PROXY PAPER BARRICK GOLD CORPORATION
Toronto Stock Exchange: ABX ISIN: CA0679011084
MEETING DATE: 30 APRIL 2014 INDEX MEMBERSHIP: DJSI WORLD; DJSI NA; S&P/TSX 60; S&P/TSX COMPOSITE RECORD DATE: 01 MARCH 2014 SECTOR: MATERIALS PUBLISH DATE: 14 APRIL 2014 INDUSTRY: METALS AND MINING
COMPANY DESCRIPTION COUNTRY OF TRADE: CANADA Barrick Gold Corporation engages in the production COUNTRY OF INCORPORATION: CANADA and sale of gold and copper. VOTING IMPEDIMENT: NONE DISCLOSURES: NONE
OWNERSHIP COMPANY PROFILE COMPENSATION PREVIOUS BOARD VOTE RESULTS APPENDIX
2014 ANNUAL & SPECIAL MEETING
PROPOSAL ISSUE BOARD GLASS LEWIS CONCERNS
1.00 Election of Directors FOR FOR 1.01 Elect Charles W. D. Birchall FOR FOR
1.02 Elect Gustavo A. Cisneros FOR FOR
1.03 Elect Ned Goodman FOR FOR
1.04 Elect J. Brett Harvey FOR FOR
1.05 Elect Nancy H.O. Lockhart FOR FOR
1.06 Elect Dambisa Moyo FOR FOR
1.07 Elect Anthony Munk FOR FOR
1.08 Elect David Naylor FOR FOR
1.09 Elect Steven J. Shapiro FOR FOR
1.10 Elect Jamie C. Sokalsky FOR FOR
1.11 Elect John L. Thornton FOR FOR
1.12 Elect Ernie L. Thrasher FOR FOR
2.00 Appointment of Auditor and Authority to Set Fees FOR FOR
3.00 Advisory Vote on Executive Compensation FOR FOR
4.00 Advance Notice Provision FOR FOR SHARE OWNERSHIP PROFILE
SHARE BREAKDOWN
1 SHARE CLASS Common Shares SHARES OUTSTANDING 1,164.7 M VOTES PER SHARE 1 INSIDE OWNERSHIP 0.27% STRATEGIC OWNERS** 0.27% FREE FLOAT 99.73%
SOURCE CAPITAL IQ AND GLASS LEWIS. AS OF 06-FEB-2014
TOP 20 SHAREHOLDERS
HOLDER OWNED* COUNTRY INVESTOR TYPE 1. Van Eck Associates Corporation 3.62% United States Traditional Investment Manager 2. TD Asset Management, Inc. 2.29% Canada Traditional Investment Manager 3. Allianz Global Investors AG 1.79% Germany Traditional Investment Manager 4. Wellington Management Company, LLP 1.79% United States Traditional Investment Manager 5. BMO Investments Inc. 1.61% Canada Traditional Investment Manager 6. Fidelity Investments 1.32% United States Traditional Investment Manager 7. BNY Mellon Asset Management 1.31% United States Traditional Investment Manager 8. Canadian Imperial Bank of Commerce, Private and Investment Banking Arm 1.28% Canada Traditional Investment Manager 9. Highfields Capital Management, LP 1.12% United States Hedge Fund Manager 10. Susquehanna International Group, LLP, Asset Management Arm 1.08% United States Bank/Investment Bank 11. Northern Cross Investments Ltd. 1.07% Bermuda Traditional Investment Manager 12. CI Investments Inc. 1.04% Canada Traditional Investment Manager 13. Mackenzie Financial Corporation 0.94% Canada Traditional Investment Manager 14. RBC Global Asset Management Inc. 0.92% Canada Traditional Investment Manager 15. Capital Research and Management Company 0.90% United States Traditional Investment Manager 16. Franklin Resources Inc. 0.84% United States Traditional Investment Manager 17. Morgan Stanley, Investment Banking and Brokerage Investments 0.82% United States Bank/Investment Bank 18. Oldfield Partners LLP 0.79% United Kingdom Traditional Investment Manager 19. CIBC Asset Management Inc. 0.78% Canada Traditional Investment Manager 20. BlackRock, Inc. 0.77% United States Traditional Investment Manager
*COMMON STOCK EQUIVALENTS (AGGREGATE ECONOMIC INTEREST) SOURCE: CAPITAL IQ. AS OF 06-FEB-2014 **CAPITAL IQ DEFINES STRATEGIC SHAREHOLDER AS A PUBLIC OR PRIVATE CORPORATION, INDIVIDUAL/INSIDER, COMPANY CONTROLLED FOUNDATION, ESOP OR STATE OWNED SHARES OR ANY HEDGE FUND MANAGERS, VC/PE FIRMS OR SOVEREIGN WEALTH FUNDS WITH A STAKE GREATER THAN 5%.
SHAREHOLDER RIGHTS
MARKET THRESHOLD COMPANY THRESHOLD1 VOTING POWER REQUIRED TO CALL A SPECIAL MEETING N/A 5.0% VOTING POWER REQUIRED TO ADD AGENDA ITEM 1.0%2 1.0%2
1N/A INDICATES THAT THE COMPANY DOES NOT PROVIDE THE CORRESPONDING SHAREHOLDER RIGHT. 2SHAREHOLDERS MUST OWN THE CORRESPONDING PERCENTAGE OR SHARES WITH MARKET VALUE OF AT LEAST C$2,000 FOR AT LEAST ONE YEAR.
ABX April 30, 2014 Annual Meeting 2 Glass, Lewis & Co., LLC COMPANY PROFILE
COUNTRY OF INCORPORATION Canada GENERAL STOCK EXCHANGE Toronto Stock Exchange
1 YR TSR 3 YR TSR AVG. 5 YR TSR AVG. ABX -45.0% -28.2% -15.0% S&P/TSX COMPOSITE INDEX 13.0% 3.4% 11.9% FINANCIALS MARKET CAPITALIZATION (MM USD) 20,512 ENTERPRISE VALUE (MM USD) 33,657 REVENUES (MM USD) 12,511
FIGURES AS OF 31-DEC-2013. SOURCE: CAPITAL IQ. ANNUALIZED SHAREHOLDER RETURNS.
SAY ON PAY VOTE Yes EXECUTIVE GLASS LEWIS STRUCTURE RATING Fair GLASS LEWIS DISCLOSURE RATING Fair COMPENSATION SINGLE TRIGGER CIC VESTING No OVERHANG OF INCENTIVE PLANS 1.5% CLAWBACK PROVISION Yes
Majority w/ ELECTION METHOD CEO START DATE June 5, 2012 Resignation Policy BOARD & STAGGERED BOARD No AVERAGE NED TENURE 6 years MANAGEMENT SHAREHOLDER AGREEMENT COMBINED CHAIRMAN/CEO No REGARDING DIRECTOR No NOMINATIONS
ANTI-TAKEOVER SHAREHOLDER RIGHTS PLAN No APPROVED BY SHAREHOLDERS* N/A MEASURES *Shareholder rights plans must be reconfirmed by shareholders every three years
AUDITOR: PRICEWATERHOUSECOOPERS TENURE: 30 YEARS AUDITORS MATERIAL WEAKNESS(ES) IDENTIFIED IN PAST 12 MONTHS No RESTATEMENT(S) IN PAST 12 MONTHS No
CURRENT AS OF APR 12, 2014
ABX April 30, 2014 Annual Meeting 3 Glass, Lewis & Co., LLC PAY-FOR-PERFORMANCE
Barrick Gold's executive compensation received a D grade in our proprietary pay-for-performance model. The Company paid more compensation to its named executive officers than the median compensation for a group of companies selected using Equilar's market based peer algorithm.The CEO was paid about the same as the median CEO compensation of these peer companies. Overall, the Company paid moderately more than its peers, but performed worse than its peers.
