AGL chief Brett Redman resigns
Brett Redman’s sudden exit comes just weeks after he laid out plans to split the energy giant, sparking speculation of an internal rift.
AGL Energy has plunged into crisis after the bombshell resignation of chief executive Brett Redman just weeks after he laid out plans to split the company in two, with chairman Graeme Hunt parachuted into the top job until a new CEO is found.
Australia’s largest electricity generator confirmed the removal of Mr Redman after 30 months in the role following a decision taken late on Wednesday during an AGL board meeting.
The outgoing boss said he could not commit to spending another five years in a CEO role once a demerger takes place. But his sudden exit sparked speculation of a rift between board members and management over the strategic direction of the company.
The move, first revealed by The Australian, will see Mr Hunt take over as interim chief executive while AGL director Peter Botten, the former Oil Search boss, was named the company’s new chairman.
AGL employees dialled into a series of ‘Town Hall’ meetings on Thursday with members of AGL’s executive team. Staff asked about the potential for job cuts and why Mr Redman had not been given more time to advance one of the biggest corporate restructures in AGL’s 180 year history.
Mr Hunt also held a call with investors saying his appointment to the CEO role was an endorsement of Mr Redman’s strategy.
Still, analysts were wary of the explanation and AGL’s shares fell 2.9 per cent to $8.80. The company has now shed more than half its value in the last nine months alone.
Mr Redman’s resignation has raised questions over the company‘s proposed structural split while the $1.65m salary handed to Mr Hunt to act as chief executive is tone deaf, MST Marquee analyst Mark Samter said.
“I know we will get the usual spin, like we did from Woodside, that this is all terribly cordial and doesn’t say anything about what is going on in the business, but it is hard not to read a lot into it. I really like Brett, and thought he was outwardly doing a good job of presenting a hard message, for him to jack it in 2.5 years into the big job, hardly rings of a resounding endorsement of what AGL is trying to do,” Mr Samter told clients.
Mr Redman said he couldn’t commit to staying with the power giant for another five years and wanted a career change after 15 years with the power giant.
He had been widely expected to lead either New AGL or PrimeCo under a proposed split of the company and his abrupt departure raised concern over the company‘s strategy and the likely success of the mooted separation.
“I‘ve been in the thick of it for a long time and I’ve always felt in my executive career I would want to do something else before I hunt up the boots and I figured that might be at the end of this role. CEO roles generally go for four or five years - so there’s a couple of years in it - and at that point I’d face into what do I want to do next,” he told The Australian.
“The separation strategy - I initiated it, presented it, developed it and continue to champion it - is the right proposition and is supported by the board.”
AGL had promised to update the market in June on the likely CEOs who could head up the two businesses, meaning decisions are starting to take shape now ahead of that decision, according to Mr Redman.
“What I was having to face into was whether I was ready to sign up to a brand new CEO role. And I felt to sign up I would have to commit for another five plus years to do it properly. And when I really thought it through I decided I wasn‘t ready to sign up for another role for another five years.”
“I then had to decide what was the right thing to do for the company again if I wasn‘t ready to sign up for another five years. And I didn’t want to wait 6, 12 or 18 months and then declare I wanted a change. I think that would be the wrong thing to do. What needs to happen now is the company and board need to appoint leaders and leadership teams that are there for the long haul. And I needed to declare to the board that wasn’t me. And once you reach that point, it started to become clear I wasn’t there to be part of the new leadership group,” Mr Redman said.
“The business will now be able to get on without me blocking the way so that they can appoint two long term sets of leadership groups that will take these two strong businesses into the future.”
Mr Hunt had landed a $1.65m salary and $600,000 of share options after agreeing to become interim boss and hand the chairman‘s role to Mr Botten.
But the move is inappropriate, according to MST Marquee.
“Whilst the speed and quantum of the market’s decline would have been hard to see, I would argue AGL is trying to take the steps it is 2-3 years too late. That buck stops with the Chairman and giving yourself a few million dollars as a pat on the back for risking the very foundations of the business does not feel the right reaction to me. Peter Botten taking over as Chairman is a good outcome for AGL, but he isn’t a miracle worker. Until shown otherwise I am not sure how anyone can reach any conclusion other than there is trouble in the demerging paradise in AGL,” Mr Samter said.
Mr Redman took over the CEO role on a permanent basis in January 2019 from the combative Andy Vesey and sought to steady the company after a war of words with the federal government over the future of its Liddell coal plant in NSW.
However, he has come under increasing pressure to find new sources of income to offset dramatically lower wholesale power prices and leaves behind an unsuccessful attempt to buy telco Vocus and questions over the merits of a possible demerger that would hive off its dirty coal assets.
Mr Redman will get to keep his short and long-term incentives after being treated as a “good leaver” under the company’s executive remuneration framework.
The “good leaver” terms allow executives to keep incentives under a range of scenarios including the CEO role being terminated by mutual agreement with the board.
AGL has been holding talks with shareholders in the last few weeks to create two ASX-listed companies through a demerger after splitting its retail and supply arms to form a green electricity retailer and generation giant dominated by coal power.
Mr Redman said he was pleased to have established the case for separating the businesses.
“After almost 15 years with AGL, I am proud of the contribution I have made to growing Australia’s largest multi-product energy retailer, assembling Australia’s largest electricity generator and founding Australia’s largest renewable investment fund. I am also pleased to have established the case for the structural separation of the business. The timing of my departure will enable the leadership team to be established to execute upon the separation strategy and lead the business into its next chapter.”
There was little sign three weeks ago that Mr Redman’s exit was on the cards. That suggests either shareholder pressure or board unrest forced the end for the 50-year old executive.
Mr Redman told The Australian on March 30 he faced a difficult choice on leadership once the company was split in two, comparing the decision to choosing a favourite child.
Asked if he planned on leading either New AGL or PrimeCo, Mr Redman said:
“That‘s going to be a very hard choice when I come to it. It’s a little bit like being asked to choose between your children. Today I’m the CEO of all AGL and that will continue for some time to come. If we go down the path of separating the two businesses, I’m going to have to choose and it’s not a choice I’m looking forward to because I think they’re both great businesses.”
Mr Botten said having his predecessor in the CEO chair would allow continuity as a search for a permanent CEO continues.
“I want to add my thanks to Brett for his service to the company and to recognise Graeme for agreeing to take up the role of Interim CEO while we work through this important period. This will provide important continuity of leadership for the business and certainty for our people and shareholders while we work through the considerations of structural separation and establish a platform for future success.”
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