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Corporate Governance

2017 Corporate Governance Statement

This corporate governance statement describes AGL’s corporate governance framework, policies and practices.

Throughout FY2017, AGL’s corporate governance arrangements were consistent with the Corporate Governance Principles and Recommendations (3rd edition) (ASX Principles) published by the ASX Corporate Governance Council. Our Appendix 4G, which is a check list cross referencing the ASX Principles to the relevant disclosures in this corporate governance statement, the 2017 Annual Report and the AGL website, has been lodged with the ASX. 

This statement has been approved by the Board and is current as at 10 August 2017.

Print Version: 2017 Corporate Governance Statement

Corporate Governance Framework

AGL is committed to ensuring that its corporate governance framework, policies and practices reflect a high standard of corporate governance. The AGL Board believes that best practice corporate governance standards support sustainable performance by AGL over time.

AGL’s governance framework is outlined in the diagram below. Corp gov framework

AGL has adopted a number of corporate governance policies and documents. The corporate governance policies and documents referred to in this Corporate Governance Statement are published on the AGL website.

 

AGL's Board

As at 10 August 2017, AGL’s Board comprised eight non-executive Directors and AGL’s Managing Director and Chief Executive Officer (CEO), Andy Vesey. An overview of the qualifications, appointment date, experience and special responsibilities of each Director is set out on pages 12 and 13 of the 2017 Annual Report.

Roles and responsibilities of the Board

The Board is responsible for the governance of AGL. The role of the Board is to safeguard AGL’s interests and foster sustainable value creation while taking into account the reasonable interests of shareholders, employees, customers, the communities in which AGL operates and other relevant stakeholders.

The Board is also responsible for reviewing and approving AGL’s strategic direction and providing effective oversight of management.

Responsibilities specifically reserved to the Board are set out in a formal Board Charter, which the Board reviews every two years.

The key roles and responsibilities reserved to the Board are:

  • reviewing and approving AGL’s strategic direction, its business plan and budget and significant strategic initiatives and plans;
  • appointing and monitoring the performance of the CEO and, if appropriate, terminating the appointment of the CEO;
  • monitoring the performance of, and approving the remuneration policies and procedures applying to, the Executive Team and other key management roles;
  • approving changes to the composition, structure and size of the Board and the formation and membership of Board Committees;
  • approving significant announcements made by AGL to the ASX and other reports to shareholders in accordance with the Corporations Act and other relevant laws;
  • approving and monitoring policies governing AGL’s relationship with other stakeholders and the communities in which AGL operates, including policies and compliance in relation to environmental, employment and occupational, health and safety matters;
  • considering the social, ethical and environmental impact of AGL’s activities and overseeing the system for managing compliance with AGL’s sustainability policies and practices;
  • monitoring compliance with legislative and regulatory requirements (including continuous disclosure) and ethical standards, including reviewing and approving AGL’s Code of Conduct;
  • monitoring financial and operating results on an ongoing basis, including the effectiveness of AGL’s accounting and financial management systems;
  • approving decisions affecting AGL’s capital, including determining AGL’s dividend policy, the amount, nature and timing of dividends to be paid to shareholders and declaring dividends payable to shareholders;
  • making recommendations to shareholders for the appointment and removal of the external auditor; and
  • monitoring the effectiveness of AGL's systems of internal compliance, risk management and control, and systems of legal compliance that govern AGL’s operations.

Responsibilities of the Chairperson

Under AGL’s Constitution, the Board elects a Chairperson from amongst the non-executive Directors. This means that the roles of Chairperson and Chief Executive Officer are not exercised by the same individual. It is also a requirement of AGL’s Board Charter that the Chairperson be independent.

The Chairperson presides over AGL’s Board meetings and shareholder meetings. Our current Chairperson is Jerry Maycock. As foreshadowed at AGL’s 2016 AGM, AGL announced on 21 June 2017 that Jerry Maycock will retire at the conclusion of the 2017 AGM and will be succeeded by Graeme Hunt. The Board is satisfied that each of Jerry Maycock and Graeme Hunt is, and has been throughout the year, an independent Director.

Board Meetings

The Board met 17 times during the financial year. Director’s attendances are set out on page 14 of the 2017 Annual Report.

