Barrick Gold Corp. (ABX), the world’s largest gold company, said directors Donald Carty andRobert Franklin resigned less than two weeks after the company announced a shakeup of its board.
Carty and Franklin joined the board after Barrick bought Placer Dome Inc. in 2006, the Toronto-based company said yesterday in a statement. The company didn’t give reasons for the departures. Both were classified as independent directors, according to a March filing.
The board departures come at the end of a difficult year for Barrick. Gold futures have declined 27 percent this year, helping spur $8.7 billion of writedowns, and ballooning costs and environmental challenges helped shut its biggest construction project, the Pascua-Lama mine in the Andes.
Barrick said earlier this month that Chairman and founder Peter Munk would step down at the company’s annual shareholders meeting next year and would be replaced by current co-Chairman John Thornton. The company also said directors Howard Beck and Brian Mulroney wouldn’t stand for re-election. The company said at the same time it would nominate four new independent directors, including Ned Goodman, chief executive officer of Dundee Corp., and former University of Toronto President David Naylor.
The Carty and Franklin resignations are “probably just a continuation of the housecleaning that’s been going on,” Chris Mancini, an analyst for Rye, New York-based Gabelli Gold Fund, said today in a telephone interview. “Broadly speaking, it’s nice to see that the board will be getting some new blood.”
Carty, who is now chairman of closely held Porter Airlines Inc., was a CEO and chairman of AMR Corp., the former parent of American Airlines. Franklin, who heads investment company Signalta Capital Corp., was chairman of Placer Dome from 1993 until Barrick bought the competitor in 2006 for about $10.2 billion including net debt.
The resignation of directors so soon after the previous announcement “indicates a high level of dysfunctionality within the board,” David Christensen, CEO of San Mateo, California-based ASA Gold & Precious Metals Ltd., said yesterday in a phone interview. ASA manages about $300 million, including Barrick shares. While Christensen said he supports the management team, the board changes announced earlier this month were “underwhelming.”
Andy Lloyd, a spokesman for Barrick, denied in an e-mail yesterday there was dysfunction in the board. He declined to comment further on the statement.
Barrick fell 0.8 percent to C$18.08 at the close in Toronto. The shares have declined 48 percent this year.
Barrick said in September it was considering adding new independent directors and changing its executive pay policies after some investors criticized the company for awarding Thornton an $11.9 million signing bonus.
Canada’s biggest pension funds wanted new independent board members and said the miner should consider replacing directors who had been there longer than 20 years and were close to Munk, two investors briefed on the matter said in September.
Barrick said Dec. 4 it would propose a new executive-compensation plan before the next shareholders meeting.
Barrick’s board will shrink to 11 as a result of yesterday’s departures. If there are no more changes announced, the departures and appointments planned for the AGM will result in a board of 12 directors, including eight independent directors.
Given that the founder is resigning and the company will soon have a new chairman, “it’s not a surprise to have some turnover,” Keith Hoppe, an analyst at Minneapolis-based Thrivent Financial for Lutherans, said today by phone. Thrivent has more than $75 billion in assets under management, according to its website.
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