Spokane Journal of Business

Gold Reserve cuts executives’ pay for $1 million-plus savings

Cost cuts to be spread over three-year period

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The president of Gold Reserve Inc. and two other executives have taken voluntary salary cuts even though the company is debt free and has $60 million in working capital.

Company President Doug Belanger says the move to reduce executive pay was done in part to “send the message” that Gold Reserve wants to improve on its current position despite the fact it’s not being paid money owed it by the Venezuelan government, and its Siembra Minera gold mine isn’t operating due to the fact the U.S. has sanctioned more than 150 companies and individuals with ties to Venezuela President Nicolás Maduro.

Gold Reserve currently owns 45% of the Siembra Minera gold mine, and the Venezuelan government owns 55% of the property, which Belanger in the past has described as having the potential to be one of the top five gold producers in the world.

“The company is in a great financial position,” Belanger tells the Journal. “If there were no activity, we’d have enough cash for at least another 10 years.”

Based in Canada, Gold Reserve and its seven employees are headquartered in Spokane on a fourth-floor suite at 999 W. Riverside, downtown.

To enhance its long-term position, the company’s board of directors approved a three-year cost reduction plan, part of which involved reducing the salaries of company chairman James Coleman, CEO Rockne Timm, and Belanger. The salary cuts range from 25% to 50%.

“The estimated compensation reductions will result in annual cash savings of approximately $1.1 million,” the company states in a press release.

Additional technical consultants also have agreed to reduced cash compensation bonuses, according to the company.

In lieu of reductions, the board of directors developed an incentive bonus plan for the executives if “certain specific” objectives related to the company’s business efforts in Venezuela are met by the end of 2023.

“If an objective is not achieved by Dec. 31, 2023, the amount of the bonus is reduced by 40% if the objective is achieved on or before Dec. 31, 2024, with no bonus payable thereafter,” the company says. “If an objective is achieved by Dec. 31, 2023, the bonus payments would approximate $3.2 million, based on certain assumptions. The actual bonus payments could be significantly less or more.”

The South American nation continues to experience serious economic, political, and social turmoil, and its overall infrastructure largely has collapsed. Meanwhile, the U.S. and Canada recognize Juan Guaidó as the legitimately elected president of Venezuela. While Maduro has continued to maintain power in the country, the U.S. has labeled the Maduro regime as illegitimate.

Troubles for Gold Reserve began more than a decade ago when the Communist-led Venezuelan government under now deceased President Hugo Chávez seized the mine.

After a prolonged legal battle, a World Bank tribunal ruled against Venezuela in 2014 and awarded $740.3 million to Gold Reserve to compensate for the loss of the mine.

In 2016, Venezuela agreed to pay the company $1 billion and buy  mining data from the company.

“With interest, they still owe us a little over $900 million,” Belanger says.

Payments to the Gold Reserve are currently blocked due to international sanctions against the country.

“There are negotiations taking place right now about trying to move the country in a direction where it could take foreign investment,” Belanger says. “Obviously, we’d be a beneficiary of that.”

Kevin Blocker
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