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The Directors Chair

Rob McEwen

A sense of purpose

In The Directors Chair with David W. Anderson: For Rob McEwen, its not only about
knowing where you want to go, but figuring out the best way to get there
Photography by Jeff Kirk

Rob McEwen has been a dominant presence in gold mining since he founded
and, as chair and CEO, built Goldcorpnow among the worlds largest gold
companiesinto an industry leader. Today hes chair, CEO and 25%-owner of
McEwen Mining, a TSX- and NYSE-listed gold and silver producer infused
with its chief owners independent spirit. Here, in conversation with governance
and leadership adviser David W. Anderson, McEwen weighs in on topics ranging
from market regulators and tax policy, to board composition and the rights
and responsibility of ownershipand sheds light on the motivations
that move him.

Rob McEwen
Primary role
Chair and CEO, McEwen Mining Inc.; chair, Lexam VG Gold Inc.
Current directorships
Induce Biologics Inc.
Founder, former chair and CEO
Goldcorp Inc.
Education
MBA, Schulich School of Business, York University; BA, University of Western Ontario
Philanthropy
McEwen Centre for Regenerative Medicine, Toronto General Hospital; Schulich School of Business; McEwen Leadership
Program, St. Andrews College
Volunteer roles
Global Advisory Council, International Society for Stem Cell Research; Vision Circle, Board of Trustees, X-Prize Foundation;
Deans Advisory Board, Schulich School of Business
Honours
kQueen Elizabeth II Diamond Jubilee Award
kOrder of Canada (2007)
kLifetime Achievement Award, Canadian Youth Business Foundation (2007)
kMost Innovative CEO, Canadian Business (2006)
kHonorary Doctor of Laws, York University (2005)
kOutstanding Achievement Award (Philanthropy), Canadian Museum Association (2004)
kOntario Entrepreneur of the Year (Energy), Ernst & Young (2002)
kMacMillan Award for Developer of the Year, PDAC (2002)
kFast Companys The Fast 50, Champion of Innovation (2002)
Current age
64
Years of board service
28

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Rob McEwen

David W. Anderson You started as an outsider in the mining in-

dustry and now you are one of its most recognizable names. Was
being an outsider an advantage?
Rob McEwen Yes, very much. I grew up in the investment industry and
I focused on gold mining companies and gold bullion. Eighteen years
later, I jumped into the mining industry. Im not a geologist or a mining engineer, so I was an outsider. I brought a different perspective to
the problem statement and even defined the problem statement differently. It allowed me to generate a different set of alternatives than
the people trained in the industry. As a stranger, I didnt hold the same
underlying assumptions but my learning curve was steep so I asked
Why? a lot! This questioning has allowed me to generate alternatives that seemed crazy or nave to the many in the industry. This gives
a definite advantage.
David W. Anderson Youre impatient, creative and embrace

big and risky ideas. I think you like being a shit disturber. And
youve been richly rewarded for your efforts. Ring true?
Rob McEwen I like to push boundaries. I wont stand in line because
if I did, I would only get to where I wanted to go as fast as the people in front of me. By that time, the opportunity may have been lost.
Innovation is an area I enjoy and it can produce huge gains in a mature
industry, such as mining. Whereas, I believe the rapidly expanding
scope and volume of securities regulations, corporate governance and
public accounting practices is a rapidly growing cancerous expense
for shareholders. I detest the complexity and resultant confusion,
time delays, and the cautionary and ass-covering behaviour of boards.
I want my board to help build value for our shareholders and not be
preoccupied ticking off all the boxes.
David W. Anderson Lets explore where youre thinking leads in
a handful of areas, starting with the mining industry itself. At
Goldcorps Red Lake mine, you had a strike that lasted a staggering 46 months until May 2000. How did you think about your
interaction with the union?
Rob McEwen When I took control of the company, the Red Lake
mine had been in operations for 40 years, it had been starved of
capital, it was a high-cost producer with a history of poor labour
relations. In addition, the price of gold was falling and threatening
the mines existence. I believed we needed to make big changes in
how we operated with the union in order to survive. We needed
new skills and the right attitude. We started with a total rewrite of
our collective agreement with the union. They disagreed and went
on strike. Every time we went back to the negotiating table, our offer to the union was less than the one before. The economics of the
mine didnt support their demands. While we stopped mining during the strike we dramatically accelerated our exploration program
and found a lot more gold, we invested in automation and technology that lifted the mine from 19th to late-20th century. When the
strike ended the union decertified and walked away. We became a
very profitable business with a state-of-the-art mine, a committed
workforce and no union.
David W. Anderson The regulatory environment itself gives us

