Incentive Plan Award Tables

Aggregate Option Exercises During Financial Year Ended December 31, 2017

The NEOs did not exercise any stock options during 2017.

Outstanding Share-Based Awards and Option-Based Awards as at Year Ended December 31, 2017(1)

The following table provides information for all share-based and option-based awards to NEOs outstanding as at December 31, 2017.

  1. The amounts shown in the table above for each of the NEOs as at December 31, 2017 include: (i) each stock option outstanding, (ii) the aggregate number of unvested PGSUs and RSUs, (iii) the aggregate number of vested DSUs that have not yet paid out, and (iv) the market value of such PGSUs, RSUs, and DSUs based on the closing price of a Barrick Common Share on December 29, 2017, the last trading day of 2017. For options and DSUs, the closing share price of our Common Shares is based on the NYSE as at December 29, 2017 ($14.47), the last trading day of 2017. For PGSUs and RSUs, the closing price of our Common Shares is based on the TSX as at December 29, 2017 (Cdn $18.18), the last trading day of 2017, converted to U.S. dollars based on the December 29, 2017 Bank of Canada daily average rate of exchange (1.2545). The value realized upon vesting of a PGSU is equal to the closing share price of our Common Shares on the TSX on the vesting date. The value realized upon vesting of a RSU is equal to the average closing share price of our Common Shares on the TSX during the five trading days preceding the vesting date.
  2. Option awards vest in four equal installments beginning on the first anniversary of the date of grant.
  3. PGSUs vest 33 months from the date of grant and upon vesting, the after-tax proceeds are used to purchase Restricted Shares that cannot be sold until the Named Partner retires or leaves the Company (up to two years longer if they leave to join, or provide services to, a defined competitor). RSUs vest 33 months from the date of grant. DSUs vest immediately on grant but must be retained until the director leaves the Board. Market or payout value of PGSU awards and RSU awards that have not vested is determined by multiplying the number of PGSUs or RSUs by the closing share price of our Common Shares on the TSX as at December 29, 2017 (Cdn $18.18), the last trading day of 2017. Market or payout value of DSUs that have vested but have not been paid out or distributed is determined by multiplying the number of DSUs by the closing share price of our Common Shares on the NYSE as at December 29, 2017 ($14.47), the last trading day of 2017.
  4. The exercise price is the closing price of our Common Shares on the day immediately prior to the grant date on the NYSE or, if the grant date is during a period in which trading of Barrick securities by an option holder is restricted by Company policy, the exercise price is the greater of the closing price on the day immediately prior to the grant date and the closing price on the first business day after trading restrictions are lifted. Details on the exercise price and closing share price (in U.S. dollars) for each of the outstanding option grants are shown in the table below:
  5. Mr. Thornton’s vested share-based awards that have yet to be paid out or distributed include 1,059 DSUs and 83 DSU dividend equivalents that he received for his service as an independent director of the Board from February 15, 2012 to June 5, 2012. Pursuant to the Directors’ Deferred Share Unit Plan, these DSUs must be retained until Mr. Thornton leaves the Board, at which point the value of the DSUs including any dividends accrued on the initial DSU grant will be paid out in cash.
  6. Mr. Dushnisky’s total outstanding share-based awards include 245,573 PGSUs and 2,458 PGSU dividend equivalents.
  7. Mr. Thomson’s total outstanding share-based awards include 153,484 PGSUs and 1,536 PGSU dividend equivalents.
  8. Ms. Raw’s total outstanding share-based awards include 68,053 PGSUs, 81,082 RSUs, 508 PGSU dividend equivalents, and 1,514 RSU dividend equivalents.
  9. Mr. Hill’s total outstanding share-based awards include 94,242 RSUs and 505 RSU dividend equivalents.

Incentive Plan Awards – Value Vested or Earned During the Year Ended December 31, 2017

The following table provides information for each of the NEOs on (1) the value that would have been realized if the options under the option-based awards had been exercised on the vesting date, (2) the value realized upon vesting of share-based awards (PGSUs, RSUs, PRSUs, and DSUs), and (3) the value earned under the API program or long-term incentive awards 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.

