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Heads roll at Newcrest

Finally. Australia’s largest gold miner Newcrest Mining (ASX: NCM) appears to have bowed to shareholder pressure and announced the departure dates for its CEO and chairman.

Chief executive Greg Robinson is expected to depart in the second half of 2014, while chairman Don Mercer will step down in December 2013. Peter Hay will take over as the new chairman, while Sandeep Biswas will succeed Mr Robinson.

Newcrest has come under pressure from several groups with the Australian Shareholders Association threatening to vote against the remuneration report at the AGM, while proxy adviser ISS has advised shareholders to block the re-election of Richard Lee, Tim Poole and John Spark for their roles in the disclosure issue that rocked the company earlier this year.

All three were members of the miners’ audit committee, which appears to have failed its purpose, following allegations that Newcrest selectively briefed some analysts before releasing massive writedowns and production downgrades to the market. ISS says the vote against the three directors was warranted because the company appeared to have inappropriate practices to its continuous disclosure obligations.

Back in September, we reported that Newcrest’s eight non-executive directors appear to add very little value, despite costing shareholders more than $2 million in director’s fees in the last financial year, after overseeing the disastrous $9.5 billion acquisition of Lihir gold in 2010 and the disclosure issue.

Newcrest’s shares have plunged more than 60% over the past year, hit in part by the falling gold price, along with fellow gold miners Resolute Mining (ASX: RSG) and Medusa Mining (ASX: MML). Resolute and Medusa shares are down 70% and 65% respectively, while over the same period the S&P / ASX 200 Index (Index: ^AXJO) (ASX: XJO) has posted as 14% gain.

Foolish takeaway

While the management changes were needed, unless change is implemented, it’s just window dressing, and shareholders will be no better off. Let’s hope that new management can take a fresh approach to the issues that have plagued Newcrest for at least the last three years.

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Motley Fool writer/analyst Mike King doesn’t own shares in any companies mentioned.

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