several areas to explore. Whats your thinking on rules for when

a company has to get shareholder approval for dilution?
Rob McEwen Some of the rules are inconsistent and unfair to share-

holders. For example, the TSX has a rule, which I fought for, that
requires a company to get shareholder approval when it plans to
issue more than 25% of its stock to make a takeover. Yet in a recent bought deal, Romarco Minerals issued 70% of its equity on a
private placement and wasnt required to obtain shareholder approval. Why werent shareholders asked to approve such a large
dilution?
David W. Anderson Regulations require considerable disclosure,
with the intention of helping investors understand the company to make informed investment decisions. Your verdict?
Rob McEwen Were forced to produce large volumes of mind-numbing, boilerplate disclosure that does not serve the public interest. We
should be creating documents that are short, concise, and easily and
quickly understood by all! Instead we are required to give our shareholders materials written in the obtuse language of lawyers and accountants. The more rules we have the easier it is for the criminally
minded to prosper.
David W. Anderson Regulators try to drive corporate accountability at the top by requiring CEOs to sign off on disclosures.
Has this been useful to the public, reducing risk?
Rob McEwen The idea that a CEO knows of everything thats happening in their company is ludicrous. No, I do not believe it reduces risk.
Securities regulators have failed to prevent some massive corporate
disasters despite their proliferation of rules. Here are a few examples:
Enron, Bernie Madoff, BreX, the mortgage frauds and financial collapse of 2008. If someone is intent on stealing from their shareholders
the rules provide lots of room to hide.
David W. Anderson Theres increasing pressure on boards to adjust their board composition in favour of greater gender diversity. How do you think about constructing a useful board?
Rob McEwen I look for skills, operational backgrounds, entrepreneurial and investor perspectives, and a willingness to make a large
financial investment in the company. I dont think one should be
on a board just because of their sex. Historically, the mining industry has been male-dominated due to the nature and location of the
work. It was hard physical work in remote locations and not attractive to many men let alone women. In the past 30 years, mining
has changed significantly with new technologies, more interaction
with local communities and exercising greater care for the environment. And as a result, women are seeing more employment opportunities in the industry. Theres no question in my mind that
women, over time, will represent an ever larger percentage of the
directors of mining companies. Currently, women represent 30%
of my board of directors and I expect that percentage will increase
because of their talent not regulation.
David W. Anderson What advice do you have for government on

competitiveness and tax policy?

Rob McEwen Reduce the regulatory hurdles and delays, have a clear

statement of regulations and tax policies. Do not change the rules

after the investment has been made. Building infrastructure that
will improve the primary business and encourage the growth of
related secondary and tertiary businesses. Low corporate taxes,
no corporate subsidies or grants. Ensure the legal system admin-

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Rob McEwen

isters the law quickly, fairly and without bias. Personal safety and
freedoms must be a high priority. Have a national securities agency. Have a national vision and goals and encourage investments
in industries that are aligned with the vision and goals. Eliminate
deficits and significantly reduce national debt. In other words, be
fiscally responsible, accountable and transparent. Educate their
citizens about the benefits of the businesses the government has
encouraged to establish in their country. Resolve and settle native
land claims that impede development. Eliminate direct payroll deduction of union dues.
Sadly, Governments generally make legislation the same way as
someone would drive a car forward by looking in the rear view. Their
timing is wrong. By the time their laws come into effect, the economic
circumstances have changed.
David W. Anderson How well is the government addressing First
Nations land claims?
Rob McEwen Its a failure. Recent legislation has only made matters
much more difficult for developing Canadas large resource potential
because it has introduced greater uncertainty and cost. There is no accountability, deadlines or transparency. In another country the process that our government has put in place here could be called bribery
there.
David W. Anderson Mining companies have learned the language

