2017 Compensation of the Executive Chairman

At our 2015 annual meeting, we committed to developing a formal compensation plan for our Executive Chairman that links his LTI award to measurable performance criteria along with the shareholder experience. In 2016, the Compensation Committee consulted extensively with shareholders to review the Executive Chairman’s compensation approach and structure. The scope of this review included the performance basis underpinning compensation, his total compensation opportunity relative to Barrick’s peers, as well as traditional and innovative performance-based compensation models employed by other companies. Based on this review, the Compensation Committee sought to develop an approach that: (a) appropriately rewards the Executive Chairman for his contributions in support of our value creation priorities; (b) ties his LTI to the experience of our shareholders; and (c) reflects our performance-based and ownership-centric compensation philosophy.

Balancing these priorities, in 2016, the Board of Directors approved, on the recommendation of the Compensation Committee, a unique four-step performance and compensation framework for our Executive Chairman.

Application of the Four-Step Performance and Compensation Framework

We applied our framework for the 2017 performance year, and the results of our assessment are further described in Assessment of the Executive Chairman’s 2017 Performance.

Step 1: Review and set total compensation range

To set a total compensation range for our Executive Chairman, the Compensation Committee, in consultation with its independent compensation consultant Pay Governance, reviewed median and 75th percentile global top executive pay from our Mining Peer Group and the broader market, including companies with an Executive Chairman role. The Compensation Committee considered several factors to set this total compensation range, including the roles and responsibilities of the Executive Chairman, the value of his individual contributions and benchmarking data as described in Compensation Governance and Oversight – Compensation Benchmarking and Peer Group, and internal pay relativity, without placing specific emphasis on any one factor. The total compensation range is reviewed and set annually, and serves as a guideline for the Compensation Committee.

For 2017, the Compensation Committee approved a total compensation range of $3 to $9 million for the Executive Chairman. Actual total compensation awarded can vary within this range based on company and individual performance. Total compensation in excess of this range will only be considered, on an exceptional basis, for superior absolute and peer relative TSR outperformance. The Executive Chairman’s LTI range (2017: up to $5.5 million) equals the total compensation range, less base salary, pension, and other benefits and perquisites (totaling approximately $3.36 million).

Step 2: Evaluate performance within framework

Our refined framework assesses the Executive Chairman’s performance based on strategic and financial goals that are pre-determined and measurable. We disclose these goals in advance to our shareholders each year.

  • Strategic Goals (50%): Strategic goals for the Executive Chairman include annual initiatives comprised of specific and concrete objectives that support the achievement of Barrick’s strategic goals, which are designed to create long-term value for our shareholders. Progress against these initiatives is assessed by the Corporate Governance & Nominating Committee, in consultation with the Lead Director, for the most recently completed financial year. The Compensation Committee considers the results of this assessment in the process of determining the Executive Chairman’s LTI award. Please see the Assessment of the Executive Chairman’s 2017 Performance and his 2018 Annual Initiatives for Our Executive Chairman.
  • Financial Goal (50%): The Compensation Committee determined that ROCE is the most comprehensive reflection of the Executive Chairman’s strategic oversight role. ROCE measures the return generated by all sources of capital funding for Barrick’s pipeline and portfolio, including capital allocated for our operating mines and non-operating exploration and growth projects. It is broader than the ROIC measure used for our Named Partners, which deliberately focuses on returns generated from capital invested in the Company’s existing operating mines.

    The hurdle rate of return for the Executive Chairman to be considered for this portion of his LTI award is 7%. This hurdle rate is stress-tested each year to ensure that it is an appropriate stretch goal. It takes into consideration Barrick’s cost of capital and is based on the Committee’s view that the Executive Chairman should be rewarded for the oversight of Barrick’s pipeline and portfolio, as well as for the delivery of exceptional returns over the long-term. At the end of each year, the Compensation Committee considers the actual ROCE result relative to the hurdle rate, and the progress that has been made in strengthening Barrick’s pipeline and portfolio, in accordance with the strategic priorities set by the Board. Our ROCE result and assessment considerations are disclosed to shareholders each year.

The Executive Chairman’s LTI award is determined based on the Compensation Committee’s review of his progress against strategic initiatives and the ROCE achieved each year, relative to the LTI range for that year. No LTI award is guaranteed.

  1. ROCE is an internal performance measure used to manage performance. ROCE measures return on capital employed by taking Adjusted EBIT (Adjusted EBITDA less depreciation) and dividing by Average Capital Employed. Capital Employed is defined as total consolidated assets, as represented on the company’s reported balance sheet. Adjusted EBIT and Adjusted EBITDA are non-GAAP financial measures with no standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other companies. For further details regarding non-GAAP financial performance measures, please see Other Information – Use of Non-GAAP Financial Performance Measures.

