The AGL Energy Group Ltd (ASX: AGL) share price is in focus today as it told investors about its board decision.
AGL has been under heavy pressure by billionaire Mike Cannon-Brookes and his investment business called Grok Ventures to decarbonise quicker. Galipea Partnership, an entity associated with Grok and Cannon-Brookes, nominated four people to the AGL board.
AGL board decision
The AGL board said that it respects the rights of shareholders to nominate board members and remains open to discussing appropriate board members with Grok or any shareholder.
But, the AGL Energy Chair Patricia McKenzie noted that it is “unusual” for a non-controlling shareholder (with 11.28% ownership) to nominate four candidates for election to the board.
This was the AGL response:
While we understand that Grok’s nominations were made in what it believes are the best interests of your company, given the depth of energy market and transition experience already represented on the renewed AGL Board, the Board is of the view that appointing all four of the Grok candidates would not add to the overall effectiveness of the Board. Additionally, as AGL’s Constitution limits the number of directors to ten, appointing the remaining Grok candidates to the Board could limit the Board’s ability to bring on additional directors who possess priority skills identified in the board skills matrix, such as ASX listed experience, mergers and acquisitions and customer, digital and emerging technologies expertise.
The end result was that AGL decided that Mark Twidell would be a “valuable addition” to the board, who has more than 30 years of experience in the international energy sector, most recently as director of energy programs at Tesla.
AGL’s board has recommended that shareholders vote in favour of his election but vote against the other candidates.
Committed to decarbonisation
AGL is focused on being a “strong and sustainable company”. It noted that there is worldwide momentum for faster decarbonisation.
It has brought forward AGL’s exit from coal by targeting the closure of the Loy Yang A power station by the end of FY35, up to a decade earlier than previously announced.
This will reduce AGL’s annual greenhouse gas emissions from around 40 million tonnes annually to net zero after closing the coal power stations.
It plans to supply up to 12GW of renewable and firming capacity by 2036, estimated to require an investment of up to $20 billion.
The interim target is to have up to 5GQ of new renewables and firming in place by 2030. Battery, wind and solar are priority investments.
Final thoughts on the AGL share price
AGL shares have fallen more than 15% since early August 2022.
It’s lower than what was offered by Grok and Brookfield to acquire the business outright, so there could be another takeover offer. However, with AGL now committed to decarbonise, Cannon-Brookes may not feel like he needs to buy the whole business. I’m glad AGL is decarbonising, but it’s not the type of ASX share I’d want to invest in. I think there are other ASX dividend shares with more long-term growth potential.
