By Fiona Balzer, Policy and Advocacy Manager, and Damien Straker, Advocacy Coordinator
30 September 2022
AGL Energy (AGL) releases strategic review
AGL released its long awaited Review of Strategic Direction Outcomes & FY23 Guidance this week.
Your ASA representative, Helen Manning, and ASA team will be assessing the review and working towards determining the voting for the upcoming AGM which will be held 15 November 2022. On initial reading of the review, the complexity of the situation facing AGL has been acknowledged and there are positive steps – but a sustained implementation effort will be required to get where AGL Energy needs to be.
The Chair, Patricia McKenzie, and Acting CEO, Damien Nicks, spoke well at the webcast and conference call to discuss the review, but left no doubts that this is a marathon not a sprint.
Also, Grok Ventures, which is associated with substantial shareholder Mike Cannon-Brookes, Galipea Partnership and certain associated enterprises (holder of 11.28% of the ordinary shares), has advised they will nominate four independent non-executive directors (NEDs) to the AGL board to be voted on by all shareholders at the November AGM. The aim is to bring new thinking to the company. These independent NED nominees are John Pollaers, Kerry Schott, Christine Holman and Mark Twidell. The press release and each of nominee CVs is available here.
AGL has confirmed the receipt of these nominations and that the notice of meeting for the AGM will include the Board’s recommendations with regard to each of the candidates up for election.
ASA will determine our voting intentions for open proxies after due consideration, while noting the Notice of Meeting will be released no less than 28 days prior to the AGM.
Link Administration Holdings Limited (LNK) scheme – final comment
And finally, this short saga ends. The Court declined to make orders approving the Scheme for Dye & Durham to acquire Link Group and dismissed the proceedings at the Second Court Hearing. The time for satisfaction of the outstanding conditions precedent had expired, and there was no expectation that they would be satisfied, and the Scheme Implementation Deed between Link Group and Dye & Durham was terminated.
Link Group announced it will pay a fully franked Special Dividend of 8 cents per Link Group share. With a record date of 30 September 2022 with a payment date of 14 October.
What next for Link Group? It intends to evaluate alternatives for the business, including an in-specie distribution of a minimum of 80% of Link Group’s shareholding in PEXA (In-Specie Distribution), to maximise value for shareholders. It also reaffirmed the FY23 guidance provided in Link Group’s FY22 results released on 30 August 2022.
ASX (ASX) AGM give a first strike!
ASX has its first ever remuneration report strike, with 30.52% of share voted against the resolution. ASA voted undirected proxies against the remuneration report given it varies significantly with ASA guidelines (long term incentive needs to be greater than 20% of total remuneration package to drive the longer-term focus and the short-term incentive should include more specific targets).
You can watch the webcast of the ASX AGM here: ASX – Annual General Meeting 2022 (viostream.com). Questions start at 29 minutes 40 seconds with ASA company monitor for ASX, Peter Gregory, representing 206 shareholders who nominated Australian Shareholders Association to carry their proxies. The meeting also covers ASX market matters so also worth watching for shareholders who hold no ASX shares.
Upcoming company meetings
ASA will attend more than 30 AGMs in the week commencing 17 October! We suggest you refer to the full list of upcoming AGMs here.
Voting intention reports will be available approximately two weeks prior to the AGM date.
Telstra (TLS) AGM
We note that there are two meetings, the regular AGM and a special EGM immediately following, to vote on the proposal to restructure into a holding company, Telstra Group, with four independent subsidiary companies. For the AGM, ASA supports the resolutions including remuneration outcomes for this year and the award for the incoming CEO for 2023, which is unchanged.
Read the full voting intentions report for Telstra here
Commonwealth Bank (CBA) AGM
The matters for the Commonwealth Bank (CBA) meeting include it being held as a physical AGM with live webcast and no opportunity for online questions or online voting on the day. The ASA supports the rotation of the physical location of the AGM to Melbourne, providing a more equitable shareholder experience, but feels that a far more equitable experience for shareholders would be to provide a hybrid AGM whereby shareholders can vote and ask questions online on the day. The bank has said it will review the impact of the current strategy after the AGM.
