Under strong pressure from dissident shareholders, the CEO of gold producer Kinross was fired. Tye Burt, until yesterday head of the 4th largest gold producer, has been dismissed because of his inability to add to the company’s value in a period of strongly risen gold prices.
The resignation follows two months after rival Barrick dismissed their CEO, and is a reflection of the great general dissatisfaction with the overall performance of major gold producers. Even within this group, Kinross’ performance was dismal, falling -31% in 2012 YTD, compared to the -19% peer group average.
The main impetus for the resignation of Burt came from an anonymous group of investors who are organized in a fairly entertaining way around a website with an unmistakable indication: firetyeburt.com. Since the appointment of Burt in 2005, the share price has not increased, while the gold price quadrupled. During this period, Burt enriched himself with approximately $60 million.
In addition to these self-enrichment, Burt is accused of being unable to find an answer to soaring costs, of making mistakes with acquisitions, and of deliberately omitting important facts related to the status of these acquisitions.
The resignation is an important signal to the miners themselves to focus on cost control and operational improvements, and to discard their traditional focus on complementing and increasing their gold reserves. The bottom line of the message is: more dividends and less money spent on risky acquisitions.