NCM to escape AGM unscathed

Despite highly-publicised calls from proxy advisers to vote against the re-election of key directors and its remuneration report, Newcrest Mining (NCM) looks set to emerge from its annual general meeting relatively unscathed.

Ahead of the AGM, fund manager Allan Gray, proxy advisers Ownership Matters and Kolesnikoff Governance, as well as the Australian Shareholders’ Association all advocated for a vote against the remuneration report, fuelling speculation Newcrest was poised to earn its first strike on executive pay.

Ownership Matters and Kolesnikoff Governance went as far as advising against the reappointment of Rick Lee, Tim Poole and John Spark.

However, The Australian reports proxy votes suggest Mr Lee, Mr Poole and Mr Spark will be re-elected to their positions, despite recording significant 'no' votes.

According to the newspaper, Newcrest's remuneration report will also gain enough shareholder support to avoid earning a "first strike," if proxy votes are any indication.

Mercer upbeat on outlook

Earlier, Newcrest chairman Don Mercer said the outlook for both gold and the company is positive and the miner will focus on restoring its reputation and strengthening its balance sheet, despite describing 2013 as a "tough year" for Newcrest and its shareholders.

In an address to the miner's annual general meeting, Mr Mercer said the group will focus on delivering reliable, low cost production and is well placed to tackle the complexity of its Papua New Guinea-based Lihir gold mine.

He said the board will focus on positioning the company to generate returns for shareholders in any reasonable external environment, after choosing not to declare a final dividend in fiscal 2013.

Mr Mercer said despite the group's reputation taking a battering by the end of fiscal 2013, Newcrest had produced 2.1 million ounces of gold and delivered major projects on schedule and within eight% of budget.

"Despite the testing year past, Newcrest is a strong company," Mr Mercer said.

"It has responded decisively to external volatility.

"It has quality assets, management and technical capability, and the flexibility to make more changes should the gold price decline further."

Mr Mercer said Newcrest will continue to co-operate with an Australian Securities and Investments Commission investigation into accusations it selectively briefed analysts.

After an independent review into Newcrest's continuous disclosure by former Australian Securities Exchange chairman, Maurice Newman, which found Newcrest takes its obligations "very seriously", the group has committed to implementing all Mr Newman's recommendations and many are well underway, Mr Mercer said.

He also said Newcrest began to take action to reduce costs in advance of the June quarter gold price fall, which it said was the largest in 30 years.

"Ultimately it is the low-cost producers with production flexibility and optionality that will outperform in this kind of volatile environment," Mr Mercer said.

"This is where Newcrest is positioning itself."

The board plans to reduce gearing levels to boost flexibility, he said, adding that Newcrest "has an acceptable balance sheet and still enjoys an investment grade credit rating".

Managing director Greg Robinson said the miner is "not happy" about failing to deliver production guidance and is working hard to rectify this.

"Newcrest has a deep well of technical capability," Mr Robinson said.

"We believe Newcrest is well placed to tackle pretty much any mine opportunity in the gold industry with confidence."

He said expectations for gold prices are higher now than 10 months ago, and warned the strong Australian dollar lowers revenue and increases the impact of domestic costs.

Mr Mercer said Newcrest executives and management "share with shareholders a financial disappointment" as they will receive nil or substantially reduced incentive rewards this year.

The miner faces a significant hurdle later in the day when it puts a series of resolutions, including its remuneration report, to shareholders for approval.

The meeting also follows soon after Newcrest announced a series of key transition arrangements for its senior management.

The miner appointed director Peter Hay as chairman, replacing Don Mercer after he steps down in December, and said it expects Sandeep Biswas to succeed Greg Robinson as chief executive officer in the second half of calendar 2014.

Troubling year for miner

It has been a troubling year for Newcrest, posting an annual net loss of $5.8 billion on the back of more than $6 billion in asset writedowns and restructuring costs and a disclosure scandal.

The company then announced that chief executive Greg Robinson's annual pay would be cut by 27% to $2.73 million, down from $3.69 million in the previous year as his short-term bonuses were reduced by $700,000.

The 2013 annual report showed Newcrest's executive managers also had their pay cut in 2013, but Finance Director Gerard Bond's overall pay increased, from $1.64 million to $1.73 million.

In addition, The Australian Securities and Investments Commission is investigating accusations that Newcrest selectively briefed analysts ahead of the original writedowns announcement.

An independent review of Newcrest's disclosure and investor relations practices was subsequently unable to find a systemic failure in the miner's interaction with the market.