A revolt by AGL investors has forced Paula Dwyer to withdraw her nomination for chair

Disquiet by as many as four institutional shareholders has forced Paula Dwyer to withdraw her nomination to chair power giant AGL Energy.

AGL Energy is embroiled in fresh crisis after shareholders staged a revolt against the appointment of its next chair, Paula Dwyer, and the veteran company director abandoned the role.

Ms Dwyer was in the running to take over from Peter Botten as chair but the selection on Tuesday of the seasoned director immediately reopened a rift with its largest shareholder, Mike Cannon-Brookes, who has been agitating for a climate-savvy hire who could transform AGL into a green energy player.

AGL’s board had met on Wednesday to ratify Ms Dwyer as chair but up to four prominent institutional shareholders voiced their opposition to her appointment, sources said, pushing Ms Dwyer to pull out of the running for the position.

The protest underscores the huge task ahead for the 185-year old coal-dominated power generator to keep pace with an accelerating transition to renewables and chart a course that can meet the climate and environmental demands of its shareholder base.

Veteran businesswoman Paula Dwyer. Picture: Aaron Francis

The company fought off two takeover offers from the tech billionaire and Brookfield earlier this year but its year-long plan to rejuvenate the electricity utility then took a major back-step when a planned demerger into retail and generation arms was dumped after pressure from investors.

A board rout ensued including the removal of Mr Botten, its chair, along with chief executive Graeme Hunt.

Mr Cannon-Brookes’ Grok Ventures expressed misgivings about Ms Dwyer’s appointment given its view the company needs to be fundamentally rebuilt to extract value for shareholders from the energy transition.

Several other shareholders including major superannuation fund Hesta and fund manager Martin Currie are also thought to have been cool on the proposal.

Michael Cannon-Brookes is understood to have opposed any chair proposed by AGL.

Others said Mr Cannon-Brookes was not open to any chair proposed by AGL with Grok drawing up its own list of preferred candidates for the board.

AGL has three separate processes underway to find a chair, a chief executive to replace Mr Hunt and also new directors after Mr Cannon-Brookes effectively sunk the company’s planned demerger in May in a defeat for the nation’s largest power generator.

The nation’s largest power generator was expected to name its new chair at a strategy update in the last week of September but has now been forced back to the drawing board to find a candidate that will appease the institutions.

AGL declined to comment.

Ms Dwyer was a previous chair of Tabcorp and Healthscope and was thought to be in the running to become chair of ANZ after a long stint as a director at the top four bank.

Healthscope was sold under Ms Dwyer’s watch for $5.7bn to Canada’s Brookfield, which recently emerged with a 2.6 per cent stake in AGL, further stoking takeover speculation.

One investor said they was concerned by Ms Dwyer’s track record at Tabcorp where the company was hit with regulatory action for ­alleged noncompliance with anti-money laundering and terrorism financing rules.

Peter Botten has stepped down as chair of AGL. Picture: Adam Yip

Grok has said it was important “to find an independent chair that’s really, really strong” to accelerate the energy transition.

The new chair faces impatient investors looking for a cohesive plan to guide it through massive electricity market volatility.

AGL directors Vanessa Sullivan and Graham Cockroft have faced a formidable to-do list: anchoring a fourfold strategy refresh that involves adapting the initial demerger rationale into a renewed single business, reworking its climate plans, executing the correct energy mix to guide it through the transition and determining the right capital structure to fund both its existing business and bulging renewables pipeline.

Grok met with AGL after its annual results in late August and the influence of its largest shareholder in moulding the new company will also be closely watched with the tech titan’s investment group expected to be handed a board role to reflect its ownership clout.

A similar situation – although more advanced – emerged back in 2017 when former Origin Energy boss Grant King voluntarily stepping aside from the BHP board in the wake of the reality that at least 40 per cent of the share register would vote against him.