STEP 3: Review and recommend compensation in the context of the overall shareholder experience, for approval by the Board of Directors

Our refined framework ensures that the Executive Chairman’s total compensation reflects the overall shareholder experience. The Compensation Committee may, in its discretion, positively or negatively modify the LTI award for the Executive Chairman, based on its review of Barrick’s TSR on an absolute basis and relative to our Mining Peer Group, sector peers, and other broad market indices. Absolute and relative TSR will be considered over a one to three year performance period and total compensation in excess of the total compensation range will only be considered, on an exceptional basis, for superior TSR outperformance. The final decision and rationale is disclosed to our shareholders each year. The Executive Chairman’s compensation is approved by the independent directors of the Board on the recommendation of the Compensation Committee.

STEP 4: Award a significant majority of the Executive Chairman’s LTI in “After-Tax Shares” that are subject to market leading holding requirements and clawback

The Executive Chairman’s compensation is structured to maintain a strong focus on creating sustainable, long-term shareholder value. A significant majority of the after-tax value of the Executive Chairman’s LTI award is used to purchase After-Tax Shares. These After-Tax Shares cannot be sold or otherwise disposed of until the later of: (a) the date the Executive Chairman retires or leaves the Company, and (b) three years from the date of purchase. Holding restrictions will continue to apply to all shares awarded to our Executive Chairman as LTI, even though our Executive Chairman has already exceeded his share ownership requirement. These holding requirements far exceed the long-term compensation holding requirements of our peers. In our view, these long-term holding requirements, combined with our Executive Chairman’s already significant share ownership position, provide him with significant motivation to create value for our fellow owners, now and over the long-term.

Our Executive Chairman’s incentive compensation is subject to forfeiture under Barrick’s robust clawback policy, which goes beyond the yet-to-be implemented provisions of the U.S. Dodd-Frank Act, as described under Managing Compensation Risks – Enhanced Clawback Policy.

2018 Annual Initiatives for our Executive Chairman

In consultation with the Lead Director, the Executive Chairman has defined a series of specific and concrete initiatives for 2018. On the recommendations of the Corporate Governance & Nominating Committee and the Compensation Committee, the Board has approved these initiatives. The Executive Chairman’s performance against these initiatives will be evaluated by the Corporate Governance & Nominating Committee, in consultation with the Lead Director.

The 2018 initiatives include: (a) provide leadership and oversight for the effective functioning of the Board of Directors, paying particular attention to size and composition; (b) drive Board oversight of talent and succession planning, including advancing our partnership and ownership culture through a decentralized model; (c) enforce financial rigor and prudence, as evidenced by discerning portfolio management, disciplined capital allocation and investments, and a stronger balance sheet;
(d) reinforce and drive the focus on growing free cash flow per share over the long-term through operational excellence – focusing on the fundamentals and superior execution; (e) drive the development of a long-term growth plan; (f) advance the resolution of outstanding issues with governments and complex projects; and (g) build and manage stakeholder relationships and strategic alliances, including and especially with China.

Throughout the year, the Board may also request the Executive Chairman’s direct involvement in significant and consequential matters as needed.

Assessment of the Executive Chairman’s 2017 Performance

Employee Photo

The Compensation Committee applied the Performance and Compensation Framework to determine the Executive Chairman’s 2017 incentive compensation award. Based on this framework, the Executive Chairman’s performance was evaluated against the initiatives that we set out for him in our 2017 information circular, recommended by the Corporate Governance & Nominating Committee in consultation with the Lead Director and the Compensation Committee. In 2017, Mr. Thornton provided strong leadership to the Board and the Executive Committee to drive the execution and delivery of our 2017 priorities. Barrick achieved a ROCE of 9.4%, which is comfortably within the long-term range of 7% to 12% contemplated by our Performance and Compensation Framework, and reflects the high quality of the Company’s asset portfolio. Under the Executive Chairman’s leadership, the Company made progress on a number of key strategic objectives, exceeding its debt reduction target for 2017 and establishing a strategic partnership with Shandong Gold with the potential to create substantial long-term value. At the same time, the Company experienced setbacks at the Veladero mine in Argentina and at Acacia. The Compensation Committee also recognized the challenging shareholder experience in 2017 relative to 2016. The Compensation Committee therefore recommended a reduction in the Executive Chairman’s incentive compensation to the independent directors of the Board for approval. An incentive compensation award of $4.341 million, which represents an 18% reduction compared to 2016, was approved by the independent directors.


