Essay: AGL’s corporate governance arrangements

AGL’s Board is formed by the Chief Financial Officer (CFO), the Executive General Managers (EGMs) of the two major operating segments (Energy Markets and Group Operations) and AGL’s Managing Director & Chief Executive Officer (CEO), Andy Vesey (AGL Energy Ltd, 2017). All directors have been determined by the Board to be independent. The Key Management Personnel (KMP) are the CEO, AGL executives with financial and/or operational responsibility and the non-executive directors.
AGL’s corporate governance arrangements are constant with the Corporate Governance Principles and Recommendations (3rd edition) (AGL Energy Ltd, 2017). The Board is responsible for the governance of AGL Ltd and for considering and supporting AGL’s strategic direction, providing effective control of AGL’s management. They seek to maintain a Board which comprises individuals holding the ability to conduct the responsibilities of directors having regard to the execution of AGL’s strategic objectives, the requirements of the law and to the highest standards of corporate governance. The role of the Board is to safeguard AGL’s interests and foster sustainable value creation while considering the reasonable interests of shareholders, employees, customers, the communities in which AGL operates and other relevant stakeholders. The Board has also established an Audit & Risk Management Committee (ARMC), Nominations Committee, People & Performance Committee and Safety (P&PC), and Sustainability & Corporate Responsibility Committee (SSCR).
The ARMC assists the Board to provide shareholders with reliable and timely financial reports and to protect the interests of shareholders. Nominations Committee’s role is reviewing the skills, knowledge and experience required of a Director, having regard to AGL’s operational, financial and strategic objectives. P&PC is responsible for reviewing the performance and remuneration of senior management and reviewing and ratifying AGL’s remuneration. SSCR Committee assist the Board in making the decisions and actions of management in achieving AGL’s objective to be a responsible, safe and ethical organisation.
AGL’s policy is to reward executives with a combination of fixed remuneration and short and long-term incentives that are designed to create value for Shareholders. The numbers of current Directors with a “developed” level of capability, which means that a Director has a level of capability in an area that can be leveraged by the Board from drawing upon the Director’s prior experience, are shown on the AGL’s Board Skills Matrix. AGL’s approach to diversity and inclusion and how these attributes are to be embedded in AGL workplaces. There are 3 female directors in AGL and the average director tenure is 5 years. The corporate has held up several priority activities to increase the proportion of women in senior leadership roles. Beneficially, over half of AGL’s directors have prior knowledge within the gas energy, electricity, retail, technology transformation industry and have led management in complex operating assets.
Each Committee are required to annually review its own performance and be effective in performing its responsibilities under its Charter by Board Committees. They also identified areas for improvement and matters that ought to be prioritised during the following year. AGL has a Code of Conduct that applies to AGL and its Directors, employees and organizations work with them. This Code sets out the standards of responsibility and ethical conduct required of every employee.
AGL operates in a highly regulated environment. Accordingly, the compliance risk inherent in AGL’s external and internal operating environments is complex and diverse. In relation to AGMs, shareholders are invited to submit questions before the meeting. This helps the company understand shareholder issues and concerns and address key areas of shareholder feedback. AGL have been properly maintained and that the financial statements comply with the Accounting Standards and give a true and fair view of the financial position and performance of AGL. They also provide confirmation that these opinions have been formed based on a sound system of risk management and internal control, which is operating effectively.
AGL’s Board always provides strategic direction and an effective oversight of AGL’s management and current strategy. The board will effectively resolve the problem as AGL faces a wide variety of risks due to the nature of its operations.