HESTA has welcomed the decision by AGL to scrap its de-merger plan, after spending an estimated $160 million, and the chief executive and chairman resigned.
The superannuation fund had previously stated it would vote against AGL’s plans, saying it was unconvinced it would accelerate decarbonisation efforts to meet Paris-aligned targets.
In an announcement to the Australian Securities Exchange (ASX), AGL said it sought to withdraw the proposal to separate AGL into AGL Australia and Accel Energy. An estimated $160 million had already been spent on the proposal.
While it believed this was still the best option for the business, it said it was “no longer available” as a possible pathway as it would be unlikely to receive sufficient support from shareholders.
“AGL Energy believes the de-merger proposal would have been supported by a majority of shareholders, both retail and institutional, many of whom are long-term holders of AGL Energy shares. However, having regard to anticipated voter turnout and stated opposition from a small number of investors including Grok Ventures, AGL Energy believes the de-merger proposal will not receive sufficient support to meet the 75% approval threshold for a scheme of arrangement.”
As a result, there would be a number of board changes and the board had begun a search process for new members.
Chairman Peter Botten would resign upon appointment of a replacement independent chair, Graeme Hunt would resign as chief executive and managing director upon appointment of a replacement, Jacqueline Hey had resigned as a non-executive director and Diane Smith-Gander would resign after the firm’s full-year results in August 2022.
“The board will now undertake a review of AGL’s strategic direction, change the composition of the board and management, and determine the best way to deliver long-term shareholder value creation in the context of Australia’s energy transition.”
HESTA chief executive, Debby Blakey, said: “Shareholders are increasingly expecting companies to do more to drive a timely, equitable and orderly transition to a low-carbon future. It’s vital that company boards consider if they have the right mix of skills and strategic thinking to ensure they remain adaptable as the need for climate action increases in the coming years.
“HESTA stands ready to work with AGL’s current and new board to provide a clear understanding of the expectations of global investors.”