2017 Compensation of our Named Partners

Our Named Partners participate in Barrick’s Partnership Plan, which provides eligibility for the API Program, the PGSU Plan, and the Change in Control Plan. Reflecting a deep commitment to long-term ownership at the heart of our partnership culture, our Named Partners are also subject to industry-leading share ownership requirements.

Base Salary

Base salaries are determined based on the scope of individual responsibilities, skills, and performance. The Compensation Committee annually reviews the base salaries of our Named Partners to ensure they remain competitive. Effective March 1, 2018, the base salaries of our Executive Vice President and Chief Financial Officer, and the Chief Investment Officer were increased to Cdn $900,000. These salary increases were determined based on a competitive compensation assessment and are commensurate with their respective roles and responsibilities. The Compensation Committee determined that the base salaries for our other Named Partners are competitively aligned with the Mining Peer Group and will remain unchanged from 2017 to 2018.

Annual Performance Incentive Program

The API Program is a key component of our Partnership Plan. Named Partners are awarded API based on their achievement of the annual initiatives and goals included in their Annual Performance Incentive scorecards (API Scorecards). API Scorecards are developed each year in consultation with the Executive Chairman and the Lead Director. The performance of our Named Partners is holistically evaluated by the Executive Chairman, with input from the Lead Director, based on their accomplishments against their API Scorecards. Each scorecard is assigned a rating from 0% (minimum) to 100% (maximum), which is multiplied by the API opportunity for each of our Named Partners to determine payouts. Maximum API awards of 300% of salary will only be made in cases of demonstrably superior performance across all scorecard categories.

2018 Annual Performance Incentive Scorecards

The table below summarizes our 2018 strategic priorities of the Named Partners in 2017. The strategic priorities underpin the annual initiatives and goals developed for our 2018 API Scorecards. Each year, API Scorecards are customized by role for our Executive Committee, including our President; Senior Executive Vice President, Strategic Matters; Executive Vice President and Chief Financial Officer; and Chief Investment Officer. The 2018 priorities are weighted in each API Scorecard to reflect individual scope of accountability. Individual performance against each of our 2018 priorities will be assessed at the end of the year and disclosed for our 2018 Named Partners in our 2019 information circular.

  1. Free cash flow is a non-GAAP financial performance measure with no standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other companies. For further details regarding non-GAAP financial performance measures, please see Other Information – Use of Non-GAAP Financial Performance Measures.

API decisions are made by the Compensation Committee in February after the end of each year, once audited financial statements are approved by the Board. API payouts are generally delivered in cash, unless otherwise determined by the Compensation Committee. The payout formula is intended as a guideline, and the Compensation Committee has the discretion to approve and/or recommend to the Board a different payout from the value determined by the API Scorecards. The Compensation Committee also reserves the right to make adjustments to the performance measures in each API Scorecard to reflect significant one-time items which occur during the measurement period. Any such adjustments will be fully disclosed in our information circular each year.

See 2017 Performance Considerations for Named Partners for detailed pay and performance highlights for our Named Partners.

Performance Granted Share Units (PGSUs)

The cornerstone of our Partnership Plan is the innovative PGSU Plan, which is designed to ensure that our Named Partners and other Partnership Plan participants are financially and emotionally invested in Barrick’s long-term success. Named Partners receive 100% of their LTI in the form of PGSUs, which are share-based units that convert into Common Shares following a vesting period of 33 months. PGSUs, even after they convert to Common Shares, cannot be sold until a Named Partner retires or leaves the Company. Our emphasis on long-term ownership for our executives and all of our other partners means that our leaders invest a significant portion of their earned compensation in Common Shares which they cannot sell until they retire or leave the Company. Over time, this investment in Common Shares will represent a meaningful part of their wealth. The value of those shares is less than their face value because of the long-term, illiquid nature of the investment, which is not reflected in the compensation tables.

Each year, PGSUs are awarded based on the Compensation Committee’s assessment of the Company’s performance against the financial and non-financial metrics included in our Long-Term Company Scorecard. These metrics were carefully selected in consultation with our shareholders to drive long-term shareholder value. The dollar value of PGSUs granted to each of our partners is determined based on the result of the Long-Term Company Scorecard (ranging from 0% to 100%), multiplied by each partner’s LTI opportunity (capped at 100% to 600% of salary, which varies based on role). The number of PGSUs granted is determined by taking the dollar value of the PGSUs granted, divided by the closing share price of our Common Shares on the date prior to grant or, if the grant date occurs during a Blackout Period, the closing share price of the first trading day after the Blackout Period, whichever is greater (as defined in the PGSU Plan). The payout formula is intended as a guideline, and the Compensation Committee has the discretion to approve and/or recommend to the Board that a Named Partner receive a different payout from the value determined by the Long-Term Company Scorecard. Maximum LTI awards will only be granted in cases of sustained long-term superior performance across all scorecard categories.

