Barrick Gold Corp. Spins the C-Suite Revolving Door Once Morehttp://www.fool.com/investing/general/2014/07/17/barrick-gold-corp-spins-the-c-suite-revolving-door.aspx Rich Duprey
July 17, 2014
It's not exactly the Saturday Night Massacre, where President Nixon fired the special prosecutor investigating Watergate and forced the resignations of his attorney and deputy attorney general, but the ouster of Barrick Gold (NYSE: CEO) CEO after just two years on the job is surprising nonetheless, even if, as reports maintain, he and the miner's new chairman didn't agree on much.
Because it follows the failed merger attempt of rival Newmont Mining (NYSE: NEM) earlier this year, and comes after the boardroom upheaval Barrick endured late last year, it signals there's still a lot of dysfunction in the company's upper management. Especially when you consider two directors resigned in a huff over the appointment of two supposed independent directors -- who were chosen by the miner's retiring co-chairman and were seen as still beholden to him.
President and CEO Jamie Sokalsky will be stepping down from Barrick on Sept. 15, to be replaced, not by a new chief executive, but rather by two new co-presidents, positions that will be filled by current senior managers. Billed as a means of enabling Barrick to meet the "distinct demands and challenges of the mining industry in the 21st century," it also serves to consolidate power in the hands of the miner's chairman John Thornton, who seems to be continuing the tradition of continuous turnover at the CEO position.
Under former chairman Peter Munk, Barrick fired three CEOs in about a 10-year period, and Sokalsky himself assumed the role in June 2012 when then-executive Aaron Regent was tossed out amid falling gold prices and a slumping stock. No doubt Sokalsky knew his hold on the corner office was tenuous at best.
After all, he was not privy to the negotiations that were enjoined for the proposed Newmont merger, and when Barrick entered into a subsequent joint venture with Saudi Arabia Mining, Sokalsky was not a part of that either. Had the deal with Newmont been successful, assets that would have been spun off to make the deal work would have had Sokalsky shipped off to oversee them. When the talks crumbled, some anticipated he would be leaving sooner rather than later since it was apparent his authority was severely diminished.
The management upheaval also led to some immediate speculation there would be a rapprochement with Newmont and merger talks would resume. Thornton nixed the suggestion, saying it was "not on our mind" though it remains open to the possibility.
Although some big investors welcomed the change, believing the miner hasn't had effective management that's resulted in a depressed stock, it would seem much of the blame ought to be laid at the feet of former chairman Munk. After all, it