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(Adds comments from executive compensation experts)
By Allison Martell
TORONTO, March 31 (Reuters) - Barrick Gold Corp unveiled a new executive compensation plan on Monday, and leaddirector J. Brett Harvey said the company might select two newboard members after its annual meeting on April 30.
Under the plan, effective for 2014, compensation for mosttop executives will be based on performance and paid in unitsthat convert into Barrick shares and that cannot be sold untilthe executive retires or leaves the company.
The plan, detailed in a regulatory filing, is the latestmove by Barrick to improve governance after a series of misstepsin recent years angered investors. At last year's annualmeeting, shareholders voted down a nonbinding resolution onexecutive pay.
"We heard the shareholders loud and clear. We understoodwhat they had to say," Harvey, who chairs the compensationcommittee, told reporters on Monday.
In December, Barrick said two longtime directors would notstand for re-election and announced four new board nominees. It also confirmed that the company's founder, Chairman PeterMunk, would step down at the annual meeting and be replaced byCo-Chairman John Thornton.
"We've got four new board members coming on and then we'vegot, we're probably going to pick up two more after the AGM,"Harvey said.
He said the new compensation plan is meant to better line upmanagement's interests with those of shareholders: "The themeinternally became, instead of having wealthy managers, we wantedwealthy owners that were managers."
RETENTION ISSUES?
Harvey said he is not aware of any peer companies that placethe same restriction on selling share awards.
One company that has introduced a similar plan is HSBCHoldings, which overhauled its pay scheme when Thorntonwas chair of its compensation committee. HSBC Holdings'executives must retain long-term share awards until they retireor leave.
Shares awarded under Barrick's new long-term incentive plantake three years to vest, and if executives leave to join a competitor they forfeit shares that have not vested. Shares thathave vested become available over two years.
Frank Glassner, chief executive of Veritas ExecutiveCompensation Consultants, said even with penalties, the plancould give executives an incentive to leave the miner.
"We don't want to incent them for leaving. We certainlydon't want to punish them for their good performance in staying,either," he said.
While deferring some compensation is not uncommon, he said,three to five years is a best practice.
Yvan Allaire, executive chairman of the board of theInstitute for Governance of Private and Public Organizations,was positive about the plan overall, but he also said it couldcause retention problems.
"It's a giant step in the right direction," said Allaire,praising the move towards share awards over stock options.
Options have fallen out of favor in recent years in partbecause of concerns they encourage short-term thinking, andoffer executives gains if their company's stock rises withoutdownside risk if it falls.
"WE HEARD THE SHAREHOLDERS"
Thornton's total compensation was $9.5 million in 2013,including a $5 million cash award that he has committed to useto buy and hold Barrick shares. Last year, he bought shares withhis controversial $11.9 million signing bonus.
Barrick said all shares awarded under the long-termcompensation plan will be bought on the open market to avoiddilution. It also laid out new minimum ownership requirements,which among other things will require the chief executive to ownshares worth 10 times base salary by 2020.
Last year, proxy advisory firm Glass Lewis had recommendedthat its clients withhold votes from three Barrick directors atthe annual meeting, criticizing Thornton's signing bonus and theseverance paid to outgoing Chief Executive Aaron Regent, amongother things.
"In terms of large, discretionary packages, I think we heardthe shareholders on that," Harvey said. "I think we'll be veryhesitant to do that kind of thing." (Editing by Jeffrey Hodgson, Andre Grenon and Peter Galloway)