FY 2013 CEO COMPENSATION SALARY: C$1,399,279 GDFV EQUITY: C$5,655,102 HISTORICAL COMPENSATION GRADE FY 2013: D NEIP/OTHER: C$1,009,491 TOTAL: C$8,063,873
FY 2013 PAY-FOR-PERFORMANCE GRADE 3-YEAR WEIGHTED AVERAGE COMPENSATION
EQUILAR PEERS VS PEERS DISCLOSED BY COMPANY SHAREHOLDER WEALTH AND BUSINESS PERFORMANCE
EQUILAR ABX Teck Resources Limited* AngloGold Ashanti Newmont Mining Corporation* Ltd. Goldcorp Inc.* Anglo American plc Kinross Gold Corporation* Gold Fields Ltd. Freeport-McMoRan Copper & Gold Rio Tinto plc Inc.* BHP Billiton Limited Cameco Corporation* Potash Corp. of Saskatchewan, Inc. Yamana Gold, Inc. Agnico Eagle Mines Limited Peabody Energy Corp. Agrium Inc. Golden Minerals Company Cliffs Natural Resources Inc. Pacific Rubiales Energy Corp. Finning International Inc. *ALSO DISCLOSED BY ABX Analysis for the year ended 12/31/2013. Performance measures, except ROA and ROE, are based on the weighted average of annualized 1, 2, and 3 year data. Compensation figures are weighted average 3-year data calculated by Glass Lewis based on information disclosed by the Company and its peers in their proxy filings. For US peers, equity awards are normalized using the grant date exchange rate and cash compensation data is normalized using the fiscal year average exchange rate.
Equilar peers are updated in January and July. Peer data is based on public information, as well as information provided to Equilar during its open submission periods. The “Peers Disclosed by Company” data is based on public information only. Glass Lewis may exclude certain peers from the Pay for Performance analysis based on factors such as trading status and/or data availability. For details of exclusion criteria, go to:www.glasslewis.com . For more information about Equilar peer groups, go to: www.equilar.com
ABX April 30, 2014 Annual Meeting 4 Glass, Lewis & Co., LLC 1.00: ELECTION OF DIRECTORS
PROPOSAL REQUEST: Election of twelve directors RECOMMENDATIONS & CONCERNS: PRIOR YEAR VOTE RESULT: N/A FOR- Birchall C. Cisneros G. Goodman N. Harvey J. Lockhart N. Moyo D. Munk A. Naylor D. Shapiro S. Sokalsky J. ELECTION METHOD: Majority w/ Resignation Policy Thornton J. Thrasher E.
NOT UP- None
BOARD OF DIRECTORS
NAME UP AGE GLASS LEWIS COMPANY OWNERSHIP** COMMITTEES TERM TERM YEARS CLASSIFICATION CLASSIFICATION START END ON AUDIT COMP GOV NOM BOARD
Charles W. D. Birchall* 71 Insider 1 Not Independent Yes 1984 2014 30
Jamie C. Sokalsky* 56 Insider 2 Not Independent Yes 2012 2014 2 ·CEO
John L. Thornton* 60 Insider 3 Not Independent Yes 2012 2014 2 ·Chairman Anthony Munk* 53 Affiliated 4 Not Independent Yes 1996 2014 18 Gustavo A. Cisneros 68 Independent Independent No C C 2003 2014 11 Ned Goodman* 76 Independent Independent Yes 2014 2014 0 J. Brett Harvey* 63 Independent 5 Independent Yes C 2005 2014 9 Nancy H.O. Lockhart 59 Independent Independent No 2014 2014 0 Dambisa Moyo 45 Independent Independent No 2011 2014 3 David Naylor 59 Independent Independent Yes 2014 2014 0 Steven J. Shapiro 61 Independent Independent Yes C 2004 2014 10 Ernie L. Thrasher 59 Independent Independent No 2014 2014 0
C = Chair, * = Public Company Executive, = Withhold or Against Recommendation
1. Executive vice chairman. 2. President and CEO. 3. Chairman. 4. Son of Peter Munk, the Company's founder and former co-chairman (effective as of the 2014 annual meeting). 5. Lead director.
**Percentages displayed for ownership above 5%, when available
ABX April 30, 2014 Annual Meeting 5 Glass, Lewis & Co., LLC ATTENDED AT LEAST 75% NAME ADDITIONAL PUBLIC COMPANY DIRECTORSHIPS OF MEETINGS
Charles W. D. Birchall Yes (1) Rogers Communications Inc. Jamie C. Sokalsky Yes None John L. Thornton Yes (2) China Unicom Ltd; Ford Motor Company Anthony Munk Yes (1) Cineplex Inc. Gustavo A. Cisneros Yes None Ned Goodman N/A (2) Dundee Corporation; Dream Unlimited Corporation J. Brett Harvey Yes (2) CONSOL Energy Inc.; Allegheny Technologies Incorporated (3) ; ; Nancy H.O. Lockhart N/A Loblaw Companies Limited Gluskin Sheff & Associates Inc. Atrium Mortgage Investment Corporation Dambisa Moyo Yes (2) SABMiller plc; Barclays plc David Naylor N/A None Steven J. Shapiro Yes (1) Asia Resource Minerals plc Ernie L. Thrasher N/A None
MARKET PRACTICE
INDEPENDENCE AND COMPOSITION ABX* REQUIREMENT BEST PRACTICE
Independent Chairman No Yes1 Yes3
Board Independence 67% 50%1 66.6%3
Audit Committee Independence 100%; Independent Chair 100%2 100%3
Compensation Committee Independence 100%; Independent Chair 100%1 100%3
Nominating Committee Independence 100%; Independent Chair 100%1 100%3 Percentage of women on board 17% N/A N/A Directors' biographies Management Information Circular; Page 11
* Based on Glass Lewis Classification 1. National Policy 58-201 Corporate Governance 2. National Instrument 52-110 Guidelines 3. Canadian Coalition for Good Governance
GLASS LEWIS ANALYSIS
We believe shareholders should be mindful of the following: MAJORITY VOTING
In October 2012 the TSX adopted a "comply or explain" majority voting requirement for the election of directors applicable to all TSX-listed companies. This requirement was expanded on February 13, 2014, when the TSX announced that majority voting would be mandatory for companies with fiscal year ends of June 30, 2014 or later. The new policy requires that directors who receive less than majority support for their election tender their resignation to the board; the board will ultimately determine whether or not to accept the resignation, but “shall accept the resignation absent exceptional circumstances.” While the Company is not required to adopt a majority voting policy due to its fiscal year end date, we note that the board has adopted a majority voting resignation policy. Although Glass Lewis prefers a "true majority" voting policy, whereby a director must stand down regardless of the board's determination with regard to a director’s tendered resignation, we recognize that the adoption of a resignation policy is standard practice in Canada. VOTE RESULTS FROM THE 2013 ANNUAL MEETING
An unprecedented reaction to a Canadian say-on-pay vote occurred last year when shareholders voted against the Company's 2012 executive compensation package with a mere 14.8% of shareholders voting in favor of the plan. An overwhelming majority of shareholders expressed their dissatisfaction with the Company's pay practices, which included excessive sign-on and severance payments to its incoming co-chairman and outgoing CEO in the range of $11 million
