Battered gold miners mount charm offensive to sell executive pay

Mon Jan 18, 2016 2:55pm EST
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By Susan Taylor and Nicole Mordant

TORONTO/VANCOUVER Jan 18 (Reuters) - Gold mining companies are running a charm offensive with their biggest shareholders on the thorny issue of executive pay, keen to hold onto investors angry about ongoing generous compensation after four years of dire stock returns.

Stung by a reprimand from disgruntled shareholders in proxy votes last year, some miners are meeting investors earlier than ever to win support for compensation plans months ahead of spring 'say-on-pay' votes.

Largely abandoned by generalist funds after a 44 percent drop in gold prices and 70 percent slump in stock values since 2011, the mining firms are desperate to avoid a further exodus of sector-focused funds.

"If you have say-on-pay votes against you and ... you're unwilling to change, people vote with their feet," said London-based Jamie Horvat, who manages the $1.5 billion Vanguard Precious Metals and Mining Fund.

In Canada, home to more large gold producers than any other country, at least three big miners began talking to shareholders last fall about 2016 executive pay, some six months ahead of when miners typically visited investors in past years - if at all - with pay plans.

Mining executives are generally well paid, but the gold industry "is in its own class," said Steve Chan, a principal at executive compensation consultant Hugessen Consulting.

Gold executive pay surged alongside company profits as bullion prices rose nearly five-fold between 2005 and 2011, Chan said. But compensation did not typically follow profits lower as bullion declined.

Cash-strapped miners have reduced costs in every corner - selling assets, closing mines and cutting staff - but CEO pay at the biggest miners is still increasing, a late-2015 study shows.   Continued...