Mike Cannon-Brookes wins AGL Energy proxy backing for board renewal

Mike Cannon-Brookes has received a boost in his bid for a refreshed board at AGL Energy after winning support from a key proxy adviser.

Mike Cannon-Brookes has received a huge boost in his bid to install new directors at AGL Energy, with influential proxy adviser CGI Glass Lewis backing the election of Kerry Schott and Christine Holman to the board.

The billionaire, AGL’s largest shareholder, has mounted a high-profile campaign through his privately owned Grok Ventures to refresh the board amid a broader effort to accelerate a transition to green energy at the 185-year-old utility after previously derailing its demerger.

AGL has indicated its board would support only Grok’s nomination of former Tesla executive Mark Twidell and would reject Ms Schott, a former Energy Security Board chair along with Ms Holman, a director of Metcash and CSR and also Australian Financial Complaints Authority chair John Pollaers.

Ahead of its November 15 annual general meeting, proxy adviser CGI Glass Lewis recommended a vote in favour of both Ms Schott, Ms Holman and Mr Twidell but said it was against the election of Mr Pollaers to the board.

“Having assessed the skills, experience and perspectives of the current directors and Grok’s nominees, we believe AGL shareholders would be best served by re-electing each of the board-supported nominees, as well as two additional Grok nominees, Kerry Schott and Christine Holman,” CGI Glass Lewis said.

“In our view, these two candidates have relevant, additive skills and viewpoints that would further round out the current mix of skills on the board and bolster the diversity of thought and perspective in the boardroom. We believe their addition would help foster a more robust evaluation of the Company’s current strategic threats and opportunities and better ensure AGL leadership is sufficiently prepared to address the myriad of challenges and tasks that lie ahead as the Company regains its footing and heads in a new direction.”

AGL has previously said that while its board acknowledges the skills and experience of the other Grok candidates, it did not believe they will “provide the further experience and skills necessary” to ensure the successful implementation of the company’s strategy.

CGI Glass Lewis said it disagreed with AGL’s conclusions on the two directors.

“Although the board claims Ms Schott’s energy and government experience and Ms Holman’s technology and ASX directorship experience are duplicative or not the right fit for AGL, based on our assessment and engagement meetings, we believe both Ms Schott and Ms Holman would be strong additions to the AGL board at this time,” the adviser said.

“Given the enormity of the challenge facing AGL and the urgency with which it needs to act at this critical inflection point in order to be successful, we believe electing these additional qualified, independent directors is in the best interests of shareholders.”

The electricity operator has already lost a high profile spat with the tech titan after it was forced to shelve its planned demerger earlier this year, resulting in both its chief executive Graeme Hunt and former chairman Peter Botten being ousted.

Mr Pollaers has previously told The Australian that AGL’s board had suffered from a conservative outlook and a fear of reinventing its strategy – and required a complete overhaul.

CGI Glass Lewis said it didn’t see as much of a need on the board for his background and experience, assuming the other Grok nominees are elected.

“We’d tend to agree with the board’s view that his prior experience at consumer products companies, among others, isn’t sufficiently compelling to warrant his election at this time, considering his relevant CEO experience is not particularly recent and he has limited ASX listed board experience, especially when compared to Ms Holman, for example.”

The adviser also shot down AGL’s argument that Grok would have too much influence on the board if the directors were appointed, noting all had vowed to act independently.

“Even if all four of Grok’s nominees were elected at AGL’s AGM, Grok would still have zero direct representation on the board because the investment firm has not nominated any of its representatives. It’s not as if Grok is seeking to elect Mr Cannon-Brooks or Grok’s CEO and CIO, Jeremy Kwong-Law, to the board.”

Grok has previously said it supported the election of directors Graham Cockcroft, Vanessa Sullivan and Miles George and the re-election of chairman Patricia McKenzie, but said a larger board was required to execute its transformation to a green retailer and generator.

A Grok spokesman said: “CGI Glass Lewis, and a growing number of retail and sophisticated shareholders, agree with our assessment that this board needs renewal, more relevant skills and fresh thinking.”

But AGL chair Patricia McKenzie said that while the company “acknowledge(s) the skills and experience of these two candidates, we do not believe they will provide the additional experience and skills necessary to ensure the successful implementation of the Board’s strategy”. “Ultimately it is a matter for shareholders,” she added.