As work-days go, it’s been a tough one for AGL Energy chair Patricia McKenzie. At the end of the annual general meeting on Tuesday, the company’s board had expanded to nine, including three candidates McKenzie and the existing board did not endorse.
As RenewEconomy reports here, AGL shareholders voted in favour of all four candidates nominated for board positions by Galipea Partnership – Mark Twidell, Kerry Schott, Christine Holman and John Pollaers – when only Twidell’s appointment was supported by AGL.
Galipea, which itself holds an 11.28% share in AGL, is an entity associated with Grok Ventures, which is the investment vehicle of tech billionaire and shareholder activist Mike Cannon-Brookes and his family.
Led by Cannon-Brookes, Galipea has been pushing for AGL to take a more ambitious approach to energy system decarbonisation and a more climate-realist approach to its exit from coal. And it hopes the new board members, with their breadth of experience, can help with that.
The lights will go out
But McKenzie, who managed on Tuesday to hold on to her role as chair of the newly expanded board, appears to be ‘not for turning’ on these crucial points of strategy.
In answer to a shareholder question at the AGM on Tuesday, the chair reiterated the view espoused in an op-ed published by the AFR earlier this month, that a faster exit from coal in Australia would lead to the lights going out.
To put a finer point on it, McKenzie believes that quitting coal on a schedule in line with science-based targets to limit global warming to 1.5°C is just not doable.
“We do not consider that there is a feasible deliverable plan that can deliver the reduction at 1.5. degrees in the NEM in that timeframe,” she told the AGM.
“Simply stated, the the major build-out of renewables firming and transmission is highly unlikely to be delivered in that timeframe.
“Accordingly, AGL has to live with what it considers to be responsible and appropriate plan to deliver …against the Paris Agreement commitments of substantially less than 2°C, consistent with AEMO and consistent with other players in the energy industry,” McKenzie said.
“Should the transition occur more quickly, and should there be opportunity for us to move more quickly within AGL to exit coal-fired generation, we will certainly consider that, taking into account the need to ensure affordability and reliability in the grid, returns to shareholders, and as fast a decarbonisation as we can responsibly deliver,” she added. “Next question.”
A first strike
But the next question will surely be, are the new board and shareholders on board with this controversial view? Should the chair stay given her views.
In a letter to AGL shareholders in late October, Cannon-Brookes and Grok urged a vote against the “unambitious decarbonisation targets” proposed on the company’s Remuneration Report, arguing that AGL should align with a more ambitious 1.5 degrees target.
“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,” the letter said.
And at the AGM on Tuesday, AGL looked likely to receive a “first strike” on the Remuneration Report, due to what McKenzie described as “a couple of large shareholders voting against it.”
“Clearly we will engage with …these two large shareholders on their concerns about the remuneration report and factor that into the design that we have for the FY 24 remuneration structure,” she added in comments later.”
Whatever happens on this particular battlefront will depend to some extent on who AGL names as the new CEO, following the September exit of Graeme Hunt.
As new independent board member Kerry Schott said in a video presentation to the AGM to support her nomination, the appointment of the new CEO will be “critical” – as will be getting the board working together collaboratively.
“The last thing that a board needs is to be Balkanised,” Schott said in her video. “It’s very clear that … the culture within the company needs to be improved. The morale has not been good.
“So fixing these things is easier said than done, but I do think I can help.”
