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what now for Australia's biggest carbon emitter

  • Written by Mark Humphery-Jenner, Associate Professor of Finance, UNSW Sydney

“What is a grok?” asked a shareholder at AGL’s 2022 annual general meeting[1] at the Melbourne Recital Centre on November 15, as those assembled struggled with the reality being forced on Australia’s biggest carbon emitter by Australia’s third-richest person[2].

Grok is, in fact, a word invented by science-fiction writer Robert Heinlein for his 1961 novel Stranger in a Strange Land. To “grok” means to understand something intuitively.

Which is not something likely to be said about how AGL’s leadership has appreciated the ambition of software billionaire Mike Cannon-Brookes to have Australia’s biggest energy retailer lead the nation’s transition to renewable energy.

At the meeting, Cannon-Brookes used the 11.3% shareholding he has collected through his investment company Grok Ventures[3] – plus proxies and support from other shareholders sympathetic to his cause – to reshape the company’s board.

Before the meeting AGL had five directors, including chairperson Patricia McKenzie. It now has four new independent directors – all nominated by Cannon-Brookes.

McKenzie and her other directors endorsed just one of those nominees – Mark Twidell, a renewable energy expert who works for Tesla Energy. The other three new directors are: Kerry Schott, past chair of the federal Energy Security Board[4]; John Pollaers, Swinburne University’ chancellor; and CSR director Christine Holman.

AGL's new idirectors, Christine Holman, Kerry Schott, John Pollaers and Mark Twidell.
AGL’s new idirectors, Christine Holman, Kerry Schott, John Pollaers and Mark Twidell. Morgan Hancock/AAP

The existing board also suffered the indignity of a significant minority vote against its executive compensation plan, as well as against AGL’s energy transition plan, which commits to quitting fossil fuels by 2035. For some, the plan was not ambitious enough. For others, the business case was unclear.

Shareholders divided

Yet as Cannon-Brookes’ forces swept the field, the same shareholder wondering about the meaning of “grok” also wondered whether the new directors would work for Cannon-Brookes or for AGL. So too did others. Division was palpable.

Shareholders now seem almost caught in a civil war.

On one side are those focused on sustainability, and carbon emissions, who support Cannon-Brookes in his mission to see AGL to divest fossil fuels quicker. Though his takeover bid failed, in May he successfully blocked AGL’s demerger plan[5], which he argued would delay divestment.

Read more: Australia's biggest carbon emitter buckles before Mike Cannon-Brookes – so what now for AGL's other shareholders?[6]

On those other side are those focused on returns, and concerned about “board capture”.

These interests need not be mutually exclusive. A company can operate sustainably and be profitable at the same time. But its leadership must explain this and make the strategy clear, cohesive and credible.

Board missed its opportunity

McKenzie talked strongly about the need to move towards renewable energy. She said AGL’s transition plan must be “sensible”. But there was a lack of focus on financials.

AGL chairperson Patricia McKenzie at the company's 2022 annual general meeting.
AGL chairperson Patricia McKenzie at the company’s 2022 annual general meeting. Morgan Hancock/AAP

Directors owe a duty[7] to all shareholders to act in the best interests of the corporation. This requires directors to focus on opportunities to maximise shareholder wealth, but doesn’t negate doing so sustainably.

New director John Pollaers came closest to articulating the challenge facing AGL. This was a time for strategic change, he said. AGL had an opportunity to generate returns and find a path to profitable growth.

McKenzie and her fellow directors could have used the opportunity to show how the renewable energy transition is necessary for AGL’s ongoing financial success, or provide new avenues for wealth creation.

But they awkwardly tried to find a middle ground, promoting the clean energy transition without fully outlining the financial underpinnings until pressed: McKenzie ultimately noted the transition must be “reasonable” to be financially viable.

Finding a shared vision

In lieu of this vision, questions revolved around the board’s competence and record.

Shareholders went into the meeting with AGL’s stock worth A$7.70. That’s better than the $5.30 it was worth a year ago, but about 70% less than the $25.81 it traded at five years ago.

The vote against the board’s executive compensation plan sets the scene for further boardroom upheaval.

Under Australia’s “two-strike[8]” rule on executive pay, at least 75% of shareholders must approve a board’s compensation plan. More than 25% opposition results in a strike. A second strike leads to a “spill resolution” – a vote on whether all directors must stand for re-election.

Whether that occurs will depend on how successfully old and new directors can work together – something incoming director Christine Holman noted in her pitch to shareholders.

Read more: The end of coal-fired power is in sight, even with private interests holding out[9]

First they must find a new chief executive, to replace Brett Redman who resigned in April[10]. A new CEO can give clarity over AGL’s future priorities – but to do so he or she will need to be palatable to both sides.

If they can’t find agreement, then AGL’s next meeting of shareholders promises to be even more spectacular.


  1. ^ annual general meeting (
  2. ^ third-richest person (
  3. ^ Grok Ventures (
  4. ^ Energy Security Board (
  5. ^ blocked AGL’s demerger plan (
  6. ^ Australia's biggest carbon emitter buckles before Mike Cannon-Brookes – so what now for AGL's other shareholders? (
  7. ^ duty (
  8. ^ two-strike (
  9. ^ The end of coal-fired power is in sight, even with private interests holding out (
  10. ^ who resigned in April (

Authors: Mark Humphery-Jenner, Associate Professor of Finance, UNSW Sydney

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