Pressure continues to build against AGL Energy chair Patricia McKenzie and the existing board as proxy advisors rally around three proposed director candidates ahead of a vote at this month’s annual general meeting.
Institutional Shareholder Services (ISS) this week recommended investors vote for all four nominees put forward by Grok Ventures, the private investing business of tech billionaire Mike Cannon-Brookes and his wife Annie.
Grok Ventures has put forward Christine Holman, Professor John Pollaers OAM, Dr Kerry Schott AO and Mark Twidell as independent nominees, to enlarge the gentailer’s board from its current five directors.
ISS dismissed AGL’s fears that Grok was seeking too much representation, saying the four nominees were “entirely independent.” It called the process to find them “systematic, well-vetted and thoughtful.”
“We firmly believe any Grok nominee who is elected to the board will, at the very least, bring independent thought and perspective into the boardroom,” ISS said.
ISS follows Glass Lewis’ move on Monday to support three directors proposed by Mike Cannon-Brookes’ Grok Ventures. It isn’t backing Pollaers, a former Foster’s executive.
AGL has thrown its support behind former Tesla executive Twidell, only.
McKenzie says the other three do not have the “additional experience and skills necessary to ensure the successful implementation of the board’s strategy.” She has also cast doubt on their independence, stressing that the board has to act on behalf of all shareholders, not just its largest.
Grok holds 11.3 per cent of AGL.
The new board will be decided at an AGM scheduled for November 15. RenewEconomy is seeking further comment from Grok, ISS and Glass Lewis.
The backing of two proxy advisors suggests that Grok Ventures’ nominees are likely to get up, if voting conventions are followed, says Brynn O’Brien, executive director at Australasian Centre for Corporate Responsibility (ACCR).
Chair looking increasingly wobbly
Both proxy advisors raise governance concerns about McKenzie, who took on the chair role after AGL candidate Paula Dwyer was torpedoed by major investors and Peter Botten resigned in the wake of the failed demerger.
“Grok Ventures has reservations about Patricia McKenzie appointing herself to chair AGL given her involvement in the failed demerger and what has been a chaotic board renewal process,” Grok said in a statement at the time.
O’Brien says it’s hard to see how McKenzie can remain as chair, given the proxy advisors’ rejection of her board recommendations.
“Both reports reinforce governance concerns relating to Ms McKenzie, who was elevated into the role after a search that she oversaw failed to put forward any other candidate.
“But Ms McKenzie may now face further problems entirely of her own making,” O’Brien continues.
“Given one of the key roles of chair is to unite and guide a board, her adversarial approach to the shareholder-nominated directors, some of whom are now likely to be sitting around the board table, looks extremely foolish.”
McKenzie’s appointment to the chair in September was also controversial because she was involved in the failed demerger plan.
Battle lines harden
Both sides are digging deeper into the trenches over the future leadership of AGL, with Cannon-Brookes calling the company’s opposition to three of Grok’s candidates “bullshit”.
In comments to Nine Entertainment on Wednesday, the tech billionaire said he hadn’t even spoken to some of the nominees and has no legal or other connection with them.
Cannon-Brookes has spent $600 million amassing his stake in AGL via a complicated set of derivatives arrangements, after losing a bid to take the company private alongside Brookfield, and is intent on winning
Last month Cannon-Brookes argued that AGL needed more changes at the company’s top if it wanted to stop destroying shareholder wealth and participate in Australia’s energy transition.
“We believe that the current board is not up to the challenge of delivering on AGL’s potential,” he said in a letter to shareholders.
“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.”
Schott’s career includes chairing the Energy Security Board and overseeing the sale of NSW state-owned coal fired power stations to AGL, Origin and Energy Australia. Holman is a long-serving director across the energy and industrial sectors.
Grok Ventures also notes that AGL’s Climate Transition Action Plan aligns with a 1.8 degrees target rather than a 1.5 degrees target, and as a result needs to make deeper decarbonisation efforts.