ABX April 30, 2014 Annual Meeting 6 Glass, Lewis & Co., LLC each and an approximate 150% base salary increase to the Company's then-serving chairman. In consideration of such actions, shareholders also sent a message to the compensation committee with all of the committee members, Messrs. Cisnero, Harvey and Shaprio, receiving more than 26% withhold votes. Furthermore, Messrs. Peter Munk and John Thornton, designated co-chairmen and recipients of the compensation benefits, received higher withhold votes as compared to previous years with approximately 16% withhold votes. We also note that Messrs. Birchall, Mulroney and Anthony Munk all received approximately 23% withhold votes from shareholders. We believe these withholds votes were in response to ongoing governance concerns regarding the board's overall independence and Mr. Mulroney's board memberships. As noted in the Company's Management Information Circular, Mr. Mulroney has determined that he will resign from the board effective as of the 2014 annual meeting. PAY-FOR-PERFORMANCE CONCERNS
Our pay-for-performance analysis indicates that the Company has been deficient in aligning pay with performance. The members of the compensation committee have the responsibility of reviewing all aspects of the compensation program for the Company's executive officers; in our opinion, the committee may not be effectively serving shareholders in this regard. Based on our analysis of the Company's overall executive compensation policies and disclosure in Proposal 3, and in light of the significant changes made to the Company's executive compensation program during the year, we refrain from recommending to withhold votes from members of the compensation committee at this time. However, if the Company continues to receive a deficient grade in our pay-for-performance model, indicating an ongoing failure to align pay with performance, we will consider holding the compensation committee members responsible. LEGAL AND REGULATORY ACTIONS
As discussed in previous Proxy Papers, the Company has several ongoing legal proceedings regarding environmental concerns, mining licenses and other business disputes. The claims have been filed in the state of Nevada, the Philippines, Pakistan, the Dominican Republic, Chile and Argentina. As one of the world's largest gold producers, the Company is frequently subjected to criticisms of its global environmental performance and ethical mining policies. Specifically, the Company has experienced several setbacks to its Pascua-Lama Project in regards to operational and environmental management issues. Of particular note, the Supreme Court of Chile upheld a decision by the Copiapo Court Appeals that required the Company to suspend construction activities until it completes a water management system in compliance with environmental permits of Chile's Superintendence of the Environment. The rulings were made in connection to a constitutional rights protection action filed on September 28, 2012 by four indigenous communities, which sought suspension of the site construction until all environmental obligations had been fulfilled. As disclosed in a press release on September 26, 2013, the Company has submitted a plan to Chilean regulatory authorities regarding completion of the water management system with projected completion by the end of 2014. While we do not believe that these actions present a serious risk at this time, a growing focus on responsible investing and environmental awareness could present a reputational risk for the Company, potentially impeding its ability to retain and acquire mining rights. However, as previously noted, the Company has taken steps to address these issues by establishing a corporate responsibility advisory board in 2012, which provides external advice and guidance on the Company’s global CSR performance and evolving best practices in CSR, in addition to, the corporate responsiblity committee of the board. It has also incorporated social corporate responsibility into its incentive arrangements for executives. PETER MUNK'S RETIREMENT AND BOARD RENEWAL On December 4, 2013, the Company announced in a press release that Peter Munk, the Company's founder and chairman, would be retiring at the 2014 annual shareholder meeting. After splitting the chairman position between Messrs. Munk and Thornton at last year's annual meeting, Mr. Thornton will assume the lead chairman position at this year's annual meeting. In addition to the executive leadership transition, two directors (Messrs. Beck and Mulroney) also announced their retirement from the board effective at that the annual meeting. Further, the Company announced that director Franklin, who served as the chair of the corporate governance and nominating committee, and director Carty resigned from the board with immediate effect on December 17, 2013. In light of the director resignations, the board has nominated four new directors, Messrs. Goodman, Naylor and Thrasher and Ms. Lockhart. The Company notes that if the nominees are elected the proportion of independent directors serving on the board will increase to two-thirds. As previously mentioned, this alleviates our concerns regarding the board's overall independence, which has been an on-going concern for the past few years. COMMITTEE COMPOSITION
Following the resignation of Howard Beck from the board at this year's annual meeting, there will only be two directors
ABX April 30, 2014 Annual Meeting 7 Glass, Lewis & Co., LLC Following the resignation of Howard Beck from the board at this year's annual meeting, there will only be two directors sitting on the audit committee. We believe that a committee with responsibilities as crucial as those of the audit committee should have a minimum of three members to perform its function to shareholder satisfaction. In addition, given the amount and importance of the work to be done by this committee, we do not believe the duties can be properly fulfilled by fewer than three directors. Therefore, we encourage the board to appoint an independent director to replace Mr. Beck as a member of the audit committee as soon as is practicable. As noted in the Company's Management Information Circular, the corporate governance and nominating committee reviews the composition of the committees and recommends committee members and chairs for board approval. Following the annual meeting, the composition of each committee will be reviewed in light of the four new director appointments. In addition, committee composition will adhere to the changes implemented in the Company's corporate governance guidelines, which state that the audit, corporate governance and nominating and compensation committees will be composed entirely of independent directors and all other committees of a majority of independent directors from and after the 2014 annual meeting.
RECOMMENDATIONS
Having reviewed the nominees, we do not believe there are substantial issues for shareholder concern.
Accordingly, we recommend that shareholders vote FOR all nominees.