  1. The value that would have been realized from stock options (all of which are denominated in U.S. dollars) is determined by multiplying the portion of each stock option grant that vested during 2017 by the difference between the closing share price of our Common Shares on the NYSE on the vesting date and the exercise price of the stock option. The exercise price is the closing price of our Common Shares on the NYSE on the day immediately prior to the grant date, or if the grant date is during a period in which trading of Barrick securities by an option holder is restricted by Company policy, the exercise price is the greater of the closing price on the day immediately prior to the grant date and the closing price on the first business date after trading restrictions are lifted. Options vest in equal parts over four years.
  2. For Mr. Thornton, share-based awards that vested during 2017 represent the DSU dividend equivalents credited to his account based on the DSUs that he received for his service as an independent director of the Board from February 15, 2012 to June 5, 2012. For Mr. Dushnisky, the value of PRSUs that vested in 2017 (denominated in U.S. dollars) is determined by multiplying the number of PRSUs that vested (89.97% of the target number of PRSUs that were granted in 2014) by the average of the closing share price of our Common Shares on the TSX on the five trading days prior to the vesting date, converted to U.S. dollars based on the Bank of Canada noon rate of exchange on the day preceding the vesting date pursuant to the PRSU program. The value of RSUs that vested in 2017 (denominated in U.S. dollars) is determined by multiplying the number of RSUs that vested by the average of the closing share price of our Common Shares on the TSX on the five trading days prior to the vesting date, converted to U.S. dollars based on the Bank of Canada noon rate of exchange on the day preceding the vesting date pursuant to the RSU Plan. The value of PGSUs that vested in 2017 (denominated in U.S. dollars) is determined by multiplying the number of PGSUs that vested by the closing share price of our Common Shares on the TSX on the vesting date, converted to U.S. dollars based on the Bank of Canada daily average exchange rate on the vesting date pursuant to the PGSU Plan. Upon vesting, the after-tax proceeds of the PGSU award were used to purchase Restricted Shares that cannot be sold until Mr. Dushnisky retires or leaves the Company (up to two years longer if he leaves to join, or provide services, to a defined competitor). For Mr. Thomson, the value of RSUs that vested in 2017 (denominated in U.S. dollars) is determined by multiplying the number of RSUs that vested by the average of the closing share price of our Common Shares on the TSX on the five trading days prior to the vesting date, converted to U.S. dollars based on the Bank of Canada daily average exchange rate on the day preceding the vesting date pursuant to the RSU Plan. Upon vesting, the after-tax proceeds of the RSU award were used to purchase Restricted Shares that cannot be sold until Mr. Thomson retires or leaves the Company.
  3. For Mr. Thornton, the value of non-equity incentive plan awards earned in the year represents the long-term incentive awarded pursuant to the Executive Chairman LTI arrangement. For Messrs. Dushnisky, Thomson, and Hill, as well as Ms. Raw, the value of non-equity incentive plan awards earned in the year represents the API earned for 2017 performance.

Executive Retirement Plans

Barrick adopted the Executive Retirement Plan in 2000. The Executive Retirement Plan is a non registered/non-qualified defined contribution plan in which participants accrue benefits in the form of account balances with a guaranteed rate of return and defined notional contributions. Currently, we administer one plan for officers based outside of the United States (including Canada) and one for 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.

An amount equal to 15% of the officer’s salary and API for the year is accrued to the Executive Retirement Plan and accumulated with interest until termination of employment (before the participant’s retirement date), or upon retirement, as applicable. Interest accumulates at the annual rate of “Government of Canada Marketable Bonds with Average Yield over 10 years” as published in the Bank of Canada Weekly Financial Statistics for the month of January of the relevant calendar year. For 2017, this interest rate was 2.34%. No above market or preferential earnings were paid out.

Participants are eligible to receive payouts upon retiring after attaining the age of 55, with the option of receiving the payout as a lump sum or in monthly installments having an equivalent actuarial value. Currently, Messrs. Thornton and Thomson are eligible to receive a payout under the Executive Retirement Plan from their accumulated account balances.

Upon termination, before the participant’s retirement date, the participant will receive the total amount credited to his or her account after the deduction of any amount transferred to a registered retirement savings plan as a retiring allowance. If the participant dies prior to retirement, the account balance will be paid out as a lump sum to the participant’s beneficiary or estate. See Potential Payments Upon Change in Control Termination for information on payments made upon termination following a Change in Control.

Defined Contribution Plan Table as at December 31, 2017(1)

  1. Executive Retirement Plan values are denominated in Canadian dollars and are converted from Canadian dollars to U.S. dollars using the following exchange rates reported by the Bank of Canada, except the contributions for Mr. Thornton that are made and reported in U.S. dollars:
    1. Accumulated Value at Start of Year – December 30, 2016 closing rate of exchange of 1.3427, the last trading day of 2016;
    2. Compensatory Value – annual average exchange rate for 2017 of 1.2986; and
    3. Accumulated Value at Year End – daily average rate of exchange of 1.2545 on December 29, 2017, the last trading day of 2017.
  2. Pursuant to the Executive Retirement Plan, an amount equal to 15% of an officer’s salary and API received during the year is accrued and accumulated with interest until termination of employment or retirement, as applicable. API in respect of the most recently completed financial year is awarded in February, after the end of the most recently completed financial year. Accordingly, the compensatory value for the year ended December 31, 2017 reflected in the table above includes 15% of the salary earned in 2017, as well as 15% of the 2016 API that was awarded in February 2017.

