Barrick Gold Corp signaled on Friday that founder and Chairman Peter Munk is likely to step down from the board at next year's annual meeting, a move sources pinned to concerns surrounding the gold miner's recent $3 billion equity offering.
Sources familiar with the situation say banks underwriting the huge offering have struggled to sell as much as one third of the shares on offer, amid investor concern around corporate governance issues within Barrick, specifically the number of independent board members and the role of Munk.
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Munk, 86, has always driven Barrick's agenda: he started the company in 1983 and forged it into the world's largest gold producer. Recent missteps such as the shelving of the costly Pascua-Lama project in the Andes have prompted investors to question the leadership of a man once viewed as a visionary in the mining industry.
In an amended regulatory filing relating to the equity offering, one of the largest in Canadian history, Toronto-based Barrick said it is working to address shareholder concerns.
It indicated that Munk is likely to bow out by the time of the AGM, which is likely to take place in the April.
"The board is addressing the issues that have been raised with our directors, which include modification of the company's executive compensation arrangements, the rejuvenation of the board through a combination of departures from the board, the addition of independent directors and succession in the chairman role at the company, consistent with Mr. Munk's desire to retire as chairman of the board," the filing said.
"The company's intention is to update the market before year end on these initiatives, with governance changes expected to take effect in conjunction with Barrick's next annual meeting."
Barrick said the filing was meant to clear up confusion in the market around the timeline for Munk's departure.
Barrick has hinted in the past that Munk was likely to leave soon, but the company had been less explicit about the timing.
Barrick faced a minor shareholder revolt at this year's annual meeting, with around 85 percent of its shareholders opposing its nonbinding resolution on executive compensation.
The revolt began after a group of Canada's top pension funds publicly opposed a $11.9 million signing bonus for Co-Chairman John Thornton, the man tipped as the miner's next chairman.
Proxy advisory firm Glass Lewis, earlier this year, advised its clients to withhold votes from three directors, as the board does not have a two-thirds level of independence.
The generous bonus for Thornton was a particular focus of investor discontent, given problems that have plagued Barrick for months, including ballooning capital costs at its key growth project, Pascua-Lama, a mine it was building on the border of Chile and Argentina.
Last month, Barrick said it would stop development of Pascua-Lama indefinitely, a surprise reversal on a project that has already cost it more than $5 billion.
Investors have also taken umbrage with Barrick's disappointing push into copper through its C$7.3 billion ($7 billion) takeover of Africa-focused copper miner Equinox in 2011. Several sources familiar with the matter have told Reuters that Munk himself played a pivotal role in pushing for the deal.
Barrick shares, down 45 percent year to date as of Thursday's close, were down less than a percent at C$18.88 on the Toronto Stock Exchange on Friday afternoon.
(Reporting by Euan Rocha; editing by Janet Guttsman, Andrew Hay; and Peter Galloway)