The Company discloses the following biographical information for directors Ned Goodman, Nancy H.O. Lockhart, David Naylor and Ernie L. Thrasher, each of whom joined the board during the past year: Ned Goodman is Director, President and Chief Executive Officer of Dundee Corporation, an independent asset management company focused in the areas of real estate and infrastructure, energy, resources and agriculture. Mr. Goodman is founder and benefactor of the Goodman Institute of Investment Management, a graduate school for investment management at Concordia University, and the Goodman School of Mines at Laurentian University. He is the Chancellor of Brock University in Ontario, Chairman Emeritus of the Canadian Council of Christians and Jews, a Vice-President of Maccabi Canada, a Governor of Junior Achievement of Canada and a Trustee of the Fraser Institute. Mr. Goodman is also a founding director of the Roasters Foundation, Jodamada Foundation and Dynamic Fund Foundation. Mr. Goodman holds an undergraduate degree in geology from McGill University and a master’s degree in business administration from the University of Toronto. Nancy H.O. Lockhart is a Corporate Director. She was the Chief Administrative Officer of Frum Development Group, a property development and management company, from 1995 to September 2013. Ms. Lockhart is a director of the Centre for Addiction and Mental Health Foundation and the Canada Merit Scholarship Foundation. She is a past director of the Canada Deposit Insurance Corporation. David Naylor is President Emeritus of the University of Toronto, Canada’s largest academic institution. President from 2005 to October 2013, Dr. Naylor was previously the Dean of the Faculty of Medicine of the University. From 2010 to 2011, he served on the Independent Panel on Federal Support to Research and Development of the Government of Canada. Dr. Naylor is a fellow of the Royal Society of Canada, a foreign associate of the U.S. Institute of Medicine, and an Officer of the Order of Canada. He has been a board member for several hospitals, foundations, and professional associations. Dr. Naylor holds a medical degree from the University of Toronto and a doctorate in social and administrative studies from Oxford University, where he was a Rhodes Scholar. Ernie L. Thrasher is the founder, Chief Executive Officer and Chief Marketing Officer of Xcoal Energy & Resources, a global coal products supplier. He is the former President of AMCI Export Corporation and Executive Vice- President, Marketing of AMCI International (both coal products suppliers). Mr. Thrasher is also a director on the National Committee on United States- China Relations.
ABX April 30, 2014 Annual Meeting 8 Glass, Lewis & Co., LLC 2.00: APPOINTMENT OF AUDITOR AND AUTHORITY TO SET FEES
PROPOSAL REQUEST: Ratification of PricewaterhouseCoopers RECOMMENDATIONS & CONCERNS: PRIOR YEAR VOTE RESULT: 97.1%; Approved FOR- NO CONCERNS BINDING/ADVISORY: Binding REQUIRED TO APPROVE: Majority of votes cast AUDITOR OPINION: Unqualified
AUDITOR FEES 2013 2012 2011 Audit Fees: $11,100,000 $10,000,000 $10,000,000 Audit-Related $800,000 $600,000 $600,000 Fees: Tax Fees: $900,000 $1,100,000 $1,100,000 All Other Fees: $100,000 $100,000 $100,000 Total Fees: $12,900,000 $11,800,000 $11,800,000 Auditor: Pricewaterhouse Pricewaterhouse Pricewaterhouse Coopers Coopers Coopers
Years Serving Company: 30 Restatement in Past 12 Months: No
GLASS LEWIS ANALYSIS
The fees paid for non-audit-related services are reasonable and the Company discloses appropriate information about these services in its filings. Accordingly, we recommend that shareholders vote FOR the ratification of the appointment of PricewaterhouseCoopers as the Company's auditor for fiscal year 2014.
ABX April 30, 2014 Annual Meeting 9 Glass, Lewis & Co., LLC 3.00: ADVISORY VOTE ON EXECUTIVE COMPENSATION
PROPOSAL REQUEST: Approval of Executive Pay Package PAY FOR PERFORMANCE FY 2013 GRADES: FY 2012 FY 2011 PRIOR YEAR VOTE RESULT: 14.8%; Failed RECOMMENDATION: FOR STRUCTURE: Fair DISCLOSURE: Fair
PROGRAM FEATURES 1
POSITIVE NEGATIVE LTIP performance-based Disconnect between pay and performance STIP performance-based Insufficient disclosure with respect to LTIP STI-LTI payout balance performance goals No single-trigger CIC benefits Largely discretionary bonuses granted to Anti-Hedging Policy Co-Chairman Executive stock ownership guidelines for NEOs No clawback policy*
1 Both positive and negative compensation features are ranked according to Glass Lewis' view of their importance or severity * Positive changes have been made regarding this feature during the past year making it no longer a concern going forward
SUMMARY COMPENSATION TABLE
NAMED EXECUTIVE OFFICERS BASE SALARY BONUS & NEIP EQUITY AWARDS TOTAL COMP
Jamie C. Sokalsky President and CEO $1,359,260 $849,538 $5,065,760 $7,736,960 Peter Munk Chairman $2,427,250 - $1,379,515 $3,911,660 John L. Thornton Co-Chairman $2,500,000 $6,250,000 - $9,458,495 Kelvin P.M. Dushnisky Senior Executive Vice President $1,054,397 $527,199 $2,455,989 $4,374,749 Ammar Al-Joundi Executive Vice President and CFO $825,265 $412,633 $1,922,275 $3,412,623
CEO to Avg NEO Pay: 1.46: 1 CEO SUMMARY
2013 2012 2011
JAMIE C. SOKALSKY JAMIE C. SOKALSKY AARON W. REGENT
Total CEO Compensation $7,736,960 $11,364,398 $9,304,109 1-year TSR -45.0% -23.1% -12.4% CEO to Avg NEO Pay 1.5:1 1.3:1 1.9:1 CEO to Peer Median * N/A N/A N/A Fixed/Perf.-Based/Discretionary ** 20.1% / 62.8% / 17.1% N/A N/A
* Calculated using Company-disclosed peers. ** Percentages based on the CEO Compensation Breakdown values.
ABX April 30, 2014 Annual Meeting 10 Glass, Lewis & Co., LLC CEO COMPENSATION BREAKDOWN
Cash $1.5M Salary $1.4M FIXED Benefits / Other $131,082 Total Fixed $1.5M
Cash $0.8M Annual Performance Incentive (STI) $849,538 Target/Maximum 125% of base salary / 250% of base salary Reserve Replacement, Corporate Social Responsibility, Number of Minor Spills & Incidents, Major Permit Compliance, Barrick/ISO 14000 Environmental Management, Exploration and Corporate Metrics Development, Adjusted Free Cash Flow, Return on Capital, Gold (Total Cash Cost/oz), Adjusted EBITDA, Gold Production, Copper (C1 Cash Cost/oz), Security and Human Rights Principles, Copper Production, Capital PERFORMANCE- Projects, Total Recordable Injury Frequency BASED Rate Performance Period 1 year Additional Vesting / Deferral Period - PSUs $3.8M Long-Term Incentive Plan (LTI) $3.8M Target/Maximum 196,722 shares / 393,444 shares
Metrics Adjusted Free Cash Flow, Adjusted EBITDA, TSR Performance Period 3 years Additional Vesting / Deferral Period - Total Performance-Based $4.6M
RSUs $1.3M TIME-VESTING/ Long-Term Incentive Plan (LTI) $1.3M DISCRETIONARY Vesting / Deferral Period 3 years (cliff) Total Time-Vesting/Discretionary $1.3M Awarded Incentive Pay $5.9M
Total Pay Excluding change in pension value and NQDCE $7.4M
PEER GROUP REVIEW 1
The Company uses one peer group for setting pay levels.
Mining Peer Group This peer group consists of 12 companies. The group consists: Anglo American plc, Anglo Gold Ashanti Ltd., BHP Billiton plc, Cameco Corp., Freeport McMoran Copper & Gold Inc., Goldcorp Inc., Gold Fields Ltd., Kinross Gold Corp., Newmont Mining Corp., Rio Tinto Ltd., Teck Resources Ltd. and Glencore Xstrata plc.. The Company benchmarks total direct compensation (base salary and all at-risk compensation) to the 50th to 75th percentile of this peer group.