Potential Payments Upon Termination

Termination Provisions for Existing Compensation Plans and Programs

The table below describes the standard treatment of certain compensation that would have become payable under existing compensation plans and programs, if an NEO’s employment had terminated on December 31, 2017, in circumstances other than a Change in Control (see Potential Payments Upon Change in Control Termination for further details). The Compensation Committee has the authority to depart from standard treatment and to consider other factors deemed appropriate, including individual contributions to the Company, restrictive covenant agreements, as well as payments to mitigate potential legal claims, subject to any such payment being made pursuant to a statutory settlement agreement.

  1. See footnote 1 in Termination Provisions for Previous Compensation Plans and Programs that Continue to Apply  table.
  2. See footnote 2 in Termination Provisions for Previous Compensation Plans and Programs that Continue to Apply  table.
  3. For U.S. participants only, PGSUs will not accelerate in vesting under any circumstance to ensure that there are no unintentional and adverse tax consequences imposed by the Internal Revenue Code’s Section 409A.

For PGSU awards, in the event of resignation or termination without cause, the Compensation Committee must be satisfied that the Named Partner has no current or future intention to be employed by a “Competitor”. The following standard treatment applies to our Named Partners who resign or retire to join, or provide services to, a “Competitor”, or if the Compensation Committee becomes aware of any evidence to this effect before full vesting:

  • All unvested PGSU awards lapse and are forfeited; and
  • Vested PGSU awards (Restricted Shares), subject to sale and trading restrictions, will be released in three tranches: 50% on the termination date, 25% on the first anniversary of the termination date, 25% on the second anniversary of the termination date.

Termination Provisions for Previous Compensation Plans and Programs that Continue to Apply

The table below outlines the standard provisions applicable to our Stock Option Plan (2004) upon termination in circumstances other than a Change in Control (see Potential Payments Upon Change in Control Termination for further details). No stock option grants have been awarded to our Named Partners since 2013 for the 2012 performance year.

  1. “Disability” means, with respect to a non-U.S. participant, the physical or mental illness of the participant resulting in the participant’s absence from his or her full-time duties with the relevant Barrick Gold Company for a period of time that results in a termination event pursuant to the applicable long-term disability plan for the Barrick Gold Company for which the participant is employed. “Disability” means, with respect to a U.S. participant, if the participant is: (i) unable to engage in his or her full-time duties with the relevant Barrick Gold Company by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering the participant.
  2. “Cause” is defined as:
    1. Willful and continued failure by the participant to substantially perform the participant’s duties with the Company (other than any such failure resulting from his or her incapacity due to physical or mental illness or disability (as defined under the plan) or any such failure subsequent to the delivery to the participant of a notice of termination without cause by the Company or the delivery by the participant of a notice of termination for good reason (as defined under the plan) to the Company after a demand for substantial performance improvement has been delivered in writing to the participant by the President, the Chairman, or a committee of the Board of Directors, as appropriate, of the Company which specifically identifies the manner in which the participant has not substantially performed his or her duties;
    2. Willful engaging by the participant in gross misconduct which is demonstrably and materially injurious to the Company, monetarily or reputationally; or
    3. The conviction of the participant of a criminal offense involving dishonesty or other moral turpitude; provided that for the purpose of footnote (2), no act or failure to act by the participant shall be considered “willful” unless done or omitted to be done by the participant in bad faith and without reasonable belief that the participant’s action or omission was in the best interests of the Company or its affiliates or subsidiaries. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board, based upon the advice of counsel for the Company or upon the instructions of a more senior officer of the Company shall be conclusively presumed to be done, or omitted to be done, by the participant in good faith and in the best interests of the Company. The Company must notify the participant of any event constituting cause within 90 days following the Company’s knowledge of its existence or such event shall not constitute Cause under the Change in Control Plan.

Potential Payments Upon Termination(1)

The table below describes and quantifies certain compensation that would have become payable under our existing and previous compensation policies and programs if an NEO’s employment had been terminated on December 31, 2017. The amounts shown in the table below are the incremental amounts to which our NEOs would be entitled upon termination (except in connection with a Change in Control). This table does not show any statutory or common law benefits payable pursuant to Canadian law or the value of continued equity vesting, as it is not considered to be an incremental benefit to our NEOs.

