Annual meeting: April 20
CEO Gary Goldberg has been at Newmont Mining since 2011, becoming CEO in 2013. When Goldberg became CEO the stock price was trading at approximately $41 per share. In 2015 at one point it traded under $20. In 2016, the stock improved, and Goldberg’s total compensation increased 24% percent to $16.5 million. This large upside for improved stock performance represents a great flaw of executive compensation practices, because the inverse never seems to be true.
Indeed, Goldberg’s salary has increased every year, to $1.27 million in 2016. Likewise, with his stock awards, which were $5.9 million in 2014 and $11,778,961 in 2016 ($9,395,636 in performance stock units and $2,383,326 in restricted stock units).
According to press reports, ISS recommends a vote against because, according to a recent press report, “The CEO’s fixed pay and incentive opportunities increased following significant stock price decline.” Further, according to a company with a filing, ISS found that “the [compensation] plan could provide for vesting at target where stock price remains flat over the performance cycle.
Stock awards are a particularly problematic payment in an industry this volatile. The stock at Newmont swung wildly in 2016. Once article notes for example, that, “Over the past year, the stock has traded as low as 11.5 times free cash flow and as high as 31.0 times.” The price used to determine target value of the 2016-2018 awards was $19.04 per share. However, by December 30, 2016, the closing price of the stock was $34.07.
The company notes that such stock awards “represent the single largest component of the officer compensation program.” This is true. The proxy statement goes on to state that it is “aligned with shareholders experience.” That is false. Shareholders purchase stocks at a certain price; long term shareholders hold them through the ups and downs of stock. Executives do benefit considerably when stock price goes up, but face only paper losses based on estimates when the stock falls. Shareholders are unlikely to receive large grants at the bottom of the market, and executives often do.