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Philanthropist Ian Telfer said he’ll give it all away. But first…

by Greg Klein | March 15, 2019

The news hardly went unnoticed, despite being buried on page 88 of a 249-page management information circular. Goldcorp TSX:G and its chairperson Ian Telfer decided to nearly triple his retirement allowance, from about US$4.5 million to around US$12 million.

The payout depends on shareholders approving the company’s takeover by Newmont Mining NYSE:NEM.

Philanthropist Ian Telfer said he’d give it all away. But first …

At a public event in July, Goldcorp chairperson
Ian Telfer vowed to put all his money
into worthy causes.

The rationale? When Telfer took over the board he “relinquished entitlement to benefits he would have otherwise been entitled to receive as an executive, including participation in the various executive incentive plans, other than a retirement allowance,” the disclosure stated. “The retirement allowance approved in 2006 did not contain any indexing to reflect inflation, and other than his annual salary and annual Goldcorp RSU grants made at the same value as other Goldcorp directors, Mr. Telfer did not receive any other benefits from Goldcorp since that time.”

But condemnation came quickly. Telfer had already been “lining his pockets” with about US$11.8 million of shareholders’ money while heading a board whose “stock price has collapsed by nearly 60%,” argued the Shareholders’ Gold Council. “In Mr. Telfer’s role as a ‘strategic leader’ at Goldcorp, he has presided over one of the most disastrous and egregious examples of shareholder value destruction in the mining industry.”

The non-profit research group also attacked other Goldcorp figures, most notably CEO David Garofalo, who’d get “an outrageous change of control package of up to C$11 million, despite his role in destroying over C$3.7 billion in shareholder value…. While Goldcorp is telling its shareholders to sell their shares close to a 13-year low, Goldcorp management stands to reap over US$33 million in potential change of control payments.”

“I’m appalled by it,” Bloomberg quoted Joe Foster of VanEck, Goldcorp’s second-largest shareholder. “They put the current management in place three years ago, and they’ve done a very poor job of operating the company, and it shows in their results,” the portfolio manager added. “To reward that poor performance with these huge payouts is a crime in my view.”

Goldcorp stock “has plummeted almost 75% since its 2011 high and the company fell short of almost every target when it last reported earnings,” the news agency stated. “Meanwhile, Telfer has collected $900,000 in average annual compensation since becoming chairman in 2006 and reaped at least $35 million from exercising stock options, according to data compiled by Bloomberg.”

Telfer’s “getting paid for destroying a ton of value over his tenure then selling at a low,” analyst John Qian of the T. Rowe Price Group told the news agency. “In what world is that worthy of a massive payout?”

Even Rick Rule spoke out against his “long-time friend.” He told Bloomberg that Telfer’s “combination of this special bonus, his prior special bonus, stepping down as CEO and his continuing role appears excessive.”

But then there’s Ian Telfer, philanthropist.

Having already donated millions of his money, last summer he publicly vowed to give it all away on his death. He stated his intention to emulate Peter Munk, who “gave away his complete net worth to charity. And while a lot of successful people say they’re going to do that, most of them don’t…. Peter Munk’s comment was that all the good that came to him came from society, and it should go back. And so that will be my legacy.”

Then what are Telfer’s plans for that extra US$7.5 million—add it to family assets? Go on a late-life binge? Or donate it to charities in a redistribution of wealth from shareholders?

And as for that legacy, which will prevail—company builder, destroyer of shareholder value or generous benefactor?

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