Illustrative Life Cycle of a PGSU Award

The following diagram illustrates the life cycle of a PGSU award, from grant to payout, following termination of employment or retirement.

The key characteristics of the PGSU Plan are included in Schedule C of our Circular. Refer to 2017 Long-Term Company Scorecard for the results of the 2017 Long-Term Company Scorecard and below for prospective disclosure of the 2018 Long-Term Company Scorecard.

2018 Long-Term Company Scorecard

The Long-Term Company Scorecard set out below includes the Company performance measures and weightings that will be used by the Compensation Committee to determine the 2018 PGSU awards, as well as a description of why each performance measure is important to Barrick. The Board’s assessment will focus on the past year’s performance as well as the trend in performance over the last three years (i.e., the past year and the two preceding years). The financial and non-financial scorecard measures have been carefully considered, with extensive shareholder input, to ensure alignment with our long-term strategy.

  1. ROIC is an internal performance measure used to manage performance. ROIC measures return on invested capital by taking Adjusted EBIT (Adjusted EBITDA less depreciation) less cash taxes as disclosed in the consolidated statements of cash flow and removing the impact of foreign currency translation gains/losses as disclosed in the consolidated income statements and dividing by average invested capital. Invested capital is calculated by taking consolidated assets as reported on our balance sheet net of assets not subject to depreciation as reported in Note 19 Property, plant and equipment of the financial statements in our 2017 Annual Report. Adjusted EBIT and Adjusted EBITDA are non-GAAP financial measures with no standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other companies. For further information and a detailed reconciliation of these non-GAAP measures to the most directly comparable IFRS measures, please see Other Information – Use of Non-GAAP Financial Performance Measures.
  2. We expect our business to operate at margins that provide strong free cash flow per share and will therefore evaluate achievement based on realized free cash flow per share and the growth trajectory over time. Free cash flow is a non-GAAP financial performance measure with no standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other companies. For further details regarding non-GAAP financial performance measures, please see Other Information – Use of Non-GAAP Financial Performance Measures. For the purposes of the scorecard, free cash flow will be adjusted for commodity prices.
  3. Dividends will be based on an annual dividend payout ratio (defined as a percentage of after-tax profit). Achievement will be based on the size of the dividend, while taking into account alternative uses of cash (e.g., share buybacks, debt repayment, re-investment, acquisitions, etc.) to ensure that there is a focus on delivering excess returns.
  4. Strong capital structure will be determined based on material actions taken to improve the balance sheet and Barrick’s investment grade rating as determined by major debt rating agencies, and we will continue to hold a very high standard for our aspired capital structure.
  5. Capital project execution will be determined based on delivery of major capital projects to the planned cost and schedule established at the time of Board sanction (Final Investment Decision). The assessment will be performed on a project-by-project basis (weighted by size of the project) and will consider quantitative and qualitative dimensions. The assessment will be based on whether we meet overall capital budget targets, our adherence to plan by spending capital dollars at the level approved for each individual project, the cumulative spend on any individual project over time, our realization of value for capital dollars spent through earned value analysis, and our ability to bring projects to completion within a targeted timeframe, operational parameters, and operating cost.
  6. Successful strategy execution will be qualitatively assessed based on considerations such as: ongoing portfolio optimization through asset divestitures and development of growth opportunities consistent with our targeted returns on invested capital and strategic focus; execution of plans to grow cash flow per share on a sustainable basis; the application of processes, governance, people, and technology to drive sustainable company performance, including demonstrable actions taken to address critical issues facing the business; and meeting important milestones for strategy execution.
  7. Reputation and license to operate will be qualitatively assessed based on quantitative and qualitative measures. We will measure our performance trajectory over time for environmental (e.g., incidences) and safety (e.g., fatalities, Total Reportable Injury Frequency Rate). Qualitative measures include our overall compliance record, independent assessments of our corporate social responsibility related performance (e.g., International Council on Metals and Mining Assurance review, Dow Jones Sustainability Index listing), success in building and maintaining strong relationships with core stakeholders, and the quality of license to operate risk assessments.
  8. Our people development priorities are: to strengthen and renew the senior leadership of the Company by attracting external talent and moving people into optimal roles; drive an equivalent level of renewal across all areas of our business through Barrick’s partnership program and selective new hiring; and build effective, industry-leading processes for attracting, developing, evaluating, and retaining people at all levels of the Company. People development will be qualitatively assessed based on considerations including the ability to attract top performers, the retention rate for A-rated performers in the organization, succession readiness for top roles, internal promotion rate to top roles, and evolution of talent management processes.

