Mike Cannon-Brookes succeeds in shaking up AGL board
Billionaire Mike Cannon-Brookes has succeeded in shaking up the board of Australia’s biggest electricity producer, with all four of his proposed directors winning support from shareholders at AGL Energy’s annual general meeting.
The company, though, won backing for its decarbonisation plans, which were less ambitious than those proposed by Cannon-Brookes, AGL’s biggest single shareholder. AGL is the country’s largest carbon emitter.
Patricia McKenzie, AGL’s chair, told the meeting in Melbourne that the company’s climate transition action plan – which would see it shut its final coal-fired power plant by 2035 – had support from shareholders. The vote was about two-thirds in favour.
McKenzie said that based on proxy votes ahead of the meeting, the fivemember board would be expanded to include all four of Cannon-Brooke’s proposed new directors: Mark Twidell, Dr Kerry Schott, Christine Holman and
John Pollaers.
AGL’s board had only supported Twidell, a solar energy veteran, ahead of the vote. It remains to be seen whether the expanded board, which also includes the recently appointed wind energy expert, Miles George, will opt to accelerate AGL’s plans.
A spokesperson for Grok Ventures, a family company owned by Cannon-Brookes, welcomed the new board additions.
“This represents another majority vote by AGL shareholders pointing to their desire for change, fresh thinking and more execution capacity to realise the potential of this great company,” the spokesperson said.
“The AGL Board has Grok Ventures’ full support to deliver on the monumental task ahead, of rebuilding the company to lead Australia’s green energy transition, for the benefit of all stakeholders,” he said.
AGL’s chair McKenzie also welcomed the new directors, saying the board “will work constructively with them in the best of interests of shareholders”. “It’s great to have diversity on the board,” McKenzie said in answer to questions, adding that Grok “does not control AGL”.
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Cannon-Brookes had raised concerns about McKenzie’s ongoing role as chair since she had backed AGL’s demerger. That plan was ditched in May
because of Grok’s activism.
In September, AGL announced it would bring forward the closure date of its Loy Yang A brown coal-fired power station in Victoria by a decade, to 2035, while leaving its black-coal burning Bayswater power station in NSW running until between 2030 and 2033. AGL’s Liddell plant, also in NSW, shuts next April.
McKenzie said AGL had the “ambition to add up to 12 gigawatts of new renewable and firming capacity by 2036, which will require a total investment of up to $20bn”.
This plan included an interim target to have up to 5GW of new renewables and firming in place by 2030, she said, adding AGL now has a 3.2GW pipeline of high-quality energy projects and access to a 3.5GW high quality renewables development pipeline via its investment in Tilt Renewables.
McKenzie said each of the new directors had issued statements of independence, saying “they are not representing any particular shareholder”.
In recorded comments, Schott said AGL needed cut carbon emissions “as much as they can, as fast as they can”, that much of the company’s value was in its gas and electricity retailing arms.Schott said it was important that the directors worked collaboratively: “The last thing a board needs is to be balkanised.”Brynn O’Brien, executive director of The Australasian Centre for Corporate Responsibility, welcomed the shareholders’ action.
“History has been made today,” O’Brien said. “The board of an Australian listed company has been transformed by shareholders over its handling of climate risks.
“This is both a victory for shareholders and a scathing indictment on those who spent years destroying shareholder value by delaying the inevitable in the face of an escalating energy transition.
“It is vital that lessons are learned from AGL’s colossal waste of time and shareholder funds.
“The boards of other high-emitting companies should be taking note of today’s outcome: climate risk management is an ever-increasing pressure and those who remain flat-footed in the face of rapidly shifting market dynamics will be held to account.”
Tim Buckley, energy finance analyst and director of independent thinktank Climate Energy Finance, said AGL had been “a global laggard in accepting and acting on the climate science” but was now at “a turning point”.
“This board renewal is critical for AGL investors given the opportunity to start to reverse the $10bn of shareholder wealth destruction in the last six years, but also for the wider context given AGL is a key Australian energy sector incumbent, with financial resources and staffing that can be leveraged constructively, with the right leadership,” Buckley said.
AGL would put its transition plan up for shareholders to vote on every three years, McKenzie said.
About 30% of shareholders voted against the remuneration plan for executives, delivering a so-called “first strike” that could place extra pressure on management in the future.
Geoff Wilson, an AGL shareholder and chair of Wilson Asset Management, said Tuesday’s outcome was “a positive step forward for shareholder democracy”.
“It is important that all Australian company boards understand that they only serve at the wishes of their shareholders,” he said.
AGL shares gave up early gains to trade about 1.4% lower close to close of trade. The benchmark ASX200 index was flat for the day.