  1. The amounts stated in the table represent the value of accelerating the vesting of unvested RSUs and PGSUs upon termination. The value of accelerating the vesting of unvested RSUs is calculated as the product of (i) the number of RSUs where restrictions lapsed because of the termination, and (ii) $14.57 (the average of the closing share price of our Common Shares on the TSX on the five trading days prior to the date of assumed vesting, December 31, 2017, converted to U.S. dollars based on the Bank of Canada daily average rate of exchange on the preceding day, pursuant to the RSU plan). The value of accelerating the vesting of unvested PGSUs is calculated as the product of (i) the number of PGSUs where restrictions lapsed because of the termination, and (ii) $14.49 (the closing share price of our Common Shares on the TSX on December 29, 2017, the last trading day of 2017 prior to the date of assumed vesting, December 31, 2017, converted from Canadian dollars to U.S. dollars based on the Bank of Canada daily average rate of exchange on December 29, 2017, pursuant to the PGSU Plan).
  2. Pursuant to his termination arrangement, in the event of a termination without cause prior to December 31, 2017 or prior to the granting of API and LTI awards in 2018 in respect of the 2017 performance year, Mr. Thomson is entitled to a severance payment equal to two times base salary (Cdn $900,000), plus two times an amount equivalent to the average of his 2016 and 2017 API (in respect of the 2015 and 2016 performance years, respectively), plus payment of Executive Retirement Plan contributions, and compensation for loss of benefits for a 24 month period. Compensation for loss of benefits is in lieu of Mr. Thomson’s medical, dental, vision care, life insurance, accidental death and dismemberment, and long-term disability coverage, as well as automobile benefits and outplacement services. Outstanding RSUs will continue to vest according to the normal schedule. Additionally, he is entitled to short-term and long-term incentive payments, prorated from January 1, 2017 to the date of his termination. For API, he is entitled to the greater of the average of his prior year’s actual API payment and the result of his individual API scorecard for 2017, as determined by the Compensation Committee. For LTI, he is entitled to an amount as determined by the Compensation Committee based on the Long-Term Company Scorecard results. The estimated severance payable has been converted from Canadian dollars to U.S. dollars based on the annual average exchange rate reported by the Bank of Canada (2017 – 1.2986).

Potential Payments Upon Change in Control Termination

Barrick renewed the Partner Change in Control Severance Plan (Change in Control Plan) effective January 1, 2018 to ensure that Named Partners and other Partnership Plan participants are entitled to receive severance benefits in the event that their employment is terminated by the Company (other than for cause or disability), or employment is deemed to have been terminated for Good Reason at any time within two years following a Change in Control. These are “double trigger” Change in Control arrangements, requiring both a Change in Control of the Company and a qualifying termination of the employment of the Named Partner or Partnership Plan participant before any payments are owed. Terminations for cause or disability and resignation without Good Reason following a Change in Control would be treated the same way as they are in non-Change in Control situations. Mr. Thornton is not subject to Change in Control protection. The table below outlines a comparison of the standard severance treatment applicable to our Named Partners and other Partnership Plan participants upon a Termination without Cause and a double-trigger Change in Control, pursuant to the Change in Control Plan and relevant provisions of each of the equity-based LTI plans:

    1. If the Named Partner or Partnership Plan participant has been designated a partner for less than three completed fiscal years prior to the Change in Control, the average of the API and/or PGSU awards will be calculated based on the average of the actual number of years that the Named Partner or Partnership Plan participant has been designated a partner. If no API or PGSU award has been paid to the Named Partner or Partnership Plan participant since being designated a partner, then one-half of the maximum API and/or maximum yearly PGSU Plan award that would be payable or granted to the Named Partner or Partnership Plan participant will be used to determine the Lump Sum Cash Severance Payment. For certainty, the API paid or payable, and the PGSU award granted or to be granted, will be annualized in circumstances where the Named Partner or Partnership Plan participant was not employed by the Company for the whole of an applicable fiscal year.
    2. For U.S. participants only, paragraph (i) in the Change in Control definition below is replaced by “the acquisition by any individual, entity or group of individuals or entities acting jointly or in concert of beneficial ownership of 30% or more of the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors other than as part of and at the time of completion of a transaction described in paragraph (iii) of the Change in Control definition below, provided, however, that for the purposes of paragraph (i), the acquisition by the Company or any employee benefit plan (or related trust) sponsored or maintained by the Company or any company controlled by the Company of Common Shares of the Company or other Voting Securities shall not constitute a Change in Control.”
    3. In addition, the Compensation Committee may, in its discretion, accelerate vesting of unvested RSUs and unvested stock options and/or extend the exercise period up to the earlier of three years and the original term to expiry.

    Other Terms and Provisions

    The Change in Control Plan prohibits Named Partners and Partnership Plan participants from soliciting Barrick employees for a period of two years following termination. Named Partners and Partnership Plan participants are required to maintain the confidentiality of any confidential or proprietary information concerning Barrick for a period of three years following termination.