ABX April 30, 2014 Annual Meeting 11 Glass, Lewis & Co., LLC EXECUTIVE COMPENSATION STRUCTURE - SYNOPSIS
Base salaries did not increase significantly during the past fiscal year. A one-year base salary FIXED freeze has been implemented for NEOs in 2014.
ANNUAL PERFORMANCE INCENTIVE AWARDS GRANTED (PAST FY) Cash 125% of base salary for the CEO and 100% of base salary for each other TARGET PAYOUTS NEO 250% of base salary for the CEO and 200% of base salary for each other MAXIMUM PAYOUTS NEO ACTUAL PAYOUTS 63% of base salary for the CEO and 50% of base salary for each other NEO Performance is measured over one year. Metrics below account for 60% of incentive awards with the remaining 40% based on individual performance. The payout formula for 2013 awards was: (Base Salary) x (Annual Performance Incentive Target) x {(Company Performance) + (Individual Performance)}
The compensation committee exercised negative discretion to 2013 awards due to poor share performance in 2013, shareholder expectations and prevailing business conditions by applying a simplified payout formula: (Base Salary) x (Annual Performance Incentive Target) x 50%. As compared to results of the 2013 performance metrics, the simplified formula decreased actual payouts by 50%.
Messrs. Munk and Thornton, the Company's co-chairmen, do not have target incentives under the plan. However, Mr. Thornton received an annual bonus of $1,250,000, equivalent to 50% of his base salary, based on personal performance in assessment of his efforts in (i) Developing strategic alternatives for the future; (ii) Execution of transformational strategy; and (iii) Stakeholder relationships.
TOTAL SECURITY BARRICK/ISO RECORDABLE AND MAJOR CORPORATE 14000 INJURY HUMAN PERMIT SOCIAL ENVIRONMENTAL FREQUENCY RIGHTS COMPLIANCE RESPONSIBILITY MANAGEMENT RATE PRINCIPLES Absolute Absolute Absolute Absolute Absolute Weighting 5% 5% 5% 5% 2.5% 100% Average Threshold 0.76 <70% Qualitative Site CSR >3 Performance Assessment performance targets
Target 0.69 75% to 80% N/A N/A 2 Performance METRICS Maximum 0.62 >90% N/A N/A 0 FOR Performance LICENSE TO Actual 0.64 98% 25% 109% 1.7 OPERATE Performance (25%) NUMBER OF MINOR SPILLS & INCIDENTS Absolute Weighting 2.5%
Threshold 85 Performance
Target 64 SHORT-TERM Performance
INCENTIVES Maximum 58 Performance
Actual >58 (100%) Performance
ABX April 30, 2014 Annual Meeting 12 Glass, Lewis & Co., LLC ADJUSTED FREE ADJUSTED EBITDA RETURN ON CASH FLOW CAPITAL Absolute Absolute Absolute Weighting 10% 10% 5% METRICS FOR FINANCIAL Threshold -$4,024M $3,680M 6.8% DISCIPLINE (25%) Performance Target Performance -$2,920M $5,257M 11.4%
Maximum -$1,816M $6,835M 16.1% Performance Actual Performance -$1,142M $5,824M 12.5%
CAPITAL EXPLORATION AND RESERVE PROJECTS CORPORATE REPLACEMENT DEVELOPMENT Absolute Absolute Absolute Weighting 15% 10% 5% Assessment of METRICS FOR actual spending INVEST IN THE Threshold Assessment of Performance and progress vs Qualitative Objectives 7.75 FUTURE (30%) budget and schedule Target Performance N/A N/A 9.12
Maximum N/A N/A 9.58 Performance
Actual Performance Did Not Meet Met Objectives (100%) Did Not Meet Objective (0%) Threshold (0%)
GOLD COPPER (TOTAL GOLD (C1 CASH COPPER CASH PRODUCTION COST/OZ) PRODUCTION COST/OZ) Absolute Absolute Absolute Absolute METRICS FOR Weighting 8% 8% 2% 2% OPERATIONAL EXCELLENCE (20%) Threshold 761 5.64 3.02 323 Performance Target Performance 634 7.05 2.16 538
Maximum 507 8.45 1.30 753 Performance Actual Performance 566 7.17 1.92 539
LONG-TERM INCENTIVE PLAN AWARDS GRANTED (PAST FY) PSRUs (75%) and RSUs (25%) PSRUs: 196,722 shares for the CEO and between 74,649 and TARGET PAYOUTS 95,375 shares for each other NEO PSUs: 393,444 shares for the CEO and between 149,298 and MAXIMUM PAYOUTS 190,750 shares for each other NEO RSUs: 65,574 shares for the CEO and between 24,883 and TIME-VESTING PAYOUTS 31,792 shares for each other NEO TSR performance is measured over three years, while free cash flow and EBITDA are evaluated annually over the 3 year period. RSU awards vest over three years. Payouts are capped at 100% of the total target number of PRSUs if the Company's TSR is negative. The peer group for TSR consists of: AngloGold Ashanti Ltd., Agnico Eagle mines Ltd., Goldcorp Inc., Kinross Gold Corporation, Newcrest Mining Ltd., Newmont Mining Corp. and Yamana Gold Inc.
In 2013, the Company eliminated the granting of stock options to NEOs and granted 25% of awards as RSUs and 75% as PRSUs. Going forward, 100% of awards will be performance-based.
Messrs. Munk and Thornton do not have target incentives under the plan. However, Mr. Munk was LONG-TERM granted an award of 71,429 RSUs and Mr. Thornton received a special long-term incentive award of
ABX April 30, 2014 Annual Meeting 13 Glass, Lewis & Co., LLC LONG-TERM granted an award of 71,429 RSUs and Mr. Thornton received a special long-term incentive award of $5.0 million, in cash, to be used to purchase shares. Mr. Thornton's award was based on the same INCENTIVES performance criteria mentioned under the STI plan.
TSR ADJUSTED FREE ADJUSTED CASH FLOW EBITDA Relative Absolute Absolute Weighting 50% 25% 25% 12.5% below Threshold market cap 20% below target 20% below target Performance weighted average METRICS FOR PRSUS Equal to Target market cap N/D N/D Performance weighted average 20% above Maximum market cap 20% above target 20% above target Performance weighted average
Actual N/D N/D N/D Performance
GLASS LEWIS ANALYSIS
This proposal seeks shareholder approval of a non-binding, advisory vote on the Company's executive compensation. Glass Lewis believes firms should fully disclose and explain all aspects of their executives' compensation in such a way that shareholders can comprehend and analyze the company's policies and procedures. In completing our assessment, we consider, among other factors, the appropriateness of performance targets and metrics, how such goals and metrics are used to improve Company performance, the peer group against which the Company believes it is competing, whether incentive schemes encourage prudent risk management and the board's adherence to market best practices. Furthermore, we also emphasize and evaluate the extent to which the Company links executive pay with performance.
