Source: Bloomberg – Barrick Gold at 20-Year Low Turns to Thornton
Barrick Gold Corp. (ABX) founder Peter Munk sees a successor in former Goldman Sachs Group Inc. (GS) President John Thornton as the world’s biggest gold miner tries to reverse a 54 percent plunge in market value in the past year.
“I searched the world for a successor,” Munk, the 85- year-old chairman of Barrick, said yesterday in an e-mailed statement. “I am delighted I found John. I am confident he will take Barrick to a new level as a global player.”
Thornton, 59, faces his first annual shareholders’ meeting tomorrow as co-chairman after the Toronto-based miner has struggled with cost overruns, writedowns, and opposition to his $11.9 million signing bonus from shareholders including Canada’s six largest pension fund managers.
Barrick, which also reports first-quarter earnings tomorrow, this month lost its position as the top gold miner by market value to Goldcorp Inc. (G), which produces fewer than half the ounces of the precious metal. It’s “appropriate” that the company considers a path to new leadership at a board level, Munk wrote in Barrick’s annual report filed March 25.
“My job was to develop the strategic vision, seek new opportunities, develop strong partnerships, build relationships with government leaders, and navigate some of the tough environments we work in,” Munk said in the e-mail yesterday. Thornton has those skills, he said.
Thornton joined Goldman Sachs’s mergers and acquisitions department in 1979 and moved to London a few years later to lead the firm’s efforts to break the hold U.K. investment banks had on clients there, according to William Cohan’s book “Money and Power: How Goldman Sachs Came to Rule the World.” During his 23-year career at Goldman Sachs, Thornton spent 1996 to 1998 as chairman of the business in Asia.
Thornton and John Thain rose to become co-presidents of the firm under former Chief Executive Officer Henry “Hank” Paulson at the time of Goldman Sachs’s 1999 initial public offering and for a few years they were seen as the most likely successors. In 2003, when it became clear to Thornton that Paulson wanted to stay in the job for longer, and after then-Vice Chairman Lloyd C. Blankfein was named to join the firm’s board, Thornton left to be a professor at the Tsinghua University School of Economics and Management.
Thornton’s “greatest strength” is strategy, said Goldman Sachs Vice Chairman J. Michael Evans, who worked with him in London and New York.
“As co-chairman of Barrick I would have thought he would be bringing a pretty significant strategic dimension to the thinking around where should the company go, particularly in the gold business,” Evans said yesterday by phone.
Thornton remains a professor and director of Tsinghua University’s global leadership program. He’s also chairman of the board of trustees of Washington-based Brookings Institution, sits on the boards of HSBC Holdings Plc, Ford Motor Co. and China Unicom (Hong Kong) Ltd. and has served as a director of Intel Corp. and News Corp.
Thornton, also a member of the international advisory board of China Investment Corp., the nation’s sovereign wealth fund, is one of the top foreign experts on China, said Dominic Barton, the London-based managing director of McKinsey & Co.
“He’s got a very unique line on many different parts of the world,” Barton said yesterday in a telephone interview. “There are not many people like him that have a global view of key countries and markets at the highest level.”
Thornton, who was elected to Barrick’s board in February 2012, joins the company as sentiment toward gold miners has soured.
Hiring Thornton was a coup for Barrick, said Ned Goodman, CEO of Toronto-based asset manager Dundee Corp.
“This guy is a superstar,” Goodman said in an April 19 telephone interview. “He has access to raise capital in places of the world that very few people actually have access to. As a shareholder of the company I’m very excited about the fact that he’s there.”
The funds’ reaction shouldn’t come as a surprise in an era of increasing shareholder concern and willingness to act on compensation issues, said Steve Chan, principal at Hugessen Consulting Inc. in Toronto, which advises boards on compensation.
“The pay is high relative to peers, lacks performance conditions, and there was limited explanation,” Chan said in an e-mail yesterday.