- Barrick Gold announced that it would be shaking up its management and that CEO Jamie Sokalsky would be stepping down.
- Senior Executive VP Kelvin Dushnisky and Senior Executive VP and COO Jim Gowans will co-run the company.
- This shouldn't surprise readers of my past criticisms of Barrick's management for poor capital allocation.
- This is probably a move in the right direction, but I would be much happier with an outsider stepping in to lead the company. I'm staying away.
Barrick Gold (NYSE:ABX) announced Wednesday that it would be shaking up management. The headline story here is that CEO Jamie Sokalsky is stepping down as CEO after 2 years at the helm. The company will now be run by two co-presidents--Kelvin Dushnisky and Jim Gowans--who are currently both senior executive VPs of the company. The change is expected to take place on September 15th.
I have written several articles criticizing Barrick's history of lousy capital allocation. The one that focuses on this issue, however, is my August 30th article: Barrick Gold Is Destroying Shareholder Value. In it I point to several recent events and transactions that may not have been in the best interest of shareholders, including:
- The sale of the company's safe, low cost producer Australian assets.
- The apparent fire-sale of Barrick Energy.
- The continuing drama over the Pascua Lama Project whose soaring capital costs have made the project more trouble than it is worth.
The company has also carried an enormous debt load which forced it to issue stock later last year.
While Jamie Sokalsky didn't preside over all of the company's poor decisions he did preside over several, and he was also hired during the Peter Munk regime that ended earlier this year. With this in mind I appreciate the effort to turn the corner and to try to move beyond this Munk era, which was characterized by value destruction and an apparent disregard for shareholders' interests. But at the same time many of the same players are involved with the company, and I am not sure that sufficient changes will be made. So while this may be a step in the right direction we need to see more before Barrick becomes a viable investment.