STAKEHOLDER ENGAGEMENT
Following the abysmal support from shareholders at last year's annual meeting, the board and compensation committee embarked on a comprehensive review of its approach to executive compensation. An important aspect of that process was shareholder engagement. Over the course of the year, the Company reported that it had engaged with shareholders representing over 30% of the Company's outstanding common shares. In those sessions, the Company sought to solicit opinions on executive compensation and corporate governance practices, and to incorporate those perspectives in the compensation structure redesign. Furthermore, the Company stated during a Glass Lewis Proxy Talk on April 22, 2014 that it was committed to an on-going shareholder engagement process and looks forward to expanding its outreach process with more of its shareholders. OVERALL STRUCTURE : FAIR
2013 Transitional Changes As discussed in the Company's Management Information Circular, the executive compensation structure was in a state of transition during 2013 as the compensation committee prepared to release a new program in 2014 (described in detail below). Specific actions taken during the course of the past year consisted of: (i) implementing a clawback policy for incentive compensation; (ii) increasing the percentage of long-term incentive awards tied to performance from 50% to 75%; (iii) eliminating the grant of stock options to NEOs; and (iv) increasing RSU vesting from 30 months (2.5 years) to 3 years. In addition, the compensation committee exercised its discretion to reduce NEO annual bonuses paid in 2013 by more than 50% in light of the misalignment between the Company's scorecard assessment of Company performance and shareholder experience during 2013. Further, the compensation committee implemented a freeze on NEO base salaries for 2014. While these changes certainly represent positive changes that will better align executive and shareholders' interests, we nonetheless have several concerns with the structure of the Company's compensation programs, as discussed below. Similar Performance Conditions As detailed above, the Company utilized a performance scorecard to assess the Company's performance over the past year with weights of each metric varying from 2% to 15%. We note that adjusted EBITDA and adjusted free cash flow
ABX April 30, 2014 Annual Meeting 14 Glass, Lewis & Co., LLC each had a weight of 10% under the STI, which represented 20% of the overall STI performance criteria, while the same metrics were used under the LTI plan at a weight of 25% each, which amounted to 50% of the LTI payout consideration. Therefore, a portion of the Company's short- and long-term incentive arrangements are based on similar metrics, which allows for a high level of pay-out (or lack thereof) for hitting similar targets. We believe the best compensation policies are based on a variety of performance metrics with appropriate weightings, which better gauge a Company's overall financial health and performance. It remains unclear as to whether the Company has addressed this overlap of performance conditions with its new short- and long-term incentive plans, as specific weightings for short-term goals have not yet been disclosed. As such, we believe the Company should structure its new plans such that short- and long-term awards are not based on substantially similar performance targets. Unchallenging Performance Targets Under the LTI plan, the Company states that performance awards are capped at 100% of the total target if the Company's TSR is negative, even if it exceeds its peers. However, if the Company's TSR remains positive, executives become eligible to receive awards even if the Company's relative metrics are below the 50th percentile of the designated peer group over the performance period. As such, NEOs are rewarded even if the Company underperforms the market. We believe incentive plans should at the very least require performance at the benchmark median before rewarding NEOs. We note that TSR has been eliminated as a performance condition in the Company's 2014 long-term incentive plan. No Clawback Provision in 2013 The Company's incentive plans previously lacked a clawback provision, whereby any bonus awarded may be recouped by the Company in the event of material fraud or misconduct by the recipient of a bonus award. We believe emerging best practice has come to promote the use of clawback provisions to safeguard against the receipt of unwarranted bonuses and to similarly encourage executives and senior management to take a more comprehensive view of the risk when making business decisions. However, we note that the Company discloses in its proxy statement, and reiterated during a Glass Lewis Proxy Talk on April 11, 2014, that it adopted a clawback policy for future incentive compensation in February 2014, which is applicable to the Company's chairman and certain other executive officers. Executive Chairman Compensation As noted in the Company's proxy statement, Messrs. Munk and Thornton do not have target incentives under the annual performance incentive or the long-term incentive plan. Rather, incentive awards are granted based on the compensation committee's assessment of their overall individual performance. During 2013, Mr. Munk received an RSU award valued at approximately $1.4 million based on considerations of his overall leadership, and board and chairman accountabilites. In comparison, Mr. Thornton received a special long-term incentive award valued at $5.0 million in addition to an annual bonus outside of the AIP of $1.25 million. The compensation committee stated that it appropriately awarded Mr. Thornton based on the assessment of his progress in advancing initiatives in three areas: (i) developing strategic alternatives for future growth; (ii) execution of transformational strategy; and (iii) stakeholder engagement. While the compensation committee considers Mr. Thornton's contributions to the Company in determining these awards, in effect, the payouts are discretionary, with no performance formula or pre-established conditions by which to judge performance. We note that each of the Company's other NEOs are subject to maximum payments under incentive plans and are beholden to achievements of quantifiable performance criteria, and that Mr. Thornton's compensation structure, or lack thereof, is highly irregular when compared to executives compensated at a similar level. It is therefore difficult for shareholders to evaluate if the payments are indeed linked to performance, a particular concern given the quantum of compensation awarded to Mr. Thornton. We believe that, going forward, the Company should include Mr. Thornton under its already-existing incentive schemes with clear definitions of maximum potential incentive payouts with awards that are subject to quantifiable and pre-determined performance criteria or, at a minimum, provide greater rationale for not doing so. Compensation Consultant During the past fiscal year, the Company paid its compensation consultant, Towers Watson, $390,048 for executive compensation-related consulting services and $561,241 for all other services. Shareholders should be concerned that the fees paid for non-compensation-related services exceed those paid for compensation-related services. Compensation consultants are engaged to provide objective, disinterested, expert advice to the compensation committee. When the consultants receive substantial income from providing other services to the Company, a conflict of interest arises and the objectivity of the consultant can reasonably be questioned. It is crucial that compensation consultants are not beholden to management due to compensation they received for non-compensation-related work. 2014 Plan Structure As previously mentioned, the Company has spent the last year reviewing compensation programs and soliciting opinions from shareholders in an effort to reconstruct its executive compensation program for 2014. In its Management Information Circular, and as discussed during a Glass Lewis Proxy Talk on April 11, 2014, the Company outlined some of the changes to its compensation program. Specifically, all of the awards granted under the Company's short- and long-term
ABX April 30, 2014 Annual Meeting 15 Glass, Lewis & Co., LLC incentive plans will be based on performance scorecards with quantitative and qualitative metrics. Some of the other highlights and perceived concerns are detailed below. Under the 2014 annual performance incentive plan ("2014 AIP"), the Company has maintained its performance scorecard evaluation, but has tailored the performance objectives applied to each NEO to suit their executive position. Payouts will continue to be subject to a payout calculation, (Base Salary) x (Annual Performance Incentive Maximum) x (Scorecard Performance Weighting), but the performance weighting range has changed from 0% to 200% to 0% to 100%. In connection with such change, the annual performance incentive multiplier of the payout formula has been amended to maximum rather than the former target payout, with the maximum achievable payout set to no more than 300% of base salary, depending on the executive position. If we assume that the Company's CEO would be eligible for the highest payout as a percentage of base salary, we note that target payout under the 2014 AIP would increase from 125% to 150% of base salary and that maximum payouts would increase from 250% to 300% of base salary. Therefore, although base salaries will not increase in 2014, the NEOs eligible payouts at target and maximum are higher under the newly designed short-term incentive plan. The most significant change to the Company's executive compensation can be seen in the Company's new 2014 performance granted share unit plan (the "2014 PGSU plan"). Under the plan, all awards will be subject to performance criteria based on a scorecard rating to generate a performance factor between 0% and 100%. The performance factor will then be multiplied by the NEOs payout as a percentage of base salary, which will range from 1 to 6 times base salary depending on the executive position. Once the payout is determined, NEOs will receive a PGSU grant with a holding period of three years, after which time the NEOs must use the long-term award to purchase shares of the Company's common stock on the open market, and hold such shares until their termination from the Company or retirement. In the case that a participant leaves the Company for employment with a competitor, there will be an additional two-year holding period following the date of termination. We also note that the Company has adopted an anti-hedging and pleging policy, which will ensure that executives remain linked to the performance of all shares purchased through the 2014 PGSU plan for the long-term. Under this very unique long-term plan, executives' interests will certainly be aligned with the interests of shareholders, as they continue to accumulate an interest in the Company throughout the duration of their employment. While we recognize that NEOs will not realize the value of the awards until they leave the Company, we are somewhat concerned with the fact that the 2014 PGSU Plan has (i) a reduced performance period from three-years, utilized under the Company's current long-term incentive plan, to a one year performance assessment; and that (ii) to the best of our knowledge, there is no relative performance metric under the new plan. Moreover, many of the metrics on the LTI scorecard are similar to the metrics proposed under the AIP scorecard. For instance, free cash flow, license to operate and people development are metrics explicitly listed on both scorecards, while other metrics such as capital project performance and strategic execution under the LTI scorecard, which are assessed upon the compensation committee's judgement, have similar characteristics to production, project cost and schedule, growth through resource reserve additions and portfolio management on the AIP scorecard. However, as noted above, the Company has not provided specific weightings for performance targets under the new AIP scorecard, leaving us unable to determine whether there is significant overlap of these targets.