of corporate social responsibility. How do you distinguish between philanthropy from business-based community building?
Rob McEwen The expenditure of corporate funds is justified only
for community building that benefits the growth of the business
local hospitals, education and infrastructure such as roads and water systems, etc. There has to be a direct link to the business and the
ability of the corporation to afford it. My view is that philanthropy
is a personal matter; if the request doesnt relate to the business
but the CEO would like to support it then the CEO should pay for it
personally. That is what I do.
David W. Anderson Your business card says youre the Chief

Photograph: (Followoing Spread) KWG Resources

Owner. What does this mean to you?

Rob McEwen It means McEwen Mining is being run by an owner, by
its largest shareholder who has a very clear alignment with the interests of all shareholders. I take no salary, receive no bonus and have no
severance package. I have invested $126 million to own 25% of the
company. I will make money the same way as all my fellow shareholders will. That is with a higher share price.
David W. Anderson You wear three hats as owner, director and
manager. What is the proper role of investors or owners in corporate decision making?
Rob McEwen Money talks. I believe that the investor who puts up the
most money should have the biggest say in the management of the
company.
David W. Anderson Do you distinguish between an owner and an

investor?
Rob McEwen Thats a good question. If an investor holds your stock for

a week and is on the shareholder register at the time of the record date
for the annual meeting they are entitled to vote. Lets say this investor

votes against managements recommendations, then sells those shares

before the AGM. Should this short-term investor have such a say in the
affairs of the company? Should there be a minimum holding period
for an investor to be considered an owner who can vote? I think there
should be one.
David W. Anderson In the mining industry, how do you discern
talent versus luck in performance?
Rob McEwen Success has many authors and definitely luck is one
of them. After all, we are dealing with mother nature, politics and
market cycles all of which can provide both pleasant and unpleasant surprises. The industry has many talented and hard-working
individuals. Some make discoveries but the majority dont. Some
discoveries are made in countries where it is taken away from you,
some discoveries happen when investors dont care about it, such
as the last three years, and some discoveries occur where many
have looked before and not found anything. Talent will give you a
better chance of finding a discovery and of running a mine, however you could call it luck when you are in the right country with
the right politics at the right time of the market cycle and you and
your shareholders make a fortune.
David W. Anderson Given your experience, how should an investor think about the mining industry?
Rob McEwen Perception of risk varies greatly from person to person. A risk adverse individual might agree with Mark Twain, who
once said that a gold mine is a hole in the ground with a liar at the
top of it. For these individuals I say, If you dont like that risk,
dont invest. Mining is a cyclical industry and large share-price
swings occur regularly. And some discoveries can create quick
and massive wealth. I was attracted to the industry for these very
reasons. I believe the prices of gold mining companies are at the
bottom of their cycle and that today is a good time to be investing
in the industry.
David W. Anderson In your stories, I hear a strong, underlying
code that seems to guide you in life and business. What would
you say is important to you?
Rob McEwen I value honesty, self-reliance, personal accountability,
fair play, simplicity and a clear sense of purpose. I strive to create capital gains for my shareholders and at the same time build value in the
communities where we operate. Outside of business, I am passionate
and invest my philanthropic dollars to improving our healthcare and
educating our next leaders and entrepreneurs. Also I wonder about
when and how we Canadians will share a single national vision and
have goals to achieve in the next 10, 25, 50 and 100 years. And I struggle with the thought that our countrys current aimless course in an
increasingly competitive world will render our children tenants in a
land we now own.

David W. Anderson, MBA, PhD, ICD.D is president of The

Anderson Governance Group in Toronto, an independent
advisory firm dedicated to assisting boards and management teams enhance leadership performance. He advises
directors, executives, investors and regulators based
on his international research and practice. E-mail:
david.anderson@taggra.com. Web: www.taggra.com

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