Shareholders and analysts shocked by ‘messy’ exit of Agnico CEO Tony Makuch after only 16 days

Gold is poured as at Agnico-Eagle’s Meadowbank mine facility in Nunavut on Aug. 24, 2011. Canada’s second-biggest gold miner announced it is replacing CEO Tony Makuch with Agnico’s long-time president, Ammar Al-Joundi.The Canadian Press

Agnico Eagle Gold Mines Ltd. is cutting ties with chief executive officer Tony Makuch after he served for only 16 days, believed to be the shortest tenure on record for a leader of a major mining company anywhere in the world.

Canada’s second-biggest gold miner announced it is replacing Mr. Makuch with Agnico’s long-time president, Ammar Al-Joundi. Toronto-based Agnico gave no reason as to why Mr. Makuch was leaving. The departure of Mr. Makuch was doubly surprising because the individual whose shoes he’d stepped into, Sean Boyd, had been the longest-serving CEO of any major Canadian miner, with a 24-year run.

Agnico in September named Mr. Makuch as the successor for Mr. Boyd, after it announced the acquisition of Kirkland Lake Gold Ltd. Mr. Makuch was CEO of Kirkland and credited for its spectacular growth that saw it rise from near-bankruptcy to the best-performing major gold miner. Mr. Makuch told The Globe and Mail that he was looking forward to becoming CEO of Agnico, and feeling extremely energized. Mr. Makuch formally took over on Feb. 8, when the transaction closed.

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“The CEO change – less than three weeks post-merger close – is a surprise,” Tanya Jakusconek, an analyst with Scotia Capital Inc., said in a note to clients, a comment echoed by Fahad Tariq, an analyst with Credit Suisse.

Mr. Boyd, who now serves as executive chair of Agnico Eagle, declined to give details around why Mr. Makuch left, saying in an interview that any conversations he or the board had with Mr. Makuch are private.

“We’re not going to go there,” he said.

Mr. Makuch’s brief foray as Agnico’s CEO also cost him a lot of money. Had he lost his job after Kirkland’s acquisition by Agnico, he would have received roughly $9.5-million in “change of control” payments based on salary, bonuses, benefits and pension payouts. But because he stayed employed by accepting the CEO position at Agnico, he was not entitled to the payments.

Mr. Makuch could not be reached for comment.

The vacuum of information around Mr. Makuch’s departure also confounded Joe Foster, a portfolio manager with fund manager VanEck, Agnico’s biggest shareholder.

“It looks kind of messy,” Mr. Foster said. “Something happened. Once Tony got into that role, I’m guessing he found it intolerable.”

Mr. Foster speculated that perhaps Mr. Makuch could not adjust to the change of pace from working at a fast-growing “entrepreneurial” company like Kirkland, to Agnico’s more “bureaucratic” setup.

The exit of Mr. Makuch is at least the fifth abrupt departure of a senior leader at major Canadian mining companies in the past nine months.

Fertilizer company Nutrien Ltd. parted ways with two CEOs last year, both with no warning, one of whom lasted only about six months. Last month, Iamgold Corp. announced the departure of both its CEO and its long-time chair. Little or no explanation was given for their exits by either company.

“It does lead to speculation, and that hurts both the company and shareholders,” said governance expert Richard Powers, associate professor at the Rotman School of Management. “Good governance would suggest [the need for] more transparency.”

Mr. Powers said that while companies may not want to air all of their dirty laundry by giving blow-by-blow accounts of soured relationships with executives, giving out no information at all is even more problematic.

The departure of Mr. Makuch from Agnico also raises questions about whether other Kirkland employees and board members who joined the firm post-merger may also now leave, VanEck’s Mr. Foster said.

But Mr. Boyd said that he’s not worried about a mass exodus.

“The reasons for doing the merger are still there,” he said. “There’s a tremendous amount of bench strength in that combination.”

While the departure of Mr. Makuch came out of left field, the naming of Mr. Al-Joundi as his replacement was not a surprise. Agnico had long signalled that he would likely one day become CEO.

Shares in Agnico lost almost 4.7 per cent of their value to close at $66.57 apiece on the Toronto Stock Exchange on Thursday, the second-worst-performing stock in the TSX Global Gold index.

With a file by David Milstead

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