The gold giants have not yet solved one of the chronic problems of the sector: excessive remuneration of executives

Barrick Gold Corp. had promised to usher in a new era of discipline in the gold mining sector by announcing a far-reaching plan to take control of its American rival Newmont Mining Corp. under a contract of 17.8 billion US dollars.

Now that it has abandoned its major offensive, one of the chronic problems of the industry – the excessive remuneration of the leaders – has emerged. Ian Telfer, Chairman of the Board of Goldcorp Inc.

Telfer is expected to win the US $ 12 million sale of Goldcorp to Newmont – a pre-Barrick-Newmont deal that could have been abandoned as a result. That's almost three times what was announced for his retirement program before last week. Following the steady deterioration in the company's share price over the past decade, Goldcorp's investors spit fire.

Mackenzie Investments' portfolio manager, Benoit Gervais, described the payment in an "orderly" manner.

The Board of Shareholders of Gold Shareholders, formed last year by prominent institutional investors with the aim of better aligning corporate performance and executive pay, said it would be a another example of directors who favored cronyism over shareholder interests.

The reaction is totally rational. Goldcorp and Newmont's Boards of Directors Are at Risk of Palace Uprisings if They Fail to Revisit the Sumptuous Award, Presented in the Acquisition Documents, as a Retirement Allowance, Even Though Mr. Telfer Will Have a Vigilance Role -President at Newmont.

This is not the only big potential gain. Goldcorp could pay $ 33.2 million in cash for 26 executives who could be fired as a result of the deal with Newmont, including General Manager David Garofalo.

In January, Goldcorp, based in Vancouver, agreed to be absorbed by Newmont under a $ 10 billion deal. Goldcorp investors are offered shares and a little money. They had gone up the stock always lower and it was selling close to a historical nadir of less than $ 13. Even at $ 14.86, supported by the Newmont offering, Goldcorp represents 27% of its record level of 2011.

The plan as a whole was facing an existential threat in February, when Barrick – recently expanded through its merger with Randgold Resources Ltd. – – resulted in a fully composed offer for Newmont. The plan to combine the two major players in the sector offered no benefit to Newmont, but promised savings of US $ 7 billion by combining operations and management.

This consolidation, proposed by Mark Bristow, president and CEO of Barrick, was welcomed by those who lamented the inefficiency of the mining industry coupled with inadequate compensation systems with stock performance.

The catch? Barrick said Newmont should abandon its bid for Goldcorp and leave its exhausted shareholders in trouble. In the end, it's never been that far.

This week, Barrick agreed to forgo its offer and forge an alliance with Newmont to consolidate their Nevada business. It's unclear if this has always been the main goal, but now, Newmont can stick to Plan A, its takeover of Goldcorp. For the price, Newmont adds mines to Canada, Mexico and Argentina. It would also take a stake in Pueblo Viejo, a gigantic mine in the Dominican Republic that Goldcorp is co-owner of Barrick.

Mr. Telfer joined Goldcorp 14 years ago, when he bought Wheaton River Minerals. In 2006, after a brief stint as CEO, he became president. It was not an official role of executive chairman, although he was active in the sector alongside the company's leaders. Goldcorp stated that it had approved the increase in payments because, as chairman of the board, it had forfeited the right to benefits that it would otherwise have been entitled to receive as an officer, including a participation in the various incentive schemes of the directors.

Maybe, but the company will have a hard time convincing its investors that this is justified since Goldcorp is sold for a fraction of what it was worth before.

The agreement gives hope to shareholders who have survived the most difficult years of society, but without any guarantee, their loyalty will be rewarded. The board offers much better prospects to his.