Barrick Gold signals founder Peter Munk to step down

Fri Nov 8, 2013 7:03pm EST
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By Euan Rocha and Michael Erman

TORONTO/NEW YORK (Reuters) - Barrick Gold Corp (ABX.TO: Quote) signaled on Friday that founder and Chairman Peter Munk will likely leave the board at next year's annual meeting, a move that sources say is intended to persuade reluctant investors to buy into the miner's $3 billion equity offering.

Sources familiar with the situation say banks underwriting the deal have struggled to sell as much as a third of the shares on offer. Investors have become increasingly concerned about Barrick's governance, especially what many see as the board's lack of independence and Munk's dominant role in the boardroom.

Munk, who turned 86 on Friday, has always driven Barrick's agenda: he started the company in 1983 and forged it into the world's largest bullion producer. Along the way, he has built a reputation as a visionary in the mining industry.

Recent missteps, however, include a disappointing bet on copper, ballooning costs at its Pascua-Lama project in the Andes and a huge signing bonus for his heir apparent. These have prompted some investors to question his leadership.

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 annual meeting, which is likely to take place in 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.

Barrick said it intends to update the market before year-end on those initiatives as well as governance changes expected to take effect in conjunction with the annual meeting.

Barrick has hinted in the past that Munk was likely to leave soon, but the company had been vague about the timing. On Friday, it said the filing was meant to clear up confusion in the market around the timeline for Munk's departure, even though it stopped short of specifying an exact date.   Continued...

Barrick Gold Corporation Chairman Peter Munk leaves the annual general meeting of shareholders in Toronto May 2, 2012. REUTERS/Mike Cassese