In the proxy circular for its annual meeting, to be held Friday, the company disclosed for the first time that it paid one-time bonuses to top executives to reward them for the company’s February, 2022, merger with Kirkland Lake Gold, including $10-million to executive chairman Sean Boyd, the former chief executive officer of Agnico Eagle. That pushed Mr. Boyd’s total pay above $20-million, higher than the CEO of any other metals miner in the S&P/TSX 60.
The company lays out an extensive explanation for the bonuses in its proxy statement to shareholders, citing “the transformational nature of the merger” which cemented “the company’s position as a ‘super senior’ in the gold mining industry.” The company also pushed up its estimate of cost savings from the merger to US$425-million over the first 10 years, from a previous forecast of $320-million.
However, Agnico Eagle is facing trouble in its shareholder advisory vote on executive compensation, or say on pay, to be held Friday. Last year, the company had the worst say on pay vote result in Canada, with only 24 per cent of shareholders approving of Agnico Eagle’s compensation philosophy.
This year, two major proxy advisers have advised shareholders to vote “no” once again in the nonbinding vote. And they’re also advocating shareholders vote against Robert Gemmell, the chair of the company’s compensation committee. Institutional Shareholder Services, one of the two advisers along with Glass Lewis & Co., says Agnico Eagle’s compensation committee “has failed to adequately address pay-for-performance concerns, and significant problematic pay practices have been identified.”
The special merger bonuses, ISS says, “were made without considering rigorous performance criteria.” Since they were made in cash, they aren’t tied to the company’s future long-term performance, ISS argues.
If Agnico Eagle fails its say on pay vote Friday, it will be the rare Canadian company to lose two consecutive votes. Wealth management company CI Financial Inc. failed in both 2021 and 2022, the only company last year to have lost two years in a row.
Chris Vollmershausen, the company’s general counsel, said in an e-mailed statement that the company feels the one-time bonus payments “were fair, reasonable, and well-earned, given the extraordinary economic benefits derived for the shareholders of Agnico Eagle” and the company has “significantly strengthened our approach to executive compensation in recent years based on direct input and feedback from our investors.” As 2022 compensation, the bonuses were properly disclosed in the 2023 circular, he said.
“We believe the issues raised by the proxy advisory firms undervalue the company’s strong performance in 2022 and unduly emphasize exceptional one-time events that do not reflect Agnico Eagle’s current and overall approach to executive compensation,” the e-mail said.
Agnico Eagle says that when it announced the merger, it anticipated a leadership team of Mr. Boyd, Anthony Makuch as CEO, and Ammar Al-Joundi as president of the combined company following the Kirkland merger. But Mr. Makuch, the Kirkland CEO, left suddenly 15 days after the merger, receiving a severance package the company valued at $13.5-million.
Agnico Eagle then promoted Mr. Al-Joundi to a combined CEO/president role. “This change is expected to result in significant savings,” the company tells shareholders in its proxy circular.
The company also cites the cost savings from cutting the number of executives at the vice-president level and above from 39 to 31 people.
Agnico Eagle’s compensation changes also included making share awards in December, rather than earlier in the year, to avoid the problem that occurs when the shares fall during the year; eliminating stock options for executives and toughening its post-merger severance terms.
All told, Mr. Boyd made $20.1-million, including a salary of $2.9-million, $6.6-million in share awards, the $8-million special bonus, and other compensation. That’s up nearly 30 per cent from 2021′s $15.7-million. (Agnico Eagle, like several other miners, reports compensation figures in U.S. dollars; The Globe and Mail has converted the pay into Canadian dollars for comparison purposes using the same exchange rates used by the companies in their pay disclosures.)
Mr. Al-Joundi made $9.9-million in 2022, including a $2-million merger bonus.
Mr. Boyd’s pay package allowed him to top Barrick Gold Inc. CEO Mark Bristow. Barrick, the most valuable miner in Canada by market capitalization, is often a pay leader. Mr. Bristow made $17.4-million, down from $18.1-million in 2021. The decline largely came because his $5.3-million bonus was down about $500,000 from 2021.
Executive chairman John Thornton made $4.1-million, roughly the same as 2021.
Barrick’s TSX-listed stock was essentially flat in 2022. According to S&P Global Market Intelligence, Barrick’s revenue dropped by 8 per cent and net income fell more than 80 per cent from 2021 thanks to a big asset writedown.
Former Teck Resources Ltd. CEO Donald Lindsay was also in the $10-million-plus club, earning just under $13-million, down from $13.2-million in 2021. His bonus of $2.86-million was about $200,000 less than 2021′s – although Teck revenue was up more than 35 per cent and net income increased nearly 16 per cent, according to S&P.
Among other metals miners in the S&P/TSX 60:
Franco Nevada Corp. CEO Paul Brink made $5.4-million, up nearly 14 per cent from 2021. The company’s shares had a total return of 6.5 per cent, but net income fell by 4.5 per cent.
Wheaton Precious Metals Corp. CEO Randy Smallwood made just under $6.7-million, up 5.8 per cent from 2021. The shares dropped slightly while profits fell by more than 11 per cent.
Kinross Gold Corp. CEO Paul Rollinson’s total compensation was essentially unchanged at about $8.8-million. The shares fell 22 per cent in 2022. Net income swung from US$221-million to a US$605-million loss.
First Quantum Minerals Ltd. CEO Tristan Pascall made $4.9-million in his first year at the helm. His father, Philip Pascall, made $7.4-million in 2021, his final full year in the job.