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Personnel changes aplenty at beleaguered Barrick as focus shifts to China

Barrick Gold Corp (TSE:ABX) (NYSE:ABX) has announced a series of high level personnel changes, starting with the news that founder and chair Peter Munk is to step down from the Toronto-headquartered miner’s board of directors next year at the gold giant’s annual meeting of shareholders. 

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Barrick Gold Corp (TSE:ABX) (NYSE:ABX) has announced a series of high level personnel changes, starting with the news that founder and chair Peter Munk is to step down from the Toronto-headquartered miner’s board of directors next year at the gold giant’s annual meeting of shareholders. 

According to a company statement released after the bell, John Thornton, Munk’s co-chair since 2012, will attempt to fill the 86-year-old’s shoes, taking over the position of chairman effective as of the same meeting, likely to occur in late April.

That meeting is to see two other directors -- Howard Beck and ex-PM Brian Mulroney, both Barrick veterans – step down from the board in favour of new faces.

The board has put forward four names for election as independent directors at the 2014 AGM -- Ned Goodman of Dundee Corp., Nancy Lockhart of Frum Development Group, former University of Toronto president David Naylor and Ernie Thrasher, CEO of Xcoal Energy & Resources – in a move that will change the mix to 10 independent directors and four non-independent directors.

One personnel change noted in the same announcement, set to take effect sooner rather than later, is the appointment of James Gowans, ex- of DeBeers Canada, who takes on the role of executive vice president and chief operating officer in late January of the New Year.

Perhaps more telling is the new pay-for-performance executive compensation plan included as part of the reforms, scheduled to take effect as of next year's AGM. It is a move designed to “further [link] compensation with the long-term interests of shareholders,” according to the company statement released. "[Barrick] has consulted extensively with shareholders in the development of this plan and continues to do so.”

Indeed, shareholder disquiet is certainly at the root of the changes, as the gold giant lurches to the end of an annus horribilis that has seen write-downs, cost overruns and a shareholder rebellion over executive compensation, most notably Thornton’s multi-million dollar signing bonus, amid a cratering gold market.

Falling commodities prices hit the world's leading gold producer hard, as they have done to miners across the industry. Costs that have spiraled out of control over the decade-long bullion boom proved unsustainable in a lower-price environment.

The string of misfortunes has seen a precipitous drop in the value of Barrick shares over the past 12 months. Last month, the company said it was suspending construction at its Pascua-Lama mine that straddles the Chile-Argentina border as a means to conserve cash and reduce capital costs for next year by up to another $1.0 billion. 

Thornton’s plans for the company, discussed in an afternoon press conference in Toronto, seem to indicate a desire to move towards a partnership with China, with the chairman-to-be saying that he would like the miner to build a long-term relationship with the Asian giant.

“What we are interested in is a distinctive, enduring relationship with the Chinese that, if it were the right kind of relationship, should exist in perpetuity,'' he said.

Either way, with speculation on the "when" of Munk's retirement now concluded, it’s the end of an era, and one that the man who took the company from a one-mine junior to a leading producer told a news conference in Toronto was “sweet and sour”, even as he noted his faith in those now leading Barrick.

“To me, what matters is what really is right for Barrick.”

Shares in Barrick ended the day at $16.71 on the TSX on Wednesday afternoon, up 21 cents for the day but well down on the 52 week high of $35.50 hit in January.

Quick facts: Barrick Gold Corp.

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TSX:ABX
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