Barrick Gold: Integrating ESG into the (Post-Merger) Executive Performance Scorecard

Nadine de Gannes; Shannon Fernandes

Product #:9B20B019

Supplier:Ivey

Discipline:Accounting, Sustainability

Setting:Canada, 2019

Details:Case (PDF) • 19 pages • 2020-10-20 (Rev: 2021-01-06)

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On January 2, 2019, Canada-based Barrick Gold Corporation (Barrick) and Randgold Resources (Randgold) merged to become the largest gold mining company in the world. Following the merger, Barrick’s new executive team communicated a financial strategy that emphasized a long-term focus, particularly on sustainability. Barrick’s executive performance scorecard—a key management tool used to direct executive attention and evaluate performance—had been introduced in 2013, after an overwhelming majority of shareholders voted against a proposed compensation plan at the annual general meeting. No changes had been made to the scorecard since 2015, despite changes in the organization and in the mining industry overall. An external human resources professional who was proposing a new executive scorecard for the company faced several questions: Should she emphasize the short-term or long-term incentive plan? Which metrics and weightings should be changed? Were the existing financial and non-financial measures still appropriate, and did they adequately reflect Barrick’s sustainability goals? Was Barrick doing enough to satisfy regulators, institutional investors, and the many guidelines and standards that had been released in recent years?

Learning Objectives

This case is intended for use in undergraduate- and graduate-level courses on managerial accounting and control, corporate governance, or responsible governance. The case also introduces executive incentive systems and the concept of the balanced scorecard (BSC), explores the background of Barrick Gold Corporation and the mining industry, and asks students to design a new executive performance scorecard that encompasses the strategic changes resulting from a merger and an increased emphasis on environmental, social, and governance factors. After working through the case and assignment questions, students will be able to do the following:

Assess the metrics used to direct executive attention, the weightings assigned to those metrics, and the means of assessing whether the metrics were achieved.
Explain corporate governance mechanisms such as the non-binding shareholder vote on compensation (i.e., the “say-on-pay” vote) and the integration of environmental, social, and governance metrics in executive incentive systems.
Evaluate and compare the appropriateness of specific metrics in short-term and long term incentive systems.

Barrick Gold: Integrating ESG into the (Post-Merger) Executive Performance Scorecard

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Learning Objectives