In addition to the Board considering strategic matters at each Board meeting, the Board holds two separate sessions each year to discuss AGL’s strategy.

It is usual for the non-executive Directors to confer, without management being present, at the start of each scheduled Board meeting. Otherwise, the Executive Team are invited to participate in Board meetings as required.

Independence

The Board regularly assesses the independence of each Director and has determined that each non-executive Director is, and was throughout the entirety of the financial year, independent. As the CEO is an executive, he is not considered to be independent.

AGL considers a Director to be independent if the Director is independent of management and free of any business or other relationship that could materially interfere, or be perceived as interfering, with the exercise of an unfettered and independent judgement in relation to matters concerning AGL. When assessing the independence of a Director, the Board considers the matters potentially affecting the independent status of a Director as described in Box 2.3 of the ASX Principles. Materiality is assessed on a case by case basis by reference to each Director’s individual circumstances rather than by applying general materiality thresholds.

Structure and skills of the Board

AGL seeks to maintain a Board of Directors with a broad range of industry, financial and customer related experience relevant to overseeing a large vertically integrated energy business undergoing evolution and transformation. As well as the general skills expected of Directors, AGL seeks to maintain a Board which at a minimum collectively has:

  • Gas and electricity experience with direct relevance to AGL’s strategy.
  • Experience with the management of complex operating assets.
  • An understanding of corporate finance and contemporary risk management.
  • An understanding of how to evolve products and services in an increasingly digital world to drive customer advocacy.
  • Experience with industries undergoing transformation, and the use of technology to support value creating evolution.
  • Experience with large public company governance, including environmental and social governance.
  • Experience with people and culture matters, including health & safety, community engagement and remuneration.
  • Diversity of thinking and perspectives, including board leadership with respect to AGL achieving gender balance.

The relevant skills and experience base required were incorporated into a Board Skills Matrix that has been and is used to assess Board composition and inform the selection and recruitment of future Directors.

The Board Skills Matrix was updated in 2016-2017 following a change in the Board’s composition with three new Director appointments.

The Board Skills Matrix below demonstrates the number of current Directors with a “developed” level of capability (having solid or strong experience in a particular area), meaning that a Director has a level of capability in a particular area that can be leveraged by the Board from drawing upon the Director’s prior experience.

Corp gov board skills matrix

The Board considers its current members have an appropriate mix of skills that enable the Board to discharge its responsibilities and deliver AGL’s strategic objectives.

Nomination and appointment

The Nominations Committee oversees arrangements for the effective appointment of new Directors. When considering the appointment of a new Director, the Committee typically engages the services of an executive recruitment firm to assist in identifying suitable candidates to be shortlisted for consideration for appointment to the Board and to carry out appropriate reference checks before the Board makes an offer to a preferred candidate.

Newly appointed Directors must stand for appointment at the next subsequent AGM. The Notice of Meeting for the AGM provides shareholders with material information about each Director standing for election or re-election including details of their relevant skills, experience and details of other directorships. Directors seeking election are also given the opportunity to address the AGM and to answer questions from shareholders at the AGM.

New Directors receive a formal letter of appointment that sets out his or her duties, responsibilities, rights and remuneration entitlements, together with an induction pack.

New Directors receive a formal letter of appointment that sets out his or her duties, responsibilities, rights and remuneration entitlements, together with an induction pack.

Since the 2016 AGM, Mr Peter Botten was appointed to the Board in accordance with this process.

Director induction and training

The formal letter of appointment and induction pack provided to newly appointed Directors contains detailed information to allow the new Director to gain an understanding of:

  • AGL, its operations and governance systems;
  • the rights, duties and responsibilities of Directors;
  • the role of each Board Committee;
  • the roles and responsibilities of the Executive Team; and
  • AGL’s financial, strategic, and operational risk management position.

New Directors also undertake an induction program that includes a program of meetings with members of AGL’s Executive Team and visits to AGL’s main operational sites.

Directors also undertake a program of ongoing Director education, including presentations on a range of topics generally relevant to AGL’s business activities including compliance training and presentations by external industry and subject specialists.