OVERALL DISCLOSURE : FAIR
We note the following concern with the Company's disclosure with regard to its compensation policies and procedures: Performance Goals Not Disclosed The Company has failed to provide a clear description of target goals under the LTI plan. We believe clearly defined performance targets are essential for shareholders to fully understand and evaluate the Company's procedures for quantifying performance into payouts for its executives. Disclosure of Payout Potential We note that the Company has altered its disclosure practices regarding incentive ranges under its long-term incentive plan. Last year, the Company provided information detailing potential payments under the LTI as a percentage of base salary. To the best of our knowledge, the Company has eliminated such disclosure in favor of disclosing threshold, target and maximum payouts in terms of number of shares. Given that the Company had increased the LTI incentive ranges last year, we believe the Company should continue to disclose LTI payments in relation to base salary in order to provide shareholders with a consistent year-over-year range of potential payouts.
2013 PAY FOR PERFORMANCE : D
The Company has been deficient in linking executive pay to corporate performance, as indicated by the "D" grade received by the Company in Glass Lewis' pay-for-performance model. A properly structured pay program should motivate executives to drive corporate performance, thus aligning executive and long-term shareholder interests. In this case, the
ABX April 30, 2014 Annual Meeting 16 Glass, Lewis & Co., LLC Company has not implemented such a program. Furthermore, we note that the Company has had a history of misaligning pay and performance, as indicated by our past Proxy Papers. In our view, shareholders should be deeply concerned with the compensation committee's sustained failure in this area.
CONCLUSION
Shareholders were clearly disappointed with the Company's compensation practices at last year's annual meeting, as evinced by 85% of shares voting against its say-on-pay proposal, the highest vote against ever for a Canadian say-on-pay proposal. The Company was not performing well, had significant turnover and was awarding exorbitant sign-on and severance payments to individuals in the range of $11 million. Following such a controversial and lackluster year, it was of the utmost importance that the Company introduce sufficient change to its executive compensation program to regain the confidence of shareholders. At the onset of the year, the Company engaged with shareholders for perspectives on its compensation program, and through that engagement adjusted its executive compensation for 2013 and developed a new program for 2014. Some of the changes implemented during 2013 included an increase in the percentage of performance-based awards under the long-term incentive plan from 50% to 75%, the elimination of stock option grants, and most notably, a reduction in bonus payouts. Upon assessment of the Company's actual performance, which was determined to be slightly over target based on the Company's annual incentive plan scorecard, negative discretion was applied in order to reduce bonus payments by 50% in an effort to align payouts with shareholders' experience. As indicated by our pay-for-performance analysis, while still lagging, these efforts also helped better align the Company's CEO pay with that of peers. However, our main concern with the Company's compensation program continues to stem from the payments made to its co-chairman, and soon to be named chairman, Mr. Thornton. While there were no grants of the same magnitude as his 2012 award, we note that the Company continued to issue special awards to Mr. Thornton during the year. Specifically, the Company disclosed that Mr. Thornton received a special long-term incentive award valued at $5.0 million. While the corresponding after tax value of more than $2.9 million was required to be used to purchase Company shares that will be subject to a holding period, we note that this payment was not made under any formal plan. Moreover, while Mr. Thornton was not a participant in the Company's annual incentive plan, he still received a bonus payment of $1.25 million, which was based on subjective performance criteria and determined at the discretion of the compensation committee. In aggregate, Mr. Thornton received total compensation of approximately $9.46 million, the highest among the NEOs and 22.2% higher than the total compensation for the Company's CEO. We believe that shareholders' interests would be better served by granting these significant short- and long-term incentive awards under the Company's established performance programs. We believe that shareholders should rightly question the Company's continued practice of granting such large awards that are not demonstrably tied to Company performance. We believe when a Company compensates a co-chairman or chairman at a level commensurate with or above executive officers, that compensation should be subject to the same or very similar performance metrics and goals as the executives. Overall, we recognize that the Company made a concerted effort in 2013 to develop a compensation structure that aligned executive pay to shareholder value and best market practices. For instance, the Company (i) implemented a clawback policy for certain of its NEOs including the chairman, (ii) increased share ownership requirements of executives, (iii) designed a more tailored performance measure for each NEO under the annual incentive plan, and (iv) instituted a base salary freeze for 2014. The highlight of the Company's recent changes, however, were those coordinated under the Company's long-term incentive plan. The newly-introduced plan is based entirely on performance assessed through a scorecard that includes ROIC, dividend payments, free cash flow and other quantitative and qualitative measures of performance to determine award payouts in the form of PGSUs. Once granted, these awards will be subject to a three-year vesting period, the vested value of which must be used to purchase common shares on the open market. As discussed in a Glass Lewis Proxy on April 11, 2014, the impetus behind the new structure was a desire to eliminate the dilution concerns associated with awarding shares upon vesting. In addition, the Company has imposed a very lengthy additional restriction period such that awards can only be paid out upon retirement or termination. Our preliminary reservation with the plan was the performance period, which was reduced from a three- to one-year period, however, we believe this concern is offset by the extended holding requirement, which by its nature embeds long-term value into the structure of NEO grants. In addition, we note that the Company is enhancing its transparency practices by releasing the performance measures to shareholders in advance of award payout assessments. Despite the Company failure to align executive pay with performance, as indicated by our pay-for-performance analysis, we believe the Company has resolved many of the underlying concerns that prompted the low shareholder support and has designed a new compensation structure that will better align pay with performance. Therefore, while we encourage shareholders to monitor the Company's compensation practices over the next year, and specifically awards granted to Mr.
