Cannon-Brookes ups ante in campaign against AGL board

The Atlassian billionaire has written to investors advocating for four directors recommended by his private Grok vehicle – three of which are opposed by the energy giant.

Mike Cannon-Brookes is stepping up a campaign on new board directors at AGL Energy.

AGL Energy‘s largest investor, Mike Cannon-Brookes, has launched a campaign to convince shareholders to vote for board renewal after the power giant batted away its proposals for a string of new director appointments.

The energy company’s board said on Friday it would support the nomination of only one of the four directors nominated by Mr Cannon-Brookes – Mark Twidell – setting AGL up for a showdown with the Atlassian billionaire at its November 15 annual meeting.

Mr Cannon-Brookes wrote to investors on Tuesday saying it would soon mail out instructions on how to vote for its favoured directors at or before the meeting.

“Grok believes each independent candidate will bring unrivalled experience and capability to AGL’s Board. For this reason, we are encouraging all AGL shareholders to vote in favour of Christine Holman, Professor John Pollaers OAM, Dr Kerry Schott AO and Mark Twidell,” Mr Cannon-Brookes said as part of his private vehicle’s campaign.

“We believe the existing AGL board needs help – particularly with executing on strategy and fresh ideas. Today, AGL only has five directors on its board. We consider this unacceptable for a company of AGL’s scale, let alone a company that has failed to keep up in a rapidly transforming industry,” the letter reads.

Grok said the candidates will not be its representatives if elected and would both consider decisions and vote independently.

It accused AGL‘s strategic review released in late September as failing to align the company with a 1.5 degree Paris climate outlook.

“To deliver such massive change (such as coal plant closures and large-scale renewables build outs), AGL requires a bigger and more diverse team in its Board room, with tried and tested operating and company transformation experience,” Mr Cannon-Brookes said.

Grok teamed up with Brookfield to lob two takeover offers for AGL – both rejected – but speculation continues to linger that either or both of the suitors may reprise a bid given tensions over the power giant’s future.

Brookfield emerged in June with a 2.5 per cent stake in AGL, stoking talk it may build a bigger hold on the company.

The Canadian investment giant said AGL, Australia’s biggest carbon emitter, offered a “perfect example” of going to where the emissions were, part of a broader strategy for its global transition fund, the largest to focus on a net-zero economy.

“Obviously working with one of the largest emitters in Australia being AGL would be a perfect example of going where the emissions are and tackling them head on,” Keira Balderston, Brookfield Asset Management’s vice president for renewable energy and transition investments, told a energy conference on Tuesday.

“I think AGL as a case study is a good one that represents two things. One is the need to expedite these transition plans. It’s the need for private capital to facilitate that – or other sources of capital to facilitate that.”

“It is going to be an expensive transition, but with that comes a lot of opportunities … it’s having really strong stewards of that capital and of that business. Ensuring that you have high levels of climate change literacy on the boards across upper management through middle management, and then down to re-skilling your on the ground labour.”

Asked if was difficult for a public company like AGL to pull off a transformation into a clean energy company while remaining listed, Ms Balderston said: “You know what, I think it‘s going to be hard either way. I think it’s going to be a challenging time for businesses to operate in transition.”

“Obviously, we do look at businesses from a private capital perspective and there are additional requirements placed on public companies, but that’s the case across all sorts of industries.”

Brookfield and Grok previously teamed up as a consortium but saw takeover offers rejected in February and March.

They had planned to invest $20bn in transitioning AGL’s generation fleet and targeting net-zero emissions by 2035 with Brookfield funding 80 per cent of the offer and Mr Cannon-Brookes the 20 per cent balance.

Both quit the race, with Brookfield subsequently saying it was not in “active discussions” on a buyout and Mr Cannon-Brookes saying the duo were “putting our pens down with great sadness”.

The consortium’s last bid was $8.25 a share, a 75c fillip on its original offer, but both were shunned by former chairman Peter Botten for undervaluing the company. AGL shares rose 2c, or 0.3 per cent, to $6.90 on Tuesday.

After the takeover failed, Mr Cannon-Brookes built a 11.3 per cent stake in AGL that he used to engineer the demise of its planned demerger.