Restricted Share Units (RSUs)

RSUs may be awarded to newly-hired officers in recognition of forfeited compensation upon joining Barrick or may be granted from time to time in recognition of a promotion and/or long-term retention needs. RSUs vest up to three years from the date of grant (as specified by the Compensation Committee at the time of the grant), and are settled in After-Tax Shares unless otherwise determined by the Compensation Committee. RSUs are granted on a case-by-case basis. The key characteristics of the Restricted Share Unit Plan are included in Schedule D of this Circular.

Previous Compensation Policies that Continue to Apply

We no longer grant stock options for executive compensation purposes, to further underscore long-term ownership as the basis of our LTI awards. We have also ceased granting Performance Restricted Share Units (PRSUs), which are deferred cash incentives, to strengthen our commitment to long-term emotional and financial ownership.

Certain Named Partners and officers of the Company continue to hold stock options granted prior to 2013 (in respect of the 2012 performance year). Please refer to Other Information – Use of Non-GAAP Financial Performance Measures for terms applicable to all outstanding option grants. There are no outstanding PRSUs.

Other Executive Compensation Elements

Employee Share Purchase Plan (ESPP)

All head office employees, including our Named Partners, are eligible to participate in the ESPP. The ESPP enables our employees to purchase our Common Shares through payroll deduction. We pay for the account set-up and purchase fees and match 50% of the employee contributions, up to a maximum of Cdn $5,000 per year.

Executive Retirement Plans

We administer two supplemental defined contribution Executive Retirement Plans that provide for annual employer contributions equal to 15% of each eligible officer’s annual earned salary and API, which accrue with interest until termination of employment (before the participant’s retirement date) or until retirement, as applicable. The accumulated contributions are paid to the eligible officer in cash upon termination or retirement, as applicable.

Currently, we administer one plan for the officers based outside of the United States (including Canada) and one for the officers primarily based in the United States. All NEOs participate in an Executive Retirement Plan and do not participate in any other Barrick retirement plan. See Executive Retirement Plans for a detailed description.

Other Benefits and Perquisites

Barrick provides competitive benefits and perquisites to employees and executives. Barrick’s group benefits package for all full-time employees includes health, dental, life, disability, and accidental death and dismemberment coverage. Our executives, including our NEOs, are also eligible for additional benefits and perquisites which generally include a leased vehicle or car allowance, parking benefits, financial counselling, and executive medicals. Certain individuals are eligible for additional perquisites, including additional life, accidental death and dismemberment and long-term disability coverage, as well as ground and air transport.

Barrick is committed to ensuring that the best people are in the right positions throughout its global business. To facilitate this core commitment to retaining the best available talent regardless of borders, relocation support is provided to employees, including our executives, when they are relocated on hire or promotion. Relocation benefits generally include relocation expenses, home finding and destination services, home sale and purchase assistance, housing allowances, moving allowances, as well as certain cash allowances recognizing cost of living differences in the host location. Our international relocation program facilitates global mobility and enables us to quickly meet our business needs around the world and develop our employees into the next generation of industry leaders.

2017 Performance Considerations for Named Partners

2017 Long-Term Company Scorecard (for 2017 PGSU Awards)

PGSU awards granted in February 2018 in respect of 2017 were determined using the 2017 Long-Term Company Scorecard that was published in the 2017 information circular. The Compensation Committee determined the 2017 PGSU awards based on the following performance considerations:

  1. ROIC is an internal performance measure used to manage performance. ROIC measures return on invested capital by taking Adjusted EBIT (Adjusted EBITDA less depreciation) less cash taxes as disclosed in the consolidated statements of cash flow and removing the impact of foreign currency translation gains/losses as disclosed in the consolidated income statements and dividing by average invested capital. Invested capital is calculated by taking consolidated assets as reported on our balance sheet net of assets not subject to depreciation as reported in Note 19 Property, plant and equipment of the financial statements in our 2017 Annual Report. Adjusted EBIT and Adjusted EBITDA are non-GAAP financial measures with no standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other companies. For further information and a detailed reconciliation of these non-GAAP measures to the most directly comparable IFRS measures, please see Other Information – Use of Non-GAAP Financial Performance Measures.
  2. Free cash flow is a non-GAAP financial performance measure with no standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other companies. For further details regarding non-GAAP financial performance measures, please see Other Information – Use of Non-GAAP Financial Performance Measures.
  3. Dividends to shareholders is based on the annual dividend payout ratio (defined as a percentage of after-tax profit). Achievement will be based on the size of the dividend, while taking into account alternative uses of cash (e.g., acquisitions, debt repayment, share buybacks, etc.) to ensure that there is a focus on delivering excess returns.
  4. Strong capital structure is determined based on material actions taken to improve the balance sheet and Barrick’s investment grade rating as determined by major debt rating agencies.
  5. Capital projects performance is determined based on delivery of approved projects at planned cost and schedule. The assessment will be quantitative and qualitative, because projects often span several years, and it is important to evaluate schedule and quality, in addition to cost. The assessment will be based on whether we meet overall capital budget targets, our adherence to plan by spending capital dollars at the level approved for each individual project, our realization of value for capital dollars spend through earned value analysis, and our ability to bring projects to completion within a targeted timeframe, operational parameters, and operating cost. All projects must meet a hurdle rate of 15%.
  6. Successful strategy execution is qualitatively assessed based on considerations such as: ongoing portfolio optimization through asset divestitures and development of growth opportunities consistent with our targeted ROIC and strategic focus; execution of plans to grow free cash flow per share on a sustainable basis; the application of processes, governance, people, and technology to drive sustainable company performance, including demonstrable actions taken to address critical issues facing the business; and meeting important milestones for strategy execution. See footnote 1 for a description of ROIC. For a description of free cash flow, see footnote 2 and Other Information – Use of Non-GAAP Financial Performance Measures.
  7. Reputation and license to operate is qualitatively assessed based on considerations including our overall compliance record, independent assessments of our corporate social responsibility related performance (e.g., International Council on Metals and Mining Assurance review, Dow Jones Sustainability Index listing), success in building and maintaining strong relationships with core stakeholders, and the quality of license to operate risk assessments.
  8. Quality of people development is qualitatively assessed based on considerations including the ability to attract top performers, the retention rate for A-rated performers in the organization, succession readiness for top roles, internal promotion rate to top roles, and evolution of talent management processes.

Financial Performance Measures (60% weighting)

Return on Invested Capital (1) (15% weighting, assessment: 0%):

Barrick has made substantial progress in upgrading its portfolio of mines, driving improvements to operational profitability, and reallocating capital to only those projects that meet target returns. These actions will produce higher ROIC(1) over time, but we have not yet achieved our long-term performance range of 10% – 15% ROIC(1). For 2017, ROIC(1) was 7.9% and as a result there is no payout on this metric.

Growth in Free Cash Flow per Share(2) (15% weighting, assessment: 33%):

We believe that a healthy, high-performing mining business must deliver positive free cash flow across the gold price cycle and be self-funding for growth. In 2017, we generated $2.07 billion in operating cash flow and $669 million in free cash flow(2) (1,166,577,478 shares outstanding). While this represents robust free cash flow for 2017, it is nonetheless a significant reduction from the $1.51 billion in free cash flow(2) generated in 2016 (1,165,577,478 shares outstanding). The payout for this metric is therefore 33%.

Robust Dividend per Share (10% weighting, assessment: 20%):

Barrick places a high priority on returning to shareholders a meaningful portion of our cash margin through dividends. We aim to increase dividends over time across a wide range of gold prices. In 2017, we increased our quarterly dividend by 50% from $0.02 per share to $0.03 per share. However, our dividend was 16% of adjusted net earnings(2) which is below our long-term performance range of 25% – 35% of adjusted net earnings(2). Therefore the payout for this metric is 20%.

Strong Capital Structure (10% weighting, assessment: 50%):

Barrick is focused on materially improving its balance sheet as measured by improved financial flexibility and credit rating. We made significant progress in 2017, reducing total debt by $1.51 billion, exceeding our debt reduction target and significantly strengthening our balance sheet. Our credit rating remained at Baa3/BBB- and Moody’s and Standard & Poor’s outlook for Barrick remained stable and positive, respectively. Our financial flexibility continues to improve and we recognize steady progress, but the strength of our capital structure remains below our high aspiration. The payout for this metric is therefore 50%.

