Industry giant Barrick Gold (TSE:ABX) (NYSE:ABX) is feeling pressure for change at board level from investors looking to shake the gold miner up and seeking to hasten the exit of founder Peter Munk, according to accounts in the Wall Street Journal.
Large investors have demanded the world’s largest gold miner allow in “new independent directors soon” and also that Munk proffer a definite timeline for handing over to co-chair, John Thornton, according to the business stalwart citing sources described as “people familiar with the matter.” In particular, a group of roughly 10 European-based shareholders are set to send the board of directors a letter shortly, “demanding changes.”
The Journal went on to identify director Robert Franklin as one who was determined to rescind his place on the board unless some new directors were appointed.
It wouldn’t be the first time investors have spoken out over the gold giant’s management even this year.
The annual general meeting in April provided the occasion for a shareholder rebellion that culminated in a rejection of a $17 million remuneration package, that – apparently most galling to the seven pension funds raising objections – involved a $12 million signing fee. The repudiation of high-price tag paydays was resoundingly taken up in that 85 per cent of shareholders voted against the package, albeit the action could only ever be symbolic, as the shareholder vote was non-binding.
In many ways, Barrick is a bellwether of the industry, experiencing the pains common to all such precious metals miners in the new low price environment.
The price of gold has fallen precipitously this year and since the peak price of above $1,900 in late 2011 by almost 30 per cent. Concurrent with this fall – and with the heady days of the gold rush that preceded it – costs involved in producing the yellow metal have risen markedly, with equipment, labour costs and sometimes royalties spiking as all sides demanded a share in the boom.
In common with its chief commodity, this has been a bad year for the Toronto-based mining giant as one setback after another has taken its toll. This year alone, the company’s stock has fallen by nearly half.
In many ways Barrick is the author of its own suffering – again, in common with other ailing gold giants – in that it took the step of commissioning high cost projects predicated on gold prices staying above $1,500 an ounce, or even above $1,700 at the peak of the bull market. The decision to press ahead with such high-cost, high-stakes projects is often laid at Munk’s door.
Unsurprising then that calls to hasten the exit of 85 year-old Peter Munk – who started the company with a single gold mine in 1983 -- are coming from every corner.
Shares in Barrick were up the morning after the Wall Street Journal report, adding 23 cents in Toronto to hit $18.98 as of 9.41 am EST.