Performance evaluation

The Board regularly reviews its own performance and the performance of individual Directors. An independent review of the performance of the Board is also conducted at least every two years.

The most recent review, which was conducted during the 2017 financial year, was facilitated by an independent consultant with experience in conducting Board performance reviews. The review process involved an interview with each Director and members of AGL’s Executive Team that have frequent interaction with the Board. The Board Review focussed on the following key areas:

  • Strategy, Risk and Performance;
  • Working with Management and Board Committees;
  • Board Teamwork/Dynamics;
  • Board Processes;
  • People, Succession Planning and Remuneration; and
  • Reporting to Shareholders and Key Stakeholders.

The review concluded that the Board is functioning effectively and the results of the review were discussed in detail at a subsequent meeting of the Nominations Committee, which all Directors attended. Steps have been taken to implement the improvements that were identified as part of the review process, including in relation to the structure and format of Board meetings. The next independent review is scheduled for 2019.

 

Board Committees

The Board has established four Committees as follows:

  • Audit & Risk Management Committee (ARMC);
  • Nominations Committee;
  • People & Performance Committee (P&PC); and
  • Safety, Sustainability & Corporate Responsibility Committee (SSCR).

Each Committee’s roles and responsibilities and membership requirements are set out in its Charter.

Details of the number of Committee meetings held and Directors’ attendance at those meetings are set out on page 14 of the 2017 Annual Report.

An overview of the roles and responsibilities, composition and membership of each Committee as at 10 August 2017 is set out in the table on the following page. Each Committee reports to the Board and makes recommendations to the full Board for its consideration as appropriate.

Evaluation of Board Committees

The Charters for each of the Board Committees require that each Committee annually review its own performance. During the 2017 financial year, in addition to the formal Board Review process that included performance of the Committees, each Board Committee set aside time at one of its meetings to review and discuss the Committee’s performance over the past 12 months. Each Committee was satisfied that it had been effective in performing its responsibilities under its Charter. Each Committee also identified areas for improvement and matters that should be prioritised during the following year.

Quick view: Structure of Board Committees

ARMC

Roles and responsibilities 

The ARMC assists the Board to fulfil its responsibilities to provide shareholders with timely and reliable financial reports and to protect the interests of shareholders, customers, employees and the broader community through the effective identification, assessment, monitoring and management of risks.

The ARMC’s primary responsibilities include overseeing and reviewing the following matters:

  • in relation to audit: 

- the integrity of the financial statements and financial reporting systems of AGL and its related bodies corporate;

- external audit engagement, including the external auditor’s qualifications, performance, independence and fees;

- performance of AGL’s internal audit function; and 

- the integrity of the AGL Group’s corporate reporting (including oversight of the AGL Group’s regulatory and statutory reporting requirements). 

  • in relation to risk management:

- reviewing and recommending AGL’s Risk Appetite Statement and material strategic risks (‘Tier 1’ risks’) to the Board for approval; and

- reviewing and monitoring the implementation of policies and procedures for identifying, assessing, monitoring and managing risk.

Composition

Composition requirements of the Committee include:

  • there must be at least 3 members;
  • all members must be independent non-executive Directors;
  • the Chair must be a member of the Committee who is not Chair of the Board;
  • all Committee members must have a working familiarity with basic accounting and finance practices with at least one member having financial expertise (i.e. as a qualified accountant or other financial professional) and at least one member having experience relevant to the industry in which AGL operates. 

AGL’s ARMC structure complies with the ASX Principles. 

 Membership

John Stanhope (Chair)
Jacqueline Hey
Les Hosking
Belinda Hutchinson

 Consultation

Any non-executive Director may attend ARMC meetings. The CEO, CFO, Company Secretary, Assistant Company Secretary, Head of Group Audit and the external auditor attend ARMC meetings at the discretion of the ARMC.  

The ARMC meets privately with the external auditor at each meeting on general matters concerning the external audit and other related matters, including the half-year and full-year financial reports.  

The ARMC also meets privately with the Head of Group Audit at each meeting.

 

Nominations Committee

Roles and responsibilities 

The Committee assists the Board fulfil its responsibilities to shareholders through the appropriate recruitment, retention and education of Directors.

