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Shareholder revolt at Barrick ASM; executive compensation rejected

Barrick’s annual shareholder meeting Wednesday was marked by a group of institutional investors rejecting a nonbinding company resolution on executive compensation in a move rarely seen in Canadian business circles, signalling underlying shareholder disgruntlement with the embattled gold giant.

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Barrick Gold Corp.’s (TSE:ABX) (NYSE:ABX) annual shareholder meeting Wednesday was marked by a group of institutional investors rejecting a non-binding company resolution on executive compensation in a move rarely seen in Canadian business circles, signalling underlying shareholder disgruntlement with the embattled gold giant.

A group of institutional investors representing several of Canada’s largest pension funds made its displeasure plain a week earlier on the matter of co-chairman John Thornton’s US$11.9-million signing bonus, broadcasting their intention to reject the resolution at this morning’s meeting.

Co-chairman and company founder Peter Munk addressed the issue head on in a speech that talked up the qualifications and track record of Thornton, a former president of Goldman Sachs.

“We had to secure him,” Munk said, referring to the controversial signing bonus. “The right thing was to have this advanced investment, to secure the kind of access he could give us and the credibility he could provide us with in securing major capital.”

It was a keenly-anticipated meeting for shareholders who have watched while the value of their shares has dropped to less than half what it was trading at in the last year in the midst of various project delays, asset write downs and an industry-wide market drubbing.

The hall where the meeting was held reached capacity half an hour before the event was scheduled to begin, leaving many shareholders locked out, according to reports. 

President and CEO Jamie Sokalsky told the company's annual meeting of shareholders he shared their disappointment after the slew of recent events that had the gold giant beset on every side.

"This has been a tough year for Barrick and our shareholders. It seems as if our company has been under siege by several disappointments and setbacks," Sokalsky told the meeting.

"I feel your disappointment, and I give you my commitment that we will do everything we can to ensure Barrick remains a strong and prosperous company, and improve our share price."

The upshot of the quarterly results released Wednesday morning is that Barrick attributes its lowered profits to a drop in gold and copper prices as well as reduced volumes sold during the quarter.

Cuts to spending were promised in the same report, with capital expenditure to drop to between US$5.2 to US$5.7 billion from the previous guidance of US$5.7 to US$6.3 billion and the planned spend on exploration to drop from the US$400 to US$440 million of previous guidance to a range of US$300 to US$340 million.

In a statement issued earlier in the day with the company’s quarterly results for the first three months of 2013, Sokalsky spoke of the need to augment returns.

"While we remain positive on the long-term fundamentals for gold and copper, we don't rely on higher metal prices to be the only driver of shareholder returns," Sokalsky said.

In the same statement, Sokalsky said the company was taking a “hard look” at “evaluating all alternatives” to its trouble-plagued Pascua-Lama project in light of the recent court-ordered suspension of construction at the site and attendant uncertainties, while also working to address regulatory issues cropping up on the Chilean side of the border-straddling project.

Barrick shares were trading at $18.49 per share on the TSX in the early afternoon, from an open of $18.90.

Quick facts: Barrick Gold Corp.

Price: 35.21 CAD

TSX:ABX
Market: TSX
Market Cap: $62.61 billion
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