Andy Vesey exit was just normal succession planning: AGL
AGL Energy says the abrupt departure of Andy Vesey was unrelated to the power giant’s bitter feud with Canberra.
AGL Energy says the abrupt departure of former boss Andy Vesey was unrelated to the power giant’s bitter feud with Canberra over the future of its Liddell power station and was normal succession planning as the company looked to a new phase of growth after a period of energy sector volatility.
Chairman Graeme Hunt also defended the board’s decision to look for a replacement for Mr Vesey after 3½ years in the top role, calling it a natural board process and in line with the average tenure of a chief executive in Australia.
“I can tell you that it is not about the relationship with the government and that a succession process had been under way for some significant amount of time,” Mr Hunt said after the company’s annual general meeting in Melbourne yesterday.
“The shareholders who I’ve spoken to, and I’ve spoken to a lot over the last few weeks and months, all understand and are comfortable with the change.”
Mr Vesey oversaw a 50 per cent increase in profits and share price from February 2015 and set a path to make the company a cleaner, greener electricity generator and retailer.
But he clashed repeatedly with the federal government over his refusal to sell or extend the life of Liddell beyond its planned 2022 closure — a policy stance that AGL yesterday confirmed it would stick with.
The oustings of Mr Vesey and former PM Malcolm Turnbull in the same week were not connected, according to Mr Hunt.
It was incorrect “to suggest that there is any relationship whatsoever” between the events. “Things unfolded in two parallel paths ... they were not related and they just came to fruition at the same time.”
For several months before Mr Vesey’s departure the board was focused on identifying new internal and external talent as the Sydney-based company entered a new phase.
“The company is entering a new stage, given the continued pace of change in our sector,” Mr Hunt said.
“… we’re moving on to a new phase that will require new leadership. We’re going through a process to work out who that is going to be.”
Considering a new leader was part of a board’s normal succession-planning remit.
“It’s a natural process to ramp that kind of investigation up, particularly as a CEO goes into their fourth year,” Mr Hunt said. “The average tenure of a CEO in Australia is about that.”
A new chief will be announced before Christmas, with interim boss Brett Redman considered the leading internal candidate.
Mr Vesey, who remains an adviser to AGL until December 31, may be called on by the board to help assist with the transition to a new CEO.
The electricity behemoth also reiterated it would proceed with the planned 2022 closure of Liddell and had no plans to back away from the decision.
“Our strategy to exit heavy carbon-emitting facilities over the long term is unchanged,” Mr Redman said. “We will continue in an operational sense to review our plans but there is no change at this point to the Liddell exit date.”
AGL said earlier the politically sensitive call to close Liddell was not driven by ideology but was an operational decision to help manage the company’s risk and a “sustainable and responsible transition” to a new cleaner power mix.
“It is not a question of ideology on our part. Far from it,” Mr Redman told the AGM. “And neither is the need to address our carbon exposure more generally. It is a question of prudent and pragmatic risk management.”
The company acknowledged concerns about high power prices, which it said had jumped “significantly and probably unsustainably” in recent years.
It blames higher prices for coal and gas, the closure of coal-fired power stations like Hazelwood, a spike in network costs and continued uncertainty over government policies following the dumping of the national energy guarantee.
AGL is working with new Energy Minister Angus Taylor to address affordability and stimulate further investment in new generation while restoring confidence among consumers.
Mr Taylor warned last month the government was prepared to “wield a big stick” to reduce high power prices in a speech where he accused the energy giants of acting like the big four banks in breaching the trust of consumers.
AGL is now waiting for policy details from Mr Taylor and expects to work in tandem with the minister to lower prices and restore confidence in the sector.
It yesterday suggested a long-term “capacity market” where power providers are rewarded for providing back-up capacity.