    Change in Control Definitions

    Pursuant to the Change in Control Plan, a “Change in Control” is generally defined as:

     

    1. The acquisition by any individual, entity or group of individuals or entities acting jointly or in concert, of 30% or more of either (A) the then outstanding Common Shares of the Company, or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors other than as part of and at the time of completion of a transaction described in (iii) below, provided that the acquisition by the Company or any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company shall not constitute a Change in Control;
    2. Individuals who constitute the Board at the time the Change in Control Plan took effect (Incumbent Board) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual who becomes a director who was approved by a vote of at least two-thirds of the directors then comprising the Incumbent Board will be deemed to be a member of the Incumbent Board. For greater certainty, this excludes any such individual whose initial assumption of office occurs as a result of an actual or threatened proxy contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of any individual, entity or group of individuals or entities other than the management or the Board;
    3. The consummation of a reorganization, merger, amalgamation, plan of arrangement or consolidation of or involving the Company or a sale or other disposition of all or substantially all of the assets of the Company or an acquisition of assets, in a single transaction or in a series of linked transactions (Business Combination), in each case, unless: (A) the beneficial owners of the then outstanding Common Shares and other voting securities prior to such Business Combination continue to hold more than 50% of the beneficial ownership of the outstanding Common Shares and voting securities of the Company or continuing corporation following the Business Combination, (B) no individual, entity or group of individuals or entities (excluding any employee benefit plan (or related trust) sponsored or maintained by the Company or continuing corporation beneficially owns 30% or more of the then outstanding Common Shares and voting securities of the Company or continuing corporation), and (C) at least a majority of the members of the board of directors of the Company or continuing corporation were members of the Incumbent Board at the time of the execution of the definitive agreement providing for such Business Combination or, in the absence of such an agreement, at the time at which approval of the Board was obtained for such Business Combination;
    4. The sale or other disposition of assets of the Company, in a single transaction or in a series of linked transactions, (A) having an aggregate net asset value of more than 50% of the aggregate net asset value of the consolidated assets of the Company, or (B) which generate, in aggregate, more than 50% of the net income or net cash flow during the last completed financial year or during the current financial year, in each case on a consolidated basis; or
    5. Approval by the shareholders of the Company of the complete liquidation or dissolution of the Company.

    Good Reason” generally means the occurrence, after a Change in Control, of any of the following events without the participant’s written consent:

    1. The assignment to the participant of any duties inconsistent in any respect with the participant’s position (including status, offices or titles held, or reporting requirements), authority, duties or responsibilities with the Company from that which existed immediately prior to such Change in Control, or in the salary, annual performance incentive, or other compensation, benefits, expense allowance or expense reimbursement rights, office location or support staff previously provided to the participant, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of written notice thereof given by the participant and, with respect to the participant’s annual performance incentive, excluding any diminution in the participant’s annual performance incentive that (A) was determined in accordance with and using the same policies and practices that were used to determine the participant’s annual performance incentive in the fiscal year immediately preceding the fiscal year in which the Change in Control occurs; and (B) does not represent a reduction greater than 10% of the agreed maximum annual performance incentive, if any, which is payable to the participant under the compensation terms in effect immediately prior to the Change in Control;
    2. Any failure by the Company to comply with any other terms of the participant’s employment as in effect immediately prior to such Change in Control such as salary or annual performance incentive review, allowable activities, and vacation, other than an isolated, insubstantial, and inadvertent failure not occurring in bad faith and which is remedied by the Company promptly after receipt of written notice thereof given by the participant;
    3. The Company requiring the participant to (A) be based at any office or location other than: (1) within 50 kilometers of the participant’s office or location immediately prior to the Change in Control, or (2) at any other office or location previously agreed to in writing by the participant; or (B) travel on business to an extent substantially greater than the travel obligations of the participant immediately prior to the Change in Control; or
    4. Any other purported termination by the Company of the participant’s employment, other than for Cause.

    Estimated Payments Upon Change in Control Termination

    The following table estimates the amounts that would have been payable to our Named Partners in the circumstance of a termination within two years following a Change in Control. Our Executive Chairman is not subject to Change in Control protection. Except as noted below, estimated amounts provided in the table below assume that a Change in Control occurred and the executive’s employment terminated on December 31, 2017. Amounts payable pursuant to a double trigger Change in Control situation are calculated according to the Change in Control Plan.

    Consistent with our historical disclosure, this table does not show any statutory or common law benefits payable pursuant to Canadian law in the event of termination without cause in the absence of a Change in Control circumstance, or the value of continued equity vesting, as it is not considered to be an incremental benefit to our Named Partners.

