Sean Boyd in the Toronto head office of Agnico Eagle Mines Ltd. on Dec. 19, 2019.J.P. MOCZULSKI/The Globe and Mail
Agnico Eagle Mines Ltd. had the largest executive payroll among major Canadian miners for 2022 – and the biggest problem with unhappy shareholders.
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 Agnico Eagle’s February, 2022, merger with Kirkland Lake Gold, including $10-million to executive chairman and former chief executive officer Sean Boyd. That pushed Mr. Boyd’s total pay above $20-million, higher than the CEO pay of any other metals miner on the S&P/TSX 60.
The company lays out an extensive explanation for the bonuses in the 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 bumped up its estimate of cost savings from the merger to US$425-million over the first 10 years from a previous forecast of US$320-million.
However, Agnico Eagle is facing trouble in its shareholder advisory vote on executive compensation, or say on pay, also 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 its compensation philosophy.
This year, two major proxy advisers have told shareholders to vote “no” once again in the nonbinding ballot. And they’re also advocating that 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., said 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 said, “were made without considering rigorous performance criteria.” Since they were made in cash, they weren’t tied to the company’s long-term performance, ISS argued.
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 firm last year to have lost two years in a row.
Chris Vollmershausen, Agnico Eagle’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,” adding that the company has significantly strengthened its “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.
Agnico Eagle said 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. But Mr. Makuch, who was Kirkland’s CEO, left just 15 days after the merger with a severance package the company valued at $13.5-million.
Agnico Eagle then promoted Mr. Al-Joundi to the combined CEO/president role.
All told, Mr. Boyd made $20.1-million – a salary of $2.9-million, $6.6-million in share awards, the $10-million special bonus and other compensation. That’s up almost 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 in 2022, down from $18.1-million in 2021 – largely because his $5.3-million bonus was down about $500,000 from 2021.
Barrick 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, its revenue dropped 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 – even though Teck revenue was up more than 35 per cent and net income increased almost 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 almost 14 per cent from 2021. The company’s shares had a total return of 6.5 per cent, but net income fell 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 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.