Our Proxy Voting Annual Review 2022 shows that there were 3,163 director revolts in the 2021/22 proxy season.

Do you expect this number to increase next year?

73% - Yes
16% - No
11% - Too early to tell

Australia may have just had its Exxon moment, thanks to billionaire Mike Cannon-Brookes.

The founder of software company Atlassian this week had four director nominees elected at the country's largest energy generation business, AGL Energy, in a proxy contest that began just as one at America's largest oil company was winding down. 

Australia, whose stock markets are heavily weighted toward carbon-intensive industries, seems to be feeling none of the sluggishness on ESG that the Northern Hemisphere has experienced in its proxy season earlier this year.

One participant at the International Corporate Governance Network's proxy season preview in London this week called the AGL board coup the "first true case of energy activism in Australia," and Cannon-Brookes himself described it on Twitter as, "A great day in the future of Australia's decarbonisation [sic]."

"The election of Mike Cannon-Brookes' nominees to AGL's board marks a significant transition that is underway in Australia, not just a transition from carbon-intensive energy to greener and renewable alternatives, but a transition that is underway in ESG activism," leading Australian activism lawyer Jeremy Leibler told me by email this week, in a reference to the greater role being played by significant shareholders. "This financial clout allows such investors, as is the case with investors in AGL, to forgo short-term profits in the search for sustainable, long-term profits."

In two glaring similarities with the Exxon campaign, this proxy fight was not an out-of-the-blue attack focused solely on cutting emissions and was at least partly of the company's own making. Unlike at Exxon, it began as M&A activism.

Way back in June 2021, AGL had announced a breakup of its power generation and retail businesses that would have seen its coal-fired plants continue operating for decades. In February, it rejected a takeover bid from Brookfield Asset Management Inc and Grok Ventures, Mike Cannon-Brookes' family office.

That merely led to a media blitz against the board's preferred option and to Grok building a stake in the company that would help it to vote the arrangement down. "The demerger makes no sense, or cents," Cannon-Brookes tweeted. Australian philosopher Peter Singer even bought shares in AGL with the intention of voting against the demerger. 

By the end of May, the board had capitulated and the chairman and CEO had both resigned but it wasn't until this week that the board elections ended with the four dissident nominees being added – as well as the incumbents up for reelection. 

That outcome wasn't necessarily a shock. Management had backed one of the four dissident nominees, with Glass Lewis and Institutional Shareholder Services recommending for three and four of the slate, respectively. And while the incumbent directors were comfortably reelected, three-in-10 shareholders voted against AGL's "say on pay" and "say on climate" resolutions, the former a first strike that could lead to full board elections if it is repeated next year.

Cannon-Brookes' victory, combined with recent voting trends in "say on climate" resolutions, has arguably catapulted Australia into the vanguard of the ESG activism movement. Nine management-sponsored "say on climate" resolutions in the ASX 300 have received 82% support year-to-date. Votes are admittedly only just becoming widespread, and proxy season is still in progress, but the results compare poorly with global support for management "say on climate" resolutions of 90% year-to-date and 96% in 2021.

Rebecca Sherratt was away at the ICGN event this week and will return next week. Subscribers can also read Kieran Poole's reporting from the Sohn Foundation London Conference on Insightia One.