Compensation Discussion & Analysis

The Board recommends a vote FOR approval of the advisory vote on executive compensation.

Compensation at Barrick rewards execution on our overarching vision: creating wealth for our owners and the communities and countries with which we partner. In keeping with our partnership culture, we have created a compensation system in consultation with our shareholders that is designed to drive deep emotional and financial ownership among our Executive Chairman and Named Partners, now and over the long-term. This has helped reinvigorate the partnership culture that drove Barrick’s early success. Our leaders are not merely aligned with owners – they are owners.

Key highlights of our compensation system:

  • ✓ A significant portion of executive compensation is long-term in nature, in the form of units that convert into Common Shares.
  • ✓ Leaders must hold these shares as long as they remain with the Company, far exceeding the holding requirements of our peers and the broader market.
  • ✓ Performance is evaluated based on short-term and long-term measures chosen to drive the highest levels of performance and execution, and disclosed to our shareholders in advance of each year.
  • ✓ We aim to attract, retain, and motivate exceptional talent.

This section provides an overview of our approach to compensation for our NEOs, the compensation decisions that we made based on performance, as well as the processes and safeguards we have in place to ensure that our compensation programs do not encourage unnecessary and excessive risk-taking.

2017 Named Executive Officers

The following individuals are referred to in this Compensation Discussion & Analysis as the NEOs:

John L. Thornton Executive Chairman
Kelvin P.M. Dushnisky President
Kevin J. Thomson Senior Executive Vice President, Strategic Matters
Catherine P. Raw Executive Vice President and Chief Financial Officer
Mark F. Hill Chief Investment Officer

Summary Compensation Table

The table below summarizes the compensation of our NEOs for the three financial years ended December 31, 2017(1). Our NEOs are our Executive Chairman; President; Senior Executive Vice President, Strategic Matters; Executive Vice President and Chief Financial Officer; and Chief Investment Officer. The key factors necessary to understand the compensation summarized in the following table are described under Compensation Discussion & Analysis and in the footnotes to this table.