Capital Project Execution (10% weighting, assessment: 80%):

Executing major capital projects well is critical to Barrick’s long-term success, especially in achieving capital return targets. We therefore set a very high, and absolute, performance standard requiring all major projects to achieve the cost and schedule estimates presented at the time of Board approval (Final Investment Decision). In 2017, capital expenditures were 9% below budget ($1.36 billion versus $1.49 billion), at the low end of our public guidance range, and all major capital growth projects remain on schedule and budget. All significant capital expenditures were independently reviewed prior to Investment Committee approval and no projects that failed to meet our investment criteria were approved. Improved rigor around capital controls and a restructuring of the Investment Committee process this year allowed additional capital to be channeled to high return projects, with a particular focus in Nevada. This additional capital was sourced from project savings and discretionary capital deferrals, without impacting critical path schedules. The payout for this metric is therefore 80%.

Non-Financial Performance Measures (40% weighting)

Strategic Execution (15% weighting, assessment: 73%):

Successful strategy execution is qualitatively assessed based on considerations such as: ongoing portfolio optimization through asset divestitures and development of growth opportunities consistent with our targeted ROIC(1) and strategic focus; execution of plans to grow free cash flow per share on a sustainable basis; the application of processes, governance, people, and technology to drive sustainable company performance, including demonstrable actions taken to address critical issues facing the business; and delivering on our strategic initiatives. Our strategic initiatives for 2017 were to generate free cash flow at a gold price of $1,000 per ounce; reduce total debt by a further $1.45 billion; optimize our portfolio; progress the Frontera district and advance projects and exploration; unify Nevada; embed and accelerate digital transformation and innovation; and upgrade talent by developing the next generation of industry leaders. We made significant progress on each of these strategic initiatives in 2017, particularly with the formation of a landmark strategic partnership with Shandong Gold. However, our free cash flow per share decreased from 2016, and although we continued to thoroughly evaluate additional growth and asset divestiture opportunities, we were not satisfied that these opportunities would materially improve the strength of our portfolio. The payout for this metric is therefore 73%.

Reputation and License to Operate (15% weighting, assessment: 20%):

We recognize that our license to operate depends on the combined strength of our safety performance, compliance record (environmental, human rights, anti-corruption, etc.), and relationship building. Shortcomings, even when due to rare events, can have a significant effect on our stakeholders and business; we therefore set a high absolute standard and evaluate consistency and improvement over time. While Barrick’s safety performance continues to improve in important respects, including the lowest ever Total Recordable Injury Frequency Rate in company history at 0.35, it fell just shy of the aggressive target we set, and two colleagues lost their lives in workplace accidents at our operations in 2017. Any fatality is unacceptable and a strong reminder that safety must be everyone’s first priority. In March, our Veladero mine in Argentina suffered its third environmental incident in eighteen months, demonstrating that we still have far to go to achieve best-in-class performance. In most jurisdictions, strong government and community relations translated into a reliable operating environment for the Company. For the tenth year in a row, Barrick was listed on the Dow Jones Sustainability World Index. Barrick reports to the Global Reporting Initiative’s Sustainability Reporting Standards, in accordance with the Core option, and Barrick’s 2016 Responsibility Report was independently assured by a third-party consistent with International Council on Mining and Metals requirements. Barrick is also a participant in CDP’s water program and our water ranking remained at A- in 2017. Recognizing that we still have work to do to improve our reputation in Argentina and Chile, and that fatalities in 2017 negate any award for safety performance, the payout for this metric is therefore 20%.

People Development (10% weighting, assessment: 60%):

In 2017, we continued to strengthen our talent base with the appointment of key senior leaders in support of our strategic priorities. We appointed Jac Fourie as Senior Vice President, Capital Projects to advance our greenfield gold projects with a high level of discipline and rigor. We appointed Ann Masse as Vice President, Safety, Health and Environment to focus on our two most important priorities: ensuring the safety of our people and protecting the environment around our operations. We also appointed Sham Chotai as Barrick’s first Chief Digital Officer, to further accelerate our digital transformation. We prepared and facilitated a succession planning review for key roles across the organization for the Board of Directors. We continue to evolve our talent management processes in line with Best-in-Class practices and are undergoing a Human Capital Management transformation, including an upgrade to our existing systems and technology. We created the Barrick Learning Academy including the development of four new foundational leadership programs to facilitate cross-functional/site learning and sharing, continuous skill building, and skill refinement. Barrick’s Partnership program entered its fourth year, and we added 11 new Partners to the program. To further underscore the Company’s commitment to partnership and our belief that all employees should be personally invested in the long-term success of Barrick, we provided a second grant of shares to all employees under the Global Employee Share Plan. Retention of key talent remains high at 93% of identified positions and robust succession planning enabled us to cover 63% of critical role openings in 2017 with internal leaders. The payout for this metric is therefore 60%.

