chairman and completed a Compensation Risk Assessment for Barrick’s executive compensation programs. In 2019, Pay Governance provided benchmarking data relating to the compensation of the Executive Chairman and completed pay-for-performance simulations for management.
The chart below summarizes the fees paid to Willis Towers Watson and Pay Governance in 2019 and 2018 for services provided to the Compensation Committee.
|Executive Compensation-Related Fees
provided to the Compensation Committee
|All Other Fees for services
provided to management
|Willis Towers Watson(1)||$159,669
|Pay Governance(2)|| Nil
- Willis Towers Watson’s consulting fees are paid pursuant to a fixed-fee retainer for consulting services provided to the Compensation Committee between March 1, 2019 and March 31, 2020. Accordingly, the value reported for 2019 reflects a prorated value of the retainer for Willis Towers Watson’s consulting support from March 1, 2019 to December 31, 2019. Willis Towers Watson’s consulting fees are in Canadian dollars and have been converted to U.S. dollars using the annual average exchange rate reported by the Bank of Canada for the relevant year. The annual average exchange rates reported by the Bank of Canada are: 2019 – 1.3269; and 2018 – 1.2957.
- Pay Governance’s consulting fees are paid in U.S. dollars. All Other Fees for service provided to management include benchmarking data related to the compensation of the Executive Chairman and pay-for-performance simulations.
The Compensation Committee reviews and approves all fees and terms of consulting services provided by independent compensation consultants that are mandated by the Compensation Committee or commissioned by management. As provided in the Compensation Committee’s mandate, the Chair of the Committee must pre-approve any non-compensation services provided by the organization of the independent compensation consultants to ensure that the independence of such consultants is not compromised.
Compensation Peer Group and Benchmarking
Given the transformational nature of the Merger and the resulting change in the size, scope, and complexity of the business, the Compensation Committee completed a comprehensive review of the mining peer group in early 2019. Barrick is one of the largest gold mining companies in the world and there are no other Canadian publicly-traded gold mining companies that are similar in size, scope, and complexity. As the competitive positioning of executive compensation is assessed using our peer group, the review therefore highlighted that peers should be considered from a broader universe of global companies that takes into account Barrick’s existing operational footprint and to attract and retain the best people in the industry. The Compensation Committee selected peers from a broad universe of global companies based on the revised criteria below:
|Peer group objective||Robust peer selection criteria|
|Reflect Barrick’s increased size, scope, and complexity||Publicly-traded companies that are similar in size to Barrick (0.33x – 3x market capitalization, revenue, and/or assets)|
|Reflect Barrick’s expanded global reach||Companies with a global footprint, including operations beyond home country in several countries, and in most cases, at least two other continents, with a focus on those with operations in North America, Africa, Australia, and Europe|
|Reflect a broader competitive landscape for qualified and experienced executive talent||Capital intensive companies, including gold and/or diversified metal and mining companies with exploration, development and mining/production activities, as well as extractive, non-mining companies to reflect a broader competitive landscape for talent|
Our 2019 Global Peer Group is comprised of twenty global companies that operate in the mining industry (70%) and broader extractive industries (30%). Goldcorp Inc. was removed from the Global Peer Group due to its acquisition by Newmont Corporation in 2019.
Each year, the Compensation Committee evaluates and, if appropriate, updates the composition of the Global Peer Group. In completing this annual review, the Compensation Committee considers:
- The Global Peer Group’s long-term alignment to the peer selection criteria;
- Feedback received from shareholders on its composition; and
- Gold and mining companies that are subject to similar long-term commodity cycle and price pressures.
Changes to the Global Peer Group are carefully considered and generally made infrequently to allow for consistency and comparability of market data from year to year. The 20 Global Peer Group companies are shown below.
|Global Mining Companies
|Agnico Eagle Mines Limited||Canada||Gold|
|Anglo American plc||United Kingdom||Diversified Metals & Mining|
|Anglo Gold Ashanti Ltd.||South Africa||Gold|
|Antofagasta plc (New)||United Kingdom||Copper|
|BHP Group (New)||Australia||Diversified Metals & Mining|
|First Quantum Minerals Ltd.||Canada||Copper|
|Freeport McMoran Copper & Gold Inc.||United States||Copper|
|Kinross Gold Corporation||Canada||Gold|
|Newcrest Mining Limited||Australia||Gold|
|Newmont Corporation||United States||Gold|
|Rio Tinto Ltd.||United Kingdom||Diversified Metals & Mining|
|South32 Limited (New)||Australia||Diversified Metals & Mining|
|Teck Resources Limited||Canada||Diversified Metals & Mining|
|Wheaton Precious Metals Corp. (New)||Canada||Silver|
|Global Extractive Non-Mining Companies
|Anadarko Petroleum Corporation (New)||United States||Oil & Gas Exploration and Production|
|Apache Corporation (New)||United States||Oil & Gas Exploration and Production|
|Canadian Natural Resources Ltd. (New)||Canada||Oil & Gas Exploration and Production|
|Hess Corporation (New)||United States||Oil & Gas Exploration and Production|
|Marathon Oil Corporation (New)||United States||Oil & Gas Exploration and Production|
|Suncor Energy Ltd. (New)||Canada||Integrated Oil & Gas|
Overall, we position our total compensation opportunities between the median and 75th percentile of the Global Peer Group. Total compensation awarded may be higher or lower than the median to 75th percentile range to reflect performance. Total compensation in excess of the 75th percentile will only be awarded for superior outperformance.
In 2019, the Compensation Committee reviewed benchmarking data for the Executive Committee, 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 and the Executive Chairman. The benchmarking data was referenced alongside other considerations, including the scope, responsibilities, and accountability of our Executive Committee and Executive Chairman, which at times may be broader than their respective job titles indicate. When determining executive compensation levels, the Compensation Committee also considered shareholder and governance views, the overall economic climate and business environment, retention needs, experience and potential for future advancement. Additionally, the Committee considered Barrick’s TSR performance on an absolute and relative basis to ensure pay decisions reflect the overall shareholder experience. TSR performance is reviewed annually against the Global Peer Group, sector peers, and other broad market indices. TSR performance is assessed for companies outside of our Global Peer Group as Barrick Shares are widely-held by institutional and retail shareholders who have shareholding interests beyond companies that operate in the mining industry.