  1. All compensation is paid in Canadian dollars and reported in U.S. dollars, except for compensation paid to Mr. Thornton which is paid and reported in U.S. dollars. The rate of exchange used to convert Canadian dollars to U.S. dollars is 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: 2017 – 1.2986; 2016 – 1.3248; and 2015 – 1.2787.
  2. The figures shown reflect the grant date fair value of PGSUs and RSUs approved by the Compensation Committee for the specified fiscal years. PGSUs granted on February 13, 2018 were converted from Canadian dollars to U.S. dollars at the Bank of Canada daily average rate of exchange: i.e., February 12, 2018: 1.2603. PGSUs granted on February 14, 2017 were converted from Canadian dollars to U.S. dollars at the Bank of Canada closing rate of exchange on the first trading day following the expiration of the Blackout Period: i.e., February 21, 2017: 1.3138. PGSUs granted on February 16, 2016 were converted from Canadian dollars to U.S. dollars at the Bank of Canada closing rate of exchange on the first trading day following the expiration of the Blackout Period: i.e., February 22, 2016: 1.3712. For RSUs granted October 24, 2017, the exchange rate used was the Bank of Canada daily average rate of exchange on the last trading day preceding the date of grant: i.e., October 23, 2017: 1.2644. For RSUs granted October 25, 2016, the exchange rate used was the Bank of Canada closing rate of exchange on the last trading day preceding the date of grant: i.e., October 24, 2016: 1.3386. For RSUs granted August 4, 2015, the exchange rate used was the Bank of Canada closing rate of exchange on the last trading day preceding the date of grant: i.e., July 31, 2015: 1.3080. Grant date fair value is determined by multiplying the number of PGSUs or RSUs by the closing share price of our Common Shares on the TSX on the day preceding the grant date, or for PGSUs only, if the grant date occurs during a Blackout Period, the number of PGSUs is determined by the greater of the closing share price of our Common Shares on the TSX on the first trading day following the expiration of the Blackout Period or the date preceding the grant date. These compensation fair values are the same as those used for accounting purposes. The following table summarizes the PGSUs and RSUs granted to the NEOs for the last three fiscal years.
    Grants of Share-Based Awards (2015 – 2017)PGSUs vest 33 months from the date of grant and the after-tax value of PGSUs is used to purchase Common Shares in the open market, which Common Shares are subject to restrictions on sale. PGSUs are further described in 2017 Compensation of our Named Partners – Performance Granted Share Units (PGSUs). The 2015 RSUs granted to Ms. Raw as part of her hiring package vest and become payable 33 months from the date of grant. Upon vesting, the post-tax value will be used to purchase Common Shares that are required to be held for the greater of three years and until she retires or leaves the Company. The 2016 and 2017 RSUs granted to Mr. Hill has part of his hiring package vest and become payable 33 months from the date of grant. Upon vesting, the post-tax value will be used to purchase Common Shares that are required to be held until he retires or leaves the Company. For Ms. Raw and Mr. Hill, additional RSUs are credited to reflect dividends paid on our Common Shares. The RSUs are further described in Schedule D of this Circular.
  3. We have ceased granting stock options to executives to further underscore long-term ownership as the basis of our long-term incentive awards.
  4. The amounts shown reflect long-term incentive awards or the portion of API or STI awards that were paid to executives on the condition that they use the award to purchase After Tax Shares which 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 retires or leaves the Company, as applicable. Additional restrictions may apply. The requirement to use all or a part of the API award to purchase our Common Shares is determined annually at the discretion of the Compensation Committee. Long-term incentives included in this column reflect those that are awarded pursuant to the Executive Chairman LTI Arrangement, as described in 2017 Compensation of Named Executive Officers – 2017 Compensation of the Executive Chairman.
  5. The figures shown represent employer contributions pursuant to the Executive Retirement Plan for compensation (earned in 2017). Employer contributions to the Executive Retirement Plan with respect to the API award earned for the year ended December 31, 2017 are made in March of the following year. No above-market or preferential earnings are credited on any contributions. Executive Retirement Plan values are denominated in Canadian dollars and are converted to U.S. dollars using the annual average exchange rate reported by the Bank of Canada for each respective year, except the contributions made for Mr. Thornton which are made and reported in U.S. dollars. See Executive Retirement Plans  for further details.
  6. The amounts disclosed in All Other Compensation represent the dollar value of various benefit plan costs and insurance premiums paid by the Company on behalf of the respective NEO; taxable allowances and/or reimbursements for certain benefits and perquisites made available to our NEOs, such as a leased vehicle or car allowance, financial counselling or tax preparation services, parking, executive medical benefits, scholarships for dependent children, ground and air transport, and other compensation not reported in any other column of the Summary Compensation Table, such as cash-based on-hire awards, as applicable. The benefits and perquisites for each NEO are denominated in U.S. dollars using the Bank of Canada annual average exchange rates for each applicable year. In 2017, Messrs. Thornton and Dushnisky and Ms. Raw received benefits and perquisites in excess of Cdn $50,000. Except for air transport, executive long-term disability and life insurance premiums, and car allowances, only Ms. Raw received financial counseling and tax preparation services which represent more than 25% of the total value of benefits and perquisites reportable for her. These financial counselling and tax preparation services were sought in relation to her relocation from London, United Kingdom to Toronto, Canada. 2017 perquisite details are as follows:
    • Mr. Thornton received $484,478 in benefits and perquisites, including life insurance, accidental death and dismemberment (AD&D) coverage, executive disability premiums of $136,756, and personal use of our corporate aircraft for commuting purposes. The incremental cost to Barrick for Mr. Thornton’s personal use of the Barrick aircraft for commuting trips to and from our Toronto head office in 2017 was $284,507. In determining this incremental cost, Barrick calculates the direct variable operating costs for our aircraft, including aircraft fuel, ground and landing fees, crew travel expenses, catering and incremental costs associated with any “deadhead” legs. Since our aircraft is used predominantly for business travel, Barrick does not include fixed costs unaffected by usage, such as annual crew salaries, aircraft acquisition costs, hangar fees, maintenance costs, and insurance. The aggregate incremental cost for personal commuting is determined by multiplying the variable operating cost per hour by the number of hours the aircraft is used for commuting trips. Barrick does not bear any incremental costs associated with non-Barrick related business travel or personal travel (other than commuting trips to and from the Toronto head office) as these amounts are reimbursed by Mr. Thornton.
    • Mr. Dushnisky received $82,752 in benefits and perquisites, including life insurance, AD&D coverage, and executive disability insurance premiums of $46,404 and a car benefit of $21,174.
    • Mr. Thomson received $35,263 in benefits and perquisites, including life insurance, AD&D coverage, and executive disability insurance premiums of $9,858 and a car allowance of $15,402.
    • Ms. Raw received $45,103 in benefits and perquisites, including financial counselling and tax preparation services that amounted to $19,616 and a car allowance of $15,402.
    • Mr. Hill received $36,795 in benefits and perquisites, including life insurance, AD&D coverage, and executive disability insurance premiums of $12,425 and a car allowance of $15,402.
  7. Mr. Thornton was appointed Co-Chairman of the Board effective June 5, 2012 and was appointed Executive Chairman effective April 30, 2014. For 2015 compensation, the Executive Chairman elected to forfeit all earned incentive compensation ($3.4 million) in order to better reflect the experience of our shareholders in 2015. For 2016, Mr. Thornton received an LTI award equal to $5,320,000, conditional upon a significant majority of the after-tax value being used to purchase Common Shares on the open market that cannot be sold until the later of (a) the date Mr. Thornton retires or leaves the Company, and (b) three years following the date of purchase. Mr. Thornton used 68% of the 2016 after-tax cash award of $2,089,524 to purchase 109,898 After-Tax Shares on March 16, 2017. Mr. Thornton received incentive awards in recognition of his exceptional achievements against the initiatives that we set out for him in our 2016 information circular, his contributions to Barrick’s strong ROCE performance of 8.7%, and Barrick’s TSR outperformance over the past one year and three years. For 2017, Mr. Thornton received an LTI award equal to $4,341,000, conditional upon a significant majority of the after-tax value being used to purchase Common Shares on the open market that cannot be sold until the later of (a) the date Mr. Thornton retires or leaves the Company, and (b) three years following the date of purchase. Mr. Thornton used 61% of the 2017 after-tax cash award of $2,617,869 to purchase 136,636 After-Tax Shares on March 8, 2018. Mr. Thornton received incentive awards in recognition of his contributions to Barrick’s 2017 strategic priorities based on the initiatives we set out for him in our 2017 information circular, strong ROCE performance of 9.4%, and Barrick’s TSR performance over the past one year and three years. Please see Assessment of the Executive Chairman’s 2017 Performance for a detailed assessment of the Executive Chairman’s 2017 performance.
  8. Mr. Dushnisky was appointed Co-President on July 16, 2014 and President on August 17, 2015.
  9. Mr. Thomson was appointed Senior Executive Vice President, Strategic Matters on October 14, 2014.
  10. Ms. Raw was appointed Executive Vice President, Business Performance on May 1, 2015 and was appointed Executive Vice President and Chief Financial Officer on April 26, 2016. Ms. Raw’s compensation for 2015 as reflected in the Summary Compensation Table includes a sign-on cash bonus (Cdn $1,500,000) and a special long-term incentive award (Cdn $750,000) that was granted for the purpose of purchasing our Common Shares on the open market. These Common Shares are subject to a holding period and may not be sold until the later of: (a) the date Ms. Raw retires or leaves the Company and (b) three years following the date of purchase. The sign-on cash bonus and special long-term incentive award are reflected in All Other Compensation for 2015. Ms. Raw was also granted LTI on August 4, 2015 (Cdn $750,000 in RSUs) in consideration of the long-term entitlements she was forfeiting from her previous employer. Her 2015 base salary was also prorated to reflect her start date of May 1, 2015. From May 1, 2015 until January 4, 2016, Ms. Raw worked remotely from London, United Kingdom. In February 2016, Ms. Raw moved to Toronto, Canada and was eligible for relocation benefits ($81,547) provided under our international relocation program which are valued at the price to the Company for providing these services. The relocation benefits and a car allowance ($25,160) are included in All Other Compensation for 2016.
  11. Mr. Hill was appointed Chief Investment Officer on September 12, 2016. Mr. Hill’s compensation for 2016 as reflected in the Summary Compensation Table includes a sign-on cash bonus (Cdn $400,000), which is reflected in All Other Compensation for 2016. Mr. Hill was awarded a short-term incentive award (Cdn $500,000) in the form of cash used to purchase our Common Shares on the open market. These Common Shares are subject to a holding period and may not be sold until the later of: (a) the date Mr. Hill retires or leaves the Company and (b) three years following the date of purchase. The STI award is reflected in the Non-Equity Incentive Plan – Long-Term Incentive Plans column. Mr. Hill was also granted LTI in two tranches on October 25, 2016 and October 24, 2017 (Cdn $1,000,000 in RSUs per tranche) in consideration of the long-term entitlements he was forfeiting from his previous employer. Upon vesting, the After-Tax Shares are subject to a holding period and may not be sold until the date Mr. Hill retires or leaves the Company. His 2016 base salary was also prorated to reflect his start date of September 12, 2016.