1.

How do you think Barrick’s strategy will change after its merger with
Randgold?
Before Merge
Before the merger, Randgold and Barrick had different approaches to their
incentive plan. These are the differences between Randgold and Barrick’s
strategies before the merger:
● Barrick
Barrick’s long-term incentive program was created with a detailed scorecard and
has a specific measure of success (i.e., targets). The long-term scorecard will
measure the participating executive on eight performance measures and will be
published and the end of each year for transparency to the shareholder. The
compensation will be awarded and converted into the Barrick common share.
These shares cannot be sold until the participating executive leave the company or
retires. These shares will be purchased on behalf of participating executives on the
open market so no dilution on shareholders.
The eight performance measures:
a. Return on invested capital (20%)
b. Dividend to shareholders (10%)
c. Free cash flow (10%)
d. Strong capital structure (10%)
e. Capital project performance (10%)
f. Strategic execution (15%)
g. Reputation and license to operate (15%)
h. People development (10%)
The plan had been accepted by the 80% of shareholders in 2014 but in 2015,
Thorton as Barrick chairman announced an increase of 35% in his salary or around
$13 million. This contrast with Barrick’s share price which lost a third of its value.
Thorton then reduces his pay to $3.1 million and then changes three of the
measurement as the table shown below.

2014 Performance Basis 2016 Performance Basis

Return on Invested 10-15% Return on Invested Description unchanged

Capital (20%) Capital (15%)

Dividends to Share 25-35% - based on the annual dividend Growth in Free Deliver positive and growing free
holders (10%) payout ratio. Achievement will be Cash Flow per cash flow per share
 based on the size of the dividend while Share (15%)
taking into account alternative uses of
cash to ensure a focus on delivering
excess returns.

Free Cash Flow (1 Positive Free Cash Flow Robust Dividend pe Description unchanged
0%) r Share (10%)

After that shareholders give feedback for a particular focus on sustainability and
governance issues. Therefore in 2017, Barrick released eight key reports for
environmental, social, and governance (ESG). Their short-term incentive program
was based on performance against strategic priorities or the Annual performance
Incentive (API) scorecard. They didn’t provide the same level of detail for their
short-term incentive plan.

● Rangold
In contrast with Barrick, Randgold focused more on its short-term incentive plan
and created a more detailed scorecard. The measurement broke down into five cat
egories:

a. Financial
b. Operational
c. Safety
d. Environment
e. Strategic
The employee will receive restricted stock units (RSUs). If the threshold was met
then they would vest 30% of the shares and will vest 100% of the share if the
maximum performance was achieved. On the other hand, their long-term incentive
payouts were based on three measures and would evaluate for a four-year period:

a. Reserve replacement ratio of reserves added compared to reserves mined

b. Total cash cost per ounce
c. Total shareholder return performance relative to peers
After Merge
After the merger, the choices of measurement and weighting would be assigned for
the long-term scorecard. The compensation was in the form of Barrick shares that
must be held until they retire or leave the company. Its also assigned sustainability
as a higher priority it appointed a special group sustainability executive dedicated to
“executive oversight of health, safety, community relations, and environmental
matters to further our sustainability vision.” In 2019 it created 18 indicators under
five sub-categories for their ESG performance which can be seen in the table
below.
 Safety Social and Economic Development Environment

Total Recordable Injury Frequency Rate Percentage of sites with Community Number of significant environmental
Development Committees incidents

Percentage of sites certified to ISO Percentage of the workforce that are Tonne CO2-e per tonne of ore
45001 nationals processed

Percentage of senior management that Emission reduction target set

are nationals

Percentage of economic value that stays Water use efficiency (recycled &
in the country reused)

Percentage of sites with Biodiversity

Action Plans

An Independent tailings review

conducted

Percentage of sites certified to ISO

14001

Human Right Governance

Percentage of security personnel Progress against Responsible Gold

receiving training on human rights Mining Principles implementation

The corporate human rights benchmark Percentage of employees receiving Code

score of Conduct training

Percentage of supply partners trained on

Code of Conduct onboarding