    1. For the purposes of this analysis, the Cash Severance for each Named Partner is determined pursuant to the “Lump Sum Cash Severance Payment” section in Potential Payments Upon Change in Control Termination. These amounts are converted from Canadian dollars to U.S. dollars based on the Bank of Canada daily average rate of exchange as of December 29, 2017 (1.2545), the last trading day of 2017.
    2. The amounts stated in the table represent the assumed cash value of the accelerated options derived by multiplying: (a) the difference between $14.47 (the closing share price of our Common Shares on the NYSE on December 29, 2017, the last trading day of 2017) and the options’ exercise prices, by (b) the number of options whose restrictions lapsed because of the termination.
    3. The amounts stated in the table represent the product of: (a) the number of RSUs whose restrictions lapsed because of the termination and (b) $14.57 (the average closing price of our Common Shares on the TSX on the five trading days prior to the date of assumed vesting, December 31, 2017, converted from Canadian dollars to U.S. dollars based on the Bank of Canada daily average rate of exchange on the preceding day, pursuant to the RSU Plan).
    4. The amounts stated in the table represent the product of: (a) the number of PGSUs whose restrictions lapsed because of the termination, and (b) $14.49 (the closing share price of our Common Shares on the TSX on December 29, 2017, the last trading day of 2017 prior to the date of assumed vesting, December 31, 2017, converted from Canadian dollars to U.S. dollars based on the Bank of Canada daily average rate of exchange on December 29, 2017, pursuant to the PGSU Plan).
    5. The Change in Control Plan provides benefit continuation under all life insurance, medical, dental, health and accidental and disability plans for a period of 24 months for each Named Partner. Barrick will also provide cash payment in lieu of the continued use of an automobile or continuation of an automobile benefit, as applicable, for a two year period for each Named Partner. The annual amounts shown below have been converted from Canadian dollars to U.S. dollars based on the Bank of Canada daily average rate of exchange as of December 29, 2017 (1.2545), and the total costs have then been multiplied by a multiple of two times for each of Messrs. Dushnisky, Thomson, and Hill, and Ms. Raw pursuant to the Change in Control Plan.

      Benefits and Perquisites for Severance Calculation

    6. The Change in Control Plan provides for job relocation counselling services, for a period not to exceed 18 months. The amounts shown here are based on an estimated cost of Cdn $20,000 for Mr. Dushnisky, Cdn $15,000 for Mr. Thomson, Cdn $15,000 for Ms. Raw, and Cdn $15,000 for Mr. Hill, converted to U.S. dollars based on the Bank of Canada daily average rate of exchange as of December 29, 2017 (1.2545), the last trading day in 2017.
  • Use of Non-GAAP Financial Performance Measures

     

    This Circular refers to “EBITDA”, “Adjusted EBITDA”, “Adjusted EBIT”, “Adjusted Net Earnings”, and “Free Cash Flow”, each of which is a non-GAAP financial measure without a standard meaning under IFRS. These measures may therefore not be comparable to similar measures presented by other companies. Set out below is a description of each of these measures and why we use them, together with a reconciliation to the most directly comparable measure under IFRS.

    EBIT and Adjusted EBIT

    EBIT is a non-GAAP financial measure, which excludes the following from net earnings:

    • Income tax expense;
    • Finance costs; and
    • Finance income.

    Adjusted EBIT is Adjusted EBITDA less depreciation. Other companies may calculate these measures differently. Please refer to the next section for a description of EBITDA, Adjusted EBITDA and a table that reconciles these non-GAAP measures to the most directly comparable IFRS measure.

    EBITDA and Adjusted EBITDA

    EBITDA is a non-GAAP financial measure, which excludes the following from net earnings:

    • Income tax expense;
    • Finance costs;
    • Finance income; and
    • Depreciation.

    Management believes that EBITDA is a valuable indicator of our ability to generate liquidity by producing operating cash flow to: fund working capital needs, service debt obligations, and fund capital expenditures. Management uses EBITDA for this purpose. EBITDA is also frequently used by investors and analysts for valuation purposes whereby EBITDA is multiplied by a factor or “EBITDA multiple” that is based on an observed or inferred relationship between EBITDA and market values to determine the approximate total enterprise value of a given company.

    Adjusted EBITDA removes the effect of “impairment charges” and starting in the second quarter 2017 MD&A, we began including additional adjusting items in the Adjusted EBITDA reconciliation to provide a greater level of consistency with the adjusting items included in our Adjusted Net Earnings reconciliation. These new items include: acquisition/disposition gains/losses; foreign currency translation gains/losses; other expense adjustments; and unrealized gains on non-hedge derivative instruments. These amounts are adjusted to remove any impact on finance costs/income, income tax expense and/or depreciation as they do not affect EBITDA. The prior periods have been restated to reflect the change in presentation. We believe this additional information will assist analysts, investors, and other stakeholders of Barrick in better understanding our ability to generate liquidity from operating cash flow, by excluding these amounts from the calculation as they are not indicative of the performance of our core mining business and not necessarily reflective of the underlying operating results for the periods presented.