The Committee is responsible for:

  • reviewing the skills, knowledge and experience required of a Director, having regard to AGL’s operational, financial and strategic objectives;
  • reviewing the structure, size and composition of the Board and Board Committees;
  • developing and implementing a process for evaluating Board, Committee and individual Director performance;
  • developing selection criteria for the appointment of new Directors and overseeing arrangements for the effective appointment and induction of new Directors; and
  • developing succession plans for non-executive Directors, taking into account the challenges and opportunities facing AGL, and the skills and experience likely to be required in the future.

Composition

Composition requirements of the Committee include:

  • the Committee comprises all independent non-executive Directors of AGL unless the Board determines otherwise;
  • the Chair is the Chair of the Board.

 Membership

Jerry Maycock (Chair)
Peter Botten
Jacqueline Hey
Les Hosking
Graeme Hunt
Belinda Hutchinson
Diane Smith-Gander
John Stanhope

 Consultation

Unless the Committee determines otherwise, the CEO and the Company Secretary attend Committee meetings.

 

P&PC

Roles and responsibilities 

The Committee:

  • assists the Board in fulfilling its responsibilities to shareholders, customers, employees and the broader community through the appropriate recruitment, retention and remuneration of senior managers and other employees with the capabilities and skills necessary to execute AGL’s business strategy. 
  • is responsible for reviewing the performance and remuneration of senior management and reviewing and ratifying AGL’s remuneration and employment policies, procedures and programs. 
  • makes recommendations to the Board in relation to:

- remuneration of Directors;

- remuneration, recruitment, retention and termination policies applicable to AGL’s senior management;

- talent management and succession planning for key management roles; 

- guidelines for incentive plans, particularly as they relate to the executives; 

- superannuation arrangements for AGL employees; and

- AGL employment policy matters. 

Composition

Composition requirements of the Committee include:

  • there must be at least 3 members;
  • all members must be independent non-executive Directors;
  • the Chair must be a member of the Committee who is not Chair of the Board. 

Our P&PC structure complies with the ASX Principles.

 Membership

Les Hosking (Chair)
Graeme Hunt
Belinda Hutchinson
Diane Smith-Gander 
John Stanhope

 Consultation

Any non-executive Director may attend P&PC meetings.

The CEO attends meetings of the P&PC by invitation when required to report on and discuss senior management performance, remuneration and related matters, but is not present at meetings when his own performance or remuneration is discussed.  

 

SSCR Committee

Roles and responsibilities 

The primary function of the Committee is to:

  • review and oversee, on behalf of the Board, the development and implementation of policies and procedures that enable AGL to operate its business safely, ethically, responsibly and sustainably; and
  • assist the Board in monitoring the decisions and actions of management in achieving AGL’s objective to be a safe, ethical, responsible and sustainable organisation.

Composition

Composition requirements of the Committee include:

  • there must be at least 3 members;
  • all members must be independent non-executive Directors;
  • the Chair must be a member of the Committee who is not Chair of the Board. 

 Membership

Graeme Hunt (Chair)
Peter Botten
Jacqueline Hey
Diane Smith-Gander

 Consultation

Any non-executive Director may attend SSCR Committee meetings.

The CEO, Company Secretary and other management representatives attend SSCR Committee meetings at the discretion of the Committee.  

 

AGL’s Executive Team

CEO and Executive Team

The Board has delegated to the CEO, Andy Vesey, the authority to manage AGL’s day-to-day affairs and the authority to control AGL’s affairs in relation to all matters other than those responsibilities reserved by the Board to itself, including in the Board Charter.

The CEO’s role includes:

  • leading AGL’s Executive Team;
  • accounting to the Board for AGL’s overall management and performance; and
  • management of AGL in accordance with the strategy, business plans and policies approved by the Board.

The CEO has authority to sub-delegate to the Executive Team. The Executive Team comprises the CEO and senior managers who report directly to the CEO.

Specific limits on the authority delegated to the CEO and the Executive Team are set out in a Delegations of Authorities Policy approved by the Board.

Each member of AGL’s Executive Team (including the CEO) is employed under a Service Agreement that sets out the terms on which the Executive is employed including details of the Executive’s duties, responsibilities, rights and remuneration entitlements. The Service Agreement also sets out the circumstances in which the employment of the Executive may be terminated by either AGL or the Executive, including details of notice periods and the amounts payable to the Executive as a consequence of the termination by AGL of the Executive’s employment.