ABX April 30, 2014 Annual Meeting 17 Glass, Lewis & Co., LLC shareholders to monitor the Company's compensation practices over the next year, and specifically awards granted to Mr. Thornton, we believe the recent changes and newly introduced compensation plans warrant shareholder support for the Company's executive compensation program at this time. Accordingly, we recommend that shareholders vote FOR this proposal.
ABX April 30, 2014 Annual Meeting 18 Glass, Lewis & Co., LLC 4.00: ADVANCE NOTICE PROVISION
PROPOSAL REQUEST: Adoption of an advance notice policy RECOMMENDATIONS & CONCERNS: PRIOR YEAR VOTE RESULT: N/A FOR- NO CONCERNS BINDING/ADVISORY: Binding REQUIRED TO APPROVE: Majority of votes cast
PROPOSAL SUMMARY
The advance notice policy will fix a deadline by which holders of common shares must submit director nominations to the Company prior to any annual or special meeting of shareholders and sets forth the information that a shareholder must include in the notice to the Company for the notice to be in proper written form. If approved, the advance notice policy will require that a nominating shareholder's notice to the secretary be made: (a) in the case of an annual meeting, not less than 30 nor more than 65 days prior to the date of the annual meeting of shareholders; provided, however, that in the event that the annual meeting of shareholders is to be held on a date that is less than 50 days after the date on which the first public announcement of the date of the annual meeting was made, notice by the nominating shareholder is to be made not later than the close of the 10th business day after the notice date in respect of such meeting; and (b) in the case of a special meeting (which is not also an annual meeting) called for the purpose of electing directors, not later than the close of business on the 15th day following the day on which the date of the special meeting is first announced. Additionally, to be in proper written form, a nominating shareholder's notice to the secretary of the Company must set forth: (a) as to each person to be nominated for election as a director: (i) the name, age, business address and residential address of the person; (ii) the principal occupation or employment of the person; (iii) the class or series and number of shares in the capital of the Company which are controlled or which are owned beneficially or of record by the person; and (iv) any other information relating to the person that would be required to be disclosed in a dissident’s proxy circular in connection with solicitations of proxies for election of directors pursuant to the applicable securities laws; and (b) as to the nominating shareholder giving the notice, any proxy, contract, arrangement, understanding or relationship pursuant to which such nominating shareholder has a right to vote any shares of the Company and any other information relating to such nominating shareholder that would be required to be made in a dissident’s proxy circular in connection with solicitations of proxies for election of directors pursuant to the applicable securities laws. The chairman of the meeting shall have the power and duty to determine whether a nomination was made in accordance with the procedures set forth in the foregoing provisions and, if any proposed nomination is not in compliance with such provisions, to declare that such defective nomination shall be disregarded.
GLASS LEWIS ANALYSIS
Under Canadian securities' law a dissenting shareholder is only required to prepare a circular if they contact more than 15 other shareholders prior to the shareholders' meeting. As such, a small group of significant shareholders could potentially submit a new slate of directors to replace a company's current board without the prior release of information regarding this new slate of directors. In such situations, a small group of shareholders may effectively take control of a company's board without paying any premium for such control and without issuing a dissident proxy circular, thereby prohibiting other shareholders (if voting by proxy) from evaluating and voting on any directors nominated by the dissident shareholder. While the use of this form of shareholder action, often referred to as a stealth proxy fight, remains relatively uncommon in practice, a few recent instances of such action have illustrated the potentially negative impact that a stealth proxy fight can have. In this case, we consider the proposed advanced notice policy to be reasonable, and recognize that the implementation of such policy would allow all shareholders to evaluate and vote on any directors nominated for election at the Company's annual meeting. Accordingly, we recommend that shareholders vote FOR this proposal.
ABX April 30, 2014 Annual Meeting 19 Glass, Lewis & Co., LLC VOTING RESULTS FROM LAST ANNUAL MEETING (APRIL 24, 2013)
NO. PROPOSAL FOR AGAINST/WITHHELD GLC REC 1.01 Elect Howard L. Beck 90.90% 9.10% For 1.02 Elect Charles W. D. Birchall 76.70% 23.30% Withhold 1.03 Elect Donald J. Carty 89.90% 10.10% For 1.04 Elect Gustavo A. Cisneros 73.10% 26.90% For 1.05 Elect Robert M. Franklin 92.60% 7.40% For 1.06 Elect J. Brett Harvey 72.10% 27.90% For 1.07 Elect Dambisa Moyo 91.80% 8.20% For 1.08 Elect Brian Mulroney 76.20% 23.80% Withhold 1.09 Elect Anthony Munk 76.00% 24.00% Withhold 1.10 Elect Peter Munk 82.50% 17.50% For 1.11 Elect Steven J. Shapiro 72.50% 27.50% For 1.12 Elect Jamie C. Sokalsky 88.30% 11.70% For 1.13 Elect John L. Thornton 83.70% 16.30% For 2.00 Appointment of Auditor and Authority to Set Fees 97.10% 2.90% For 3.00 Advisory Vote on Executive Compensation 14.80% 85.20% Against
ABX April 30, 2014 Annual Meeting 20 Glass, Lewis & Co., LLC APPENDIX
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DISCLOSURES
Glass, Lewis & Co., LLC is not a registered investment advisor. As a result, the proxy research and vote recommendations included in this report should not be construed as investment advice or as any solicitation, offer, or recommendation to buy or sell any of the securities referred to herein. All information contained in this report is impersonal and is not tailored to the investment strategy of any specific person. Moreover, the content of this report is based on publicly available information and on sources believed to be accurate and reliable. However, no representations or warranties, expressed or implied, are made as to the accuracy, completeness, or usefulness of any such content. Glass Lewis is not responsible for any actions taken or not taken on the basis of this information.
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LEAD ANALYSTS
Governance & Compensation: Alicia Ritcey Compensation: Jonathan Hansen-Granger
ABX April 30, 2014 Annual Meeting 21 Glass, Lewis & Co., LLC EQUILAR PEERS VS PEERS DISCLOSED BY COMPANY
EQUILAR ABX Teck Resources Limited* BHP Billiton Limited Newmont Mining Corporation* Rio Tinto plc Goldcorp Inc.* Gold Fields Ltd. Kinross Gold Corporation* Anglo American plc Freeport-McMoRan Copper & Gold Inc.* AngloGold Ashanti Ltd. Cameco Corporation* Potash Corp. of Saskatchewan, Inc. Yamana Gold, Inc. Agnico Eagle Mines Limited Peabody Energy Corp. Agrium Inc. Golden Minerals Company Cliffs Natural Resources Inc. Pacific Rubiales Energy Corp. Finning International Inc. *ALSO DISCLOSED BY ABX
ABX April 30, 2014 Annual Meeting 22 Glass, Lewis & Co., LLC