AGL Energy (AGL) 2015 AGM Report

Company/ASX Code : AGL Energy Limited (AGL)
Venue :
10.30am Melbourne Recital Centre,
31 Sturt St, Southbank
Melbourne, Victoria
Monitor : Mr Ian Graves
AGM Details / NoM : Wednesday 30th September, 2015
# of Attendees : 100
# Holdings represented by ASA : 634
Value of Proxies : $40.5 million
# Shares Represented by ASA : 2.55 million
Market Capitalisation : $10.6 billion

Despite $567 million write-down, executives still receive bonuses

The AGM commenced with the Chairman reporting the result for the FY2015 year noting that the statutory profit down 62% to $218 million. The explanation given for this poor result was the write-off of $576 million in upstream gas assets. This write-off was caused by delays in gas production, gas price reductions and reduction in estimated reserves. Underlying profit rose 12% to $630 million.

As with last year, a number of environmental activists attended the meeting asking questions related to AGL’s coal seam gas production in NSW and the financial impact on the company. The Chairman explained that further write downs could not be ruled out as these would be dependant on future market conditions and technical issues.

He compared the current cost of Solar power of approximately $160/ MH, Wind farm $80/MH, with Coal fired $40/MH. The Chairman said that these comparative costs were unlikely to change in the near future.

The special shareholder resolution by shareholders, to amend the constitution was not put to the meeting. An alternate proposal, to the effect that AGL would work towards a carbon free future, was approved by 96% of votes cast.

Mr Hosking, Chair of the People and Performance Committee, presented the Remuneration Report. ASA advised the meeting that the use of underlying profit when measuring executive performance did not align with retail shareholders interests. ASA considered that bonus payments should only be made for above average performance and where hurdles were achieved. ASA reminded the meeting that AGL share price had remained in the range $14-$16 over the last 5 years and dividend payments had not increased. It was because of these factors that ASA voted against the resolution. However the resolution passed with 91% of votes cast.

On the grant of performance rights to the Managing Director, the ASA advised the meeting that because of the vesting period being only 3 years, not 4, the TSR beginning to vest at 40th percentile with 100% vesting at the 65th and 200% at the 90th percentile, the ASA considered this vesting profile is excessive and would vote against the resolution. The resolution was passed with 97% of votes cast.

ASA voted open proxies against the re-election of Mr Hosking, who as Chairman of People and Performance Committee,  has been slow to respond to the 22.8% no vote against the Remuneration Report in 2014, as well as continuing using underlying profit for incentive payments. Further Mr. Hosking who has been a director of AGL for over 7 years, has only acquired 4,669 shares. ASA guidelines are that a director should, over 3 years acquire shares to the value of his or her annual fees. The resolution was passed with 91% of votes cast

Mr John Stanhope and Mr Graham Hunt were re-elected as directors.

This company is monitored by Mr Ian Graves and Mr David Jackson. Mr Gavin Morton attended the AGM on behalf of the ASA.