At the pre-AGM meeting, the ASA representatives wanted to understand the new chair’s approach and his priorities for the bank. Mr O’Malley is keen to maintain an open and transparent approach and promote a balanced view, one that works for all stakeholders.
Also discussed at that meeting was CBA approach to gas investment given the European energy crisis and the uncertainties of the emerging economic headwinds.
ASA will vote open proxies in favour of the board resolutions. With regards to shareholder resolutions, the ASA acknowledges the concerns of Market Forces but does not support this resolution at this stage. CBA has this year produced its first Climate Report. It is the first Australian bank to report Scope 3 financed emissions and has provided a roadmap of how it is going to address those emissions over the coming 3 years.
Addressing climate change is a work in progress for many businesses and the economy and it is complicated. CBA is committed to leading in this, supporting its customers and the economy in the transition, and leading the narrative with government and institutions. It acknowledges there is much work ahead, but it is making good progress. We trust the CBA will keep moving forward.
CSL (CSL) AGM
The voting intention report will be delayed until next week due to the timing of the pre-AGM meeting. While not wanting to pre-empt the report we note CSL has made some revisions to its remuneration structure, including the addition of a second LTI measure, which aligns with ASA guidelines. More details next week!
Aurizon (AZJ) AGM
FY22 was a challenging but productive period for Aurizon with above rail and network volumes less than expected. Aurizon is entering a new phase with its strategy to extend operations into the new commodity-rich regions of Australia, and over the next decade expects re-balance the portfolio with the Bulk business to become a greater proportion of revenue and earnings compared to the coal-related business. The bulk segment provides integrated supply chain services, including rail and road transportation, port services and material handling for a range of mining, metal, industrial and agricultural customers across a national footprint. A key part of this strategy is the now ACCC approved acquisition of One Rail Australia Holdings.
In a year of considerable headwinds, the company has delivered a solid financial, operational and safety performance and we will be supporting the resolutions.
The main longer-term risk to Aurizon is climate change and coal and bulk haulage volume linked to domestic coal and mining production. The company demonstrates good risk awareness and a prioritisation to areas that are likely to impact business. Risks include changes from legislative and regulatory oversight; carbon reduction policies; customer exposure to export markets and geopolitical issues, affecting demand. Cyber security also receives much attention.
Treasury Estate Wines (TWE) AGM
TWE has had a successful year following the effective closure of the mainland China market and further rationalisation of their winery portfolio towards premium and luxury brands. Management has navigated through the global pandemic, supply chain disruptions and inflationary cost pressures and yet have emerged as a stronger company. Sales growth in other countries has generally been strong and the company maintains a positive outlook on future growth in the Chinese market.
We are supporting all the resolutions at the AGM. Ordinarily we would be looking very seriously at the chairman’s length of service and his ‘independence’. However, TWE has been through challenging times in the last few years (due to COVID-19 and the geopolitical situation with respect to the Chinese market) resulting in realignment of their business (i.e., shift of focus to European markets, increased emphasis on premium and luxury brands and the purchase of another US Vineyard). This re-alignment would benefit from stability of the Board of Directors as well as their on-going corporate knowledge.
Read the full voting intentions report for Treasury Estate Wines here
In case you missed it last week
Australian Foundation Investments (AFI) AGM
ASA is supportive of all three resolutions requiring a shareholder vote.
Read the full voting intentions report for AFIC here.
Brambles (BXB) AGM
We have real concerns regarding the workloads of two of the directors who are up for election and re-election. Kendra Banks is MD of Seek, Australia and New Zealand, while George El-Zoghbi is CEO for Arnotts. We will ask how they plan to manage their workload before deciding which way to vote.
Read the voting intention report here.