Ian Telfer is poised for a big payout if Newmont Mining Corp. succeeds in its US$10-billion acquisition of Goldcorp Inc.
The long-time Goldcorp chairman would be entitled to a lump sum retirement cash payment of US$12-million, Goldcorp said in a regulatory disclosure on Thursday. Previously, the company had said he would receive US$4.5-million upon retirement.
Goldcorp said it approved the increase, tied to the Newmont deal, partly because of Mr. Telfer’s role as “strategic leader” of the company since he became chairman in 2006.
In January, with its shares trading near a historic low, Vancouver-based Goldcorp agreed to a sale to Newmont. The success of the transaction was initially seen as a forgone conclusion. But last week, Barrick Gold proposed a US$17.8-billion acquisition of Newmont. If that deal succeeds, Newmont must cancel its plans to buy Goldcorp.
While he never had a formal title of “executive chairman,” Mr. Telfer, 72, has always functioned in a quasi-executive role, akin to John Thornton at Barrick Gold. Mr. Telfer is known for being the visionary behind Goldcorp and responsible for many of the firm’s strategic decisions, including its sale to Newmont.
As chair, Mr. Telfer made $1-million in 2017, however, more than four times higher than the next-best compensated director Bev Briscoe. His compensation for 2018 has not yet been disclosed.
Mr. Telfer joined Goldcorp in 2005 after it acquired his predecessor company Wheaton River Minerals. Mr. Telfer was CEO of Goldcorp for a short while after the departure of founder Robert McEwen. In 2006, he became chairman after the acquisition of Glamis Gold Ltd.
Mr. Telfer’s previous planned retirement payout of US$4.5-million dates back to that time. In merger documents filed Thursday, Goldcorp said that when he moved into the chairman’s role, he “relinquished entitlement to benefits he would have otherwise been entitled to receive as an executive, including participation in the various executive incentive plans.”
Benoit Gervais, portfolio manager with MacKenzie Investments, said the bump in the retirement payment to Mr. Telfer is “preposterous.”
“Where is the alignment between compensation and [shareholder] returns?” he said.
Mr. Gervais said it is another example of the “broken” compensation structure in the Canadian gold industry that he says often sees gold executives making lavish sums for subpar returns.
Two times in the past six years, Barrick Gold has lost non-binding “say-on-pay" votes at its annual general meeting in light of excessive compensation paid to Mr. Thornton. In particular, shareholders at the 2013 AGM decried the US$11.9-million signing bonus he earned when he joined the gold miner in 2012.
Goldcorp’s merger documents also reveal the company could pay out US$33.2-million in cash to 26 executives who may lose their jobs as a result of the acquisition by Newmont, including CEO David Garofalo, chief financial officer Jason Attew and chief operating officer Todd White. The executive contracts allow for the payouts if the executives resign for “a good reason” within 12 months of the merger, which typically includes being assigned to a new role with diminished responsibilities.
The merger also gives the executives the immediate ability to acquire and sell stock awards that otherwise would not have “vested,” or become usable, for months or years. The Goldcorp documents show the executives, including Mr. Garafolo, hold almost 3.1 million shares of stock awards, worth about US$33.5-million that they’ll be able to sell.
Mr. Garofalo’s cash severance is expected to be about US$6.7-million, according to the company’s 2018 proxy, plus immediate access to almost 700,000 stock awards worth about US$7.6-million, per Thursday’s disclosures.
Mr. Garofalo’s compensation for 2018 has not yet been disclosed. He made $8.4-million in compensation in 2017.
Unlike Mr. Garafalo, who will leave Goldcorp if the Newmont acquisition closes, Mr. Telfer will have a role at Newmont. He is set to become deputy chair.
Goldcorp shareholders will vote on April 4 whether to approve the transaction. Shareholders at Newmont must also approve the transaction for it to close. Newmont has not yet set a date for its vote.
Niall McGee
David Milstead