TORONTO (Reuters) — Proxy advisory firm Institutional Shareholder Services has recommended that shareholders vote against Barrick Gold Corp's executive pay plan, the second influential advisor to find fault with the company's compensation scheme.
A 36 per cent jump in executive chairman John Thornton's compensation, to $12.9 million in 2014 from $9.5 million in 2013, is of particular concern, a report issued by ISS on Thursday said.
"At a time when shareholder returns have significantly lagged peer companies, that total compensation for Thornton... has nevertheless increased significantly in the most recent year is seen to be problematic at a minimum and seemingly unwarranted," the report said.
Proxy advisory firm Glass Lewis is also is recommending shareholders vote against Barrick's compensation plan, flagging "serious concerns" with Thornton's pay.
At its annual meeting in Toronto on April 28, Barrick will consider an advisory resolution on executive compensation. While non-binding, so-called "say on pay" votes are important measures of shareholder attitude.
After a shareholder outcry in 2013, Barrick introduced a new compensation program in March 2014.
Under that plan, the largest part of top executive compensation is based on performance and paid in units that convert into Barrick shares that cannot be sold until an executive retires or leaves the company.
Both ISS and Glass Lewis cited positive features of the pay program, such as performance-based equity grants, but are concerned by Thornton's less-structuredcompensation plan.
"There appears to be no compensation component that is truly tied (to) pre-established and measurable long-term performance metrics embedded in his totalcompensation, and therefore the pay risk in this case remains high," the ISS report said.
Thornton's objectives, which differ from other top executives and include transformational reforms, are detailed in the company's circular against his performance, said Barrick spokesman Andy Lloyd.
"There is no better measure of long-term performance than shares, and share ownership is at the heart of our system," Lloyd said. "Our leaders will rise and fall as with all of our shareholders so we see that as not just alignment, but leaders as owners."
Thornton holds 1.4 million Barrick shares, half of which were purchased with his own money, Lloyd added.