March 16, 2018
Dear Fellow Shareholders,
As your Board’s Lead Director, I would like to share with you some of the best-in-class principles and practices that underpin our governance approach, and to review compensation results for 2017.
We work to improve our governance practices on a continuous basis and have done so recently in a number of ways:
- For the second year in a row, independent directors met with Barrick shareholders representing 19% of the Company’s shares, without management or the Executive Chairman present.
- We have added an annual Sustainability Day to our ongoing investor engagement activities.
- We make it possible for you to contact me or our Executive Chairman directly.
- We signed, and fully support, the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures. We include information regarding our climate strategy in our annual financial filings.
- We are a member of Canada’s 30% Club and are seeking more diverse candidates for our Board.
- We are further strengthening the diversity of our Board and its capabilities with the nomination of two new independent directors: Patricia Hatter, an experienced leader in technology and digital transformation, and María Ignacia Benítez, who brings an intimate understanding of the Chilean political, legal, environmental, and regulatory system.
- Our Risk Committee receives regular updates on all aspects of the Company’s cybersecurity strategy.
Determining executive compensation is one of our most important governance functions. At the heart of our partnership culture is the belief that leaders must be owners. The goal of our compensation system is to drive the highest possible emotional and financial ownership among the Company’s senior executives, now and over the long-term, while linking compensation to the Company’s performance and the experience of our shareholders. A significant portion of our leaders’ compensation is in the form of Barrick shares that cannot be sold until they retire or leave the Company.
In keeping with our commitment to transparency, we use pre-disclosed targets to assess our leaders’ performance. To determine the 2017 incentive compensation for the Executive Chairman, we applied the Performance and Compensation Framework that we disclosed in our 2017 Circular. We considered the Executive Chairman’s strong leadership and execution against the initiatives that we set out for him at the beginning of the year; a return on capital employed (ROCE) of 9.4%, which is within our long-term range of 7% to 12%; the challenging shareholder experience in 2017 relative to 2016; and the setbacks that Barrick experienced during the year at Acacia Mining plc and the Veladero mine. On the basis of these considerations, the Executive Chairman received total incentive compensation of $4.3 million and total compensation of $7.7 million, representing reductions of 18% and 9.4% from 2016, respectively. The Board once again acknowledges the Executive Chairman’s continued commitment to deep, long-term ownership in the Company. He now holds more than 2.7 million Barrick shares, more than 13 times his base salary.
For 2017, the Compensation Committee gave Barrick’s management leaders a collective grade of 40 out of 100, as measured against our long-term scorecard. Our Named Partners received an average score of 64 out of 100 on their personal scorecards, which are tailored to their individual responsibilities. To better align total compensation with the shareholder experience in 2017, and in recognition of the setbacks that Barrick experienced in 2017, including at Acacia, the President’s total compensation was reduced by 19% compared to 2016.
We also disclose voting results for each of our directors. We hold ourselves to the same standards of responsibility and accountability as our management leaders.
While Barrick has made progress over the past year, we believe in continually setting the bar higher and clearing it. It is incumbent on me and the other members of the Board to ensure that the Company’s leaders do not relent in their pursuit of Barrick’s over-arching objective: creating sustainable long-term value per share for you, our fellow owners.
Lead Director and Chair of the Compensation Committee on behalf of the Barrick Board of Directors and the Compensation Committee