Timing of AGL Energy boss Brett Redman’s exit riles investors
AGL Energy investors have raised concerns about the strategic direction of the company after the sudden resignation of Brett Redman.
AGL Energy investors have raised concerns about the strategic direction of the company after the sudden resignation of Brett Redman sparked questions over the future of a proposed demerger he initiated just four weeks ago.
Mr Redman was shown the door after being unable to commit to a further five years at the power giant under a proposed demerger. But the reasoning for moving him on immediately as CEO has vexed shareholders and analysts while the appointment of former chairman Graeme Hunt as his replacement also unsettled investors.
AGL shareholder Argo Investments said it was surprised by the sequence of events and unimpressed by the timing of the move.
“They had an investor day and the CEO laid out the strategy that he’s put to the board. Then four weeks later he’s decided it’s not for him and he’s moving on. So it does seem a little strange,” Argo managing director Jason Beddow said.
“It doesn’t give you a huge amount of confidence for the strategy to have been put up by the CEO and then he’s effectively left before they’ve even kicked it off.”
“It’s probably the worst timing — Brett couldn’t take it through and implement it and get it done.”
Australia’s largest electricity generator confirmed the removal on Thursday of Mr Redman after 30 months in the role, with Mr Hunt replacing him on an interim basis with a $1.65m salary.
He had 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.
Argo said there was logic in exploring a demerger but said AGL should have followed European peers in making a move several years ago.
“My view would be they’ve got to do something. They can’t just hope that wholesale markets improve one day and then all of a sudden they’ve got greater leverage and it’s a good company again,” Mr Beddow said.
“I do think they need to do something — until they disclose how they’re going to do it and the contractual arrangements and balance sheet, it’s pretty hard to say if it’s good, bad or in between.”
AGL’s explanation for Mr Redman’s exit was also called into question by one of Australia’s leading energy analysts.
“There has been a wildly consistent, and surprisingly abundant, messaging from AGL about Brett’s departure this week. Frankly, it all feels a bit too polished,” MST Marquee analyst Mark Samter said.
“Against that, I have one major question for everyone — if dinner at Rockpool on Tuesday night for the AGL board was so bitter and Brett’s decision not to want one of the two CEOs jobs post-demerger made his role so untenable to even be allowed back into the office, then why on earth was he awarded good leaver status?”
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.
“It makes literally zero sense, for a business that is frankly pretty cash-strapped to shell out more money to a man who, so the story goes, has left them in the lurch at the most critical point in their history since being founded in 1837. If he has let them down like the story goes, pay him the least you possibly can.”
Mr Samter said Mr Redman should have been allowed to execute AGL’s strategy.
“While Brett might not sit among the upper echelons of strategic thinkers, there are few better executives at executing a plan in Australia. If AGL is to be believed, and the demerger faces no limitations from a viability perspective, then it is all about execution from here. Why you would kick him out, seemingly before he even got his caramel popcorn at Rockpool, let alone allowed a day back in AGL HQ, is hard to comprehend.”