  1. ROIC is an internal performance measure used to manage performance. ROIC measures return on invested capital by taking Adjusted EBIT (Adjusted EBITDA less depreciation) less cash taxes as disclosed in the consolidated statements of cash flow and removing the impact of foreign currency translation gains/losses as disclosed in the consolidated income statements and dividing by average invested capital. Invested capital is calculated by taking consolidated assets as reported on our balance sheet net of assets not subject to depreciation as reported in Note 19 Property, Plant and Equipment of the financial statements in our 2017 Annual Report. Adjusted EBIT and Adjusted EBITDA are non-GAAP financial measures with no standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other companies. For further information and a detailed reconciliation of these non-GAAP measures to the most recently comparable IFRS measures, please see Other Information – Use of Non-GAAP Financial Performance Measures.
  2. Free cash flow and adjusted net earnings are non-GAAP financial performance measures with no standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other companies. For further details regarding non-GAAP financial performance measures, please see Other Information – Use of Non-GAAP Financial Performance Measures.

2017 Annual Performance Incentive Considerations for our Named Partners

2017 API awards for our Named Partners were determined based on the Compensation Committee’s review of their performance against the short-term priorities and initiatives that were published in the 2017 information circular.

President – API Considerations

Mr. Kelvin Dushnisky

Mr. Kelvin Dushnisky was appointed President of Barrick on August 17, 2015. On the Executive Chairman’s recommendation and the Compensation Committee’s advice, and in consideration of Barrick’s operational performance and his contributions during 2017 to advance our 2017 priorities, the independent directors of the Board determined that an API Scorecard result of 40% was appropriate. In determining the API payout, the independent directors of the Board, on the recommendation of the Compensation Committee, exercised their discretion to reduce Mr. Dushnisky’s API from the formulaic payout to $693,090 to better align total compensation with the shareholder experience in 2017. This decision included consideration of the impact of Acacia, a company operated independently of Barrick and in which Barrick has a 63.9% equity stake, on the Company’s operational and financial performance in 2017. Mr. Dushnisky serves as Chairman of the board of Acacia. The considerations of the Compensation Committee and the independent directors of the Board are summarized in the table below.


  1. Free cash flow is a non-GAAP financial performance measure with no standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other companies. For further details regarding non-GAAP financial performance measures, please see Other Information – Use of Non-GAAP Financial Performance Measures.

Four-Year Reported and Realized Pay Comparison for President


Senior Executive Vice President, Strategic Matters – API Considerations

Mr. Kevin Thomson

Mr. Kevin Thomson was appointed Senior Executive Vice President, Strategic Matters on October 14, 2014. In determining Mr. Thomson’s API award, the Compensation Committee considered the Executive Chairman’s recommendations and Mr. Thomson’s contributions to advance our 2017 priorities, which are described in greater detail below. The Compensation Committee determined that an API Scorecard result of 70% was appropriate and awarded Mr. Thomson an API of $1,455,489. The Compensation Committee’s considerations are summarized in the table below.


Executive Vice President and Chief Financial Officer – API Considerations

Ms. Catherine Raw, formerly Executive Vice President, Business Performance, was appointed Executive Vice President and Chief Financial Officer on April 26, 2016. In determining Ms. Raw’s API award, the Compensation Committee considered the Executive Chairman’s recommendations and Ms. Raw’s contributions to advance our 2017 priorities, which are described in greater detail below. The Compensation Committee determined that an API Scorecard result of 75% was appropriate and awarded Ms. Raw an API of $1,386,180. The Compensation Committee’s considerations are summarized in the table below.


  1. Free cash flow is a non-GAAP financial performance measure with no standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other companies. For further details regarding non-GAAP financial performance measures, please see Other Information – Use of Non-GAAP Financial Performance Measures.
  2. Outstanding debt values only relate to outstanding public debt.

Chief Investment Officer – API Considerations

Mr. Mark Hill

Mr. Mark Hill was appointed Chief Investment Officer on September 12, 2016. In determining Mr. Hill’s API award, the Compensation Committee considered the Executive Chairman’s recommendations and Mr. Hill’s contributions to advance our 2017 priorities, which are described in greater detail below. The Compensation Committee determined that an API Scorecard result of 70% was appropriate and awarded Mr. Hill an API of $1,132,047. The Compensation Committee’s considerations are summarized in the table below.

  1. Free cash flow is a non-GAAP financial performance measure with no standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other companies. For further details regarding non-GAAP financial performance measures, please see Other Information – Use of Non-GAAP Financial Performance Measures.