    EBITDA and Adjusted EBITDA are intended to provide additional information to investors and analysts and do not have any standardized definition under IFRS, and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. EBITDA and Adjusted EBITDA exclude the impact of cash costs of financing activities and taxes, and the effects of changes in operating working capital balances, and therefore are not necessarily indicative of operating profit or cash flow from operations as determined under IFRS. Other companies may calculate EBITDA and Adjusted EBITDA differently. The following table reconciles this non-GAAP measure to the most directly comparable IFRS measure.

    Reconciliation of Net Earnings to EBITDA and Adjusted EBITDA

    1. Finance costs exclude accretion.
    2. Net impairment reversals for the current year primarily relate to impairment reversals at the Cerro Casale project upon reclassification of the project’s net assets as held-for-sale as at March 31, 2017 and impairment reversals at Lumwana during the fourth quarter of 2017, partially offset by net impairments at Acacia’s Bulyanhulu mine and the Pascua-Lama project during the fourth quarter of 2017.
    3. Disposition gains for the current year primarily relate to the sale of a 50% interest in the Veladero mine and the gain related to the sale of a 25% interest in the Cerro Casale project.
    4. Other expense adjustments primarily consist of reduced operations program costs at Acacia’s Bulyanhulu mine.

    Adjusted Net Earnings

    “Adjusted net earnings” is a non-GAAP financial performance measure which excludes the following from net earnings:

    • Impairment charges (reversals) related to intangibles, goodwill, property, plant and equipment, and investments;
    • Acquisition/disposition gains/losses;
    • Foreign currency translation gains/losses;
    • Significant tax adjustments;
    • Unrealized gains/losses on non-hedge derivative instruments; and
    • Tax effect and non-controlling interest of the above items.

    The Company uses this measure internally to evaluate our underlying operating performance for the reporting periods presented and to assist with the planning and forecasting of future operating results. Barrick believes that adjusted net earnings is a useful measure of our performance because impairment charges, acquisition/disposition gains/losses and significant tax adjustments do not reflect the underlying operating performance of our core mining business and are not necessarily indicative of future operating results. Furthermore, foreign currency translation gains/losses and unrealized gains/losses from non-hedge derivatives are not necessarily reflective of the underlying operating results for the reporting periods presented. The tax effect and non-controlling interest of the adjusting items are also excluded to reconcile the amounts to Barrick’s share on a post-tax basis, consistent with net earnings.

    Adjusted net earnings is intended to provide additional information only and does not have any standardized meaning under IFRS and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Other companies may calculate these measures differently. The following table reconciles this non-GAAP measure to the most directly comparable IFRS measure.

    Reconciliation of Net Earnings to Net Earnings per Share, Adjusted Net Earnings and Adjusted Net Earnings per Share

    1. Net impairment reversals for the current year primarily relate to impairment reversals at the Cerro Casale project upon reclassification of the project’s net assets as held-for-sale as at March 31, 2017 and impairment reversals at Lumwana during the fourth quarter of 2017, partially offset by net impairments at Acacia’s Bulyanhulu mine and the Pascua-Lama project during the fourth quarter of 2017.
    2. Disposition gains for the current year primarily relate to the sale of a 50% interest in the Veladero mine and the gain related to the sale of a 25% interest in the Cerro Casale project.
    3. Significant tax adjustments for the current year primarily relate to dividend withholding tax expense and a tax provision relating to the impact of the proposed framework for Acacia operations in Tanzania, partially offset by the anticipated impact of the U.S tax reform.
    4. Other expense adjustments for the current year primarily relate to losses on debt extinguishment and reduced operations program costs at Acacia’s Bulyanhulu mine.
    5. Tax effect and non-controlling interest for the current year primarily relates to the impairment reversals at the Cerro Casale project, tax provision at Acacia and Pueblo Viejo depreciation adjustment discussed above.
    6. Calculated using weighted average number of shares outstanding under the basic method of earnings per share.

    Free Cash Flow

    Free cash flow is a non-GAAP financial performance measure which excludes capital expenditures from net cash provided by operating activities. Barrick believes this to be a useful indicator of our ability to operate without reliance on additional borrowing or usage of existing cash. Free cash flow is intended to provide additional information only and does not have any standardized meaning under IFRS, and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The measure is not necessarily indicative of operating profit or cash flow from operations as determined under IFRS. Other companies may calculate this measure differently. The following table reconciles this non-GAAP measure to the most directly comparable IFRS measure.

    Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow

    Other Information

     

    SCHEDULE C

    KEY CHARACTERISTICS OF THE PERFORMANCE GRANTED SHARE UNIT (PGSU) PLAN

    1. The Compensation Committee may, in its discretion, accelerate vesting of all or a portion of the then unvested PGSUs.
    2. The Compensation Committee may, in its discretion, waive the prohibitions on the sale, transfer, or other disposition of the Restricted Shares with respect to any or all Restricted Shares held by the employee at any time and from time to time.

    SCHEDULE D

    KEY CHARACTERISTICS OF THE RESTRICTED SHARE UNIT (RSU) PLAN

    SCHEDULE E

    KEY CHARACTERISTICS OF THE PERFORMANCE RESTRICTED SHARE UNIT (PRSU) PROGRAM

    Equity Compensation Plan Information

    Barrick has two compensation plans under which our Common Shares are authorized for issuance: the 2004 Plan and the Amended and Restated Stock Option Plan (the Amended and Restated Plan, and collectively with the 2004 Plan, the Option Plans). In 2007, shareholder and regulatory approval was obtained for amendments to the 2004 Plan.

    The purpose of the Option Plans is to provide key employees and consultants of the Company and its subsidiaries with compensation opportunities that encourage share ownership and enhance our ability to attract, retain, and motivate key personnel. The Option Plans are designed to reward significant performance achievements.

    The Company’s directors are eligible to receive options under the Amended and Restated Plan, but no options have been granted to non-executive directors since 2003. Non-executive directors are not eligible to participate in the 2004 Plan. The Compensation Committee decided in 2013 to cease granting options as a component of executive compensation going forward.

    The Compensation Committee administers the Option Plans. All grants of options are subject to approval by the Board.

    The following table provides information as of December 31, 2017 and March 1, 2018, regarding Common Shares issuable upon the exercise of options under each of our Option Plans, as well as the number of Common Shares available for issuance under each such plan.

    Equity Compensation Plans

    Key Features of our Option Plans

    1. As of March 1, 2018, 21,944,288 Common Shares had been issued pursuant to options granted under the Amended and Restated Plan, representing 1.88% of the Company’s outstanding capital as of that date. As of December 31, 2017, there were options outstanding to purchase an aggregate of 300,000 Common Shares under the Amended and Restated Plan, representing 0.03% of the Company’s outstanding capital as of that date, taking into account options that have been exercised, forfeited, or cancelled.
    2. As of March 1, 2018, 8,395,488 Common Shares had been issued pursuant to options granted under the 2004 Plan, representing 0.72% of the Company’s outstanding capital as of that date. As of December 31, 2017, there were options outstanding to purchase an aggregate of 699,467 Common Shares under the 2004 Plan, representing 0.06% of the Company’s outstanding capital as of that date, taking into account options that have been exercised, forfeited, or cancelled.

    Key Terms and Conditions of the Amended and Restated Plan

    Key Terms and Conditions of the 2004 Plan

    Burn Rate of our Option Plans

    The table below sets out the burn rate of the Amended and Restated Plan and the 2004 Plan for the three most recently completed fiscal years. The “burn rate” is defined as the number of options granted in a fiscal year divided by the weighted average number of Common Shares outstanding in that year(1).

    1. The weighted average number of Common Shares outstanding is the number of Common Shares outstanding at the beginning of the period, adjusted by the number of Common Shares bought back or issued during the period multiplied by a time-weighting factor. The time-weighting factor is the number of days that the Common Shares outstanding as a proportion of the total number of days in the period.

    Directors’ and Officers’ Insurance and Indemnification

    During 2017, we purchased insurance for the benefit of our directors and officers, and those of our subsidiaries, against liabilities incurred by them in their capacity as directors and officers, subject to certain limitations contained in the OBCA. The premium for such insurance was $4.3 million. The policy provides coverage to each director and officer of $260 million in the policy year from July 12, 2017 to July 12, 2018.

    In accordance with the provisions of the OBCA, our by-laws provide that we will indemnify a director or officer, a former director or officer, or another individual who acts or acted at the Company’s request as a director or officer (or in a similar capacity) of another entity against all costs, charges, and expenses, including amounts paid to settle an action or to satisfy a judgment reasonably incurred in respect of any civil, criminal, administrative, investigative, or other proceeding in which the individual is involved because of the association with the Company or other entity if the individual acted honestly and in good faith with a view to the best interests of the Company or, as the case may be, to the best interests of the other entity for which the individual acted as a director or officer (or in a similar capacity) at the Company’s request. If we become liable under the terms of our by-laws, our insurance coverage will extend to our liability; however, each claim will be subject to a deductible of $2.5 million or $5 million, depending on the nature of the claim.