Cannon-Brookes says AGL board not fit to deliver decarbonisation strategy

The investment vehicle of tech billionaire Mike Cannon-Brookes and his family, Grok Ventures, says AGL Energy’s board is unfit to deliver on the gentailer’s green potential, in a fresh call for to shareholders to elect new independent directors.

Galipea Partnership, an entity associated with Grok and Cannon-Brookes with an 11.28% share in AGL, has nominated four candidates for the gentailer’s board to help drive its uphill decarbonisation journey.

The fate of Grok’s nominees – John Pollaers, Christine Holman, Kerry Schott and Mark Twidell – will be decided  by a shareholder vote ahead of the company’s AGM next month.

AGL said in early October, in its own letter to shareholders, that while it supported the nomination of Twidell, a former Tesla Energy executive, it would urge shareholders to vote against the other three nominees at the mid-November AGM.

AGL said it was not endorsing the other Grok nominees because their skill set was either “already present” on the board or “not aligned” to the priority skills being sought for the company’s strategy.

But Grok and Cannon-Brookes, who led a successful shareholder push to abandon AGL’s proposed demerger earlier this year, are not backing down.

Not up to the challenge

In a new letter to shareholders on Monday, Cannon-Brookes argues that AGL, which has seen a share price decline of 69% since 2019, will continue to languish without more changes at the company’s top.

“Without expanding the size, diversity and skills of the Board, we believe AGL will continue to fall behind the rapidly transforming energy industry, and further destroy shareholder value,” says Cannon-Brookes in the letter.

“We believe that the current board is not up to the challenge of delivering on AGL’s potential,” he says.

“AGL’s Board includes five directors, four of whom were planning to lead AGL’s smaller, demerged entities.

“We are therefore voting FOR independent Board candidates Professor John Pollaers OAM, Christine Holman, Dr Kerry Schott AO and Mark Twidell.”

Forward looking directors

In a document attached to the letter, Grok says Schott promises to bring “unrivalled credentials” to the AGL board from her time as chair of the Energy Security Board, while Pollaers brings decades-worth of experience leading large-scale corporate transformations.

Holman, meanwhile, promises valuable experience across industrial and technology sectors, including understanding of customer demands and technology transformations, the document says.

Grok also notes that AGL has five directors on its board, compared to a board of 10 at its competitor, Origin Energy.

“AGL’s five board members were slated to lead smaller, demerged entities. They are now leading a larger and vertically integrated business with more ambitious decarbonisation and renewables targets,” the document says.

“To deliver on these targets Grok believes AGL requires a highly independent Board with a balance of forward-looking directors.”

MCB’s how-to-vote card

Grok and Cannon-Brookes have also been critical of the appointment of Patricia McKenzie to chair the AGL board, who they describe as “a proponent of the failed demerger.”

But in the letter on Monday they urge shareholders to vote for the four candidates proposed by the AGL board, including for the election of Graham Cockcroft, Vanessa Sullivan and Miles George, and the re-election of Patricia McKenzie.

The letter also recommends shareholders vote against the “unambitious decarbonisation targets” proposed on the Remuneration report, arguing that AGL should align with a more ambitious 1.5 degrees target.

“This would require management to get in front of the rapidly transforming energy industry, rather than remaining steps behind, benefiting all stakeholders, including shareholders,” it says.

Likewise, Grok notes that AGL’s Climate Transition Action Plan targets a strategy that aligns with a 1.8 degrees target rather than a 1.5 degrees target, and so advises shareholders to vote against that part of the strategy.

“AGL requires more accelerated decarbonisation ambitions to secure and maintain the market-leading position as Australia’s largest, greenest and most reliable energy retailer, in turn delivering higher shareholder returns,” it says.