Remuneration

The Remuneration Report on pages 32 to 56 of the 2017 Annual Report sets out AGL’s policies and practices for remunerating non-executive Directors and executives. The arrangements that apply to the CEO and Executive Team are different to those of non-executive Directors.

Performance evaluation

The Board reviews the CEO’s performance annually against agreed performance objectives and other relevant factors. The CEO undertakes a similar exercise in relation to the Executive Team. Executive Team performance evaluations were conducted for the financial year ended 30 June 2017 in accordance with this process. Details of the evaluation process and the linkages between the result of performance evaluations and remuneration are disclosed in the Remuneration Report on pages 40 to 49 of the 2017 Annual Report.

Company Secretary

The Board is responsible for the appointment of AGL’s Company Secretaries. AGL has appointed two Company Secretaries.

AGL’s General Counsel and Company Secretary, John Fitzgerald, acts as secretary of the Board and each Board Committee, attending all meetings of the Board and Board Committees as required. John Fitzgerald fulfils other management responsibilities in addition to company secretarial duties in his role as General Counsel. The formal reporting line of John Fitzgerald is to the CEO.

Melinda Hunter is responsible for the day-to-day operations of the Company Secretariat function and attends meetings of the Board and Board Committees as required.

The Company Secretaries are accountable to the Board through the Chairperson on all corporate governance matters and all matters to do with the proper functioning of the Board.

 

Risk Management framework and financial reporting

Risk management model

AGL faces a wide variety of risks due to the nature of its operations. Details of AGL’s strategic risks are set out on pages 17 and 18 of the 2017 Annual Report. Further, a detailed report about AGL’s economic, environmental and social sustainability risks, including how these risks are managed, is included in AGL’s Sustainability Report.

AGL is committed to ensuring that risk management practices are embedded into all business processes and operations in order to drive consistent, effective and accountable action, decision making and management practice.

The Board has adopted a Risk Management Policy that sets out AGL’s objectives for risk management and clearly articulates the responsibilities of all AGL personnel in relation to the management of risk.

AGL seeks to embed risk management principles and practices into strategy development and day-to-day business processes to achieve robust and favourable commercial outcomes. AGL’s Risk Management model is based on the ‘three lines of defence’ and is illustrated in the diagram below.

Risk management principles

AGL systematically examines all operational and financial activities to identify material risk exposures using an enterprise-wide risk program aligned with ISO31000, the international standard for risk management. This program is supported by:

  • AGL's Risk Management Policy; and
  • AGL’s Risk Management & Assessment Standard, the objectives of which are to provide guidance to AGL employees on how to conduct risk assessments, ensure consistency and simplicity in approach to risk identification, evaluation and management and establish a common ‘risk’ language across the business.

AGL has implemented a number of other policies that directly or indirectly serve to mitigate and manage risk (including the Securities Dealing Policy and the Market Disclosure Policy). AGL also has in place a number of business unit and/or site based policies and procedures to allow for the safe and reliable operation of power generation plants and other operating assets.

Roles of the Board and ARMC

The Board is responsible for approving and monitoring the implementation of policies governing AGL’s systems of internal compliance, risk management and control.

The ARMC, among other things, reviews and recommends AGL’s risk management policies and material strategic risks (‘Tier 1 Risks’) to the Board for approval and reviews and monitors the implementation of policies and procedures for identifying, assessing, monitoring and managing risk.

The ARMC receives presentations from management on AGL’s material strategic risks and the controls in place to mitigate or manage those risks each quarter. The ARMC and the Board annually review AGL’s strategic risks and the risk management framework to ensure that it continues to operate effectively. During the financial year ended 30 June 2017, the Board reviewed and approved AGL’s risk management framework including AGL’s Tier 1 Risks, Risk Consequence Assessment Criteria and General Statement of Risk Appetite.

The ARMC receives regular presentations from management throughout the year on specific risk topics. The ARMC also has responsibility for approving the internal audit plan submitted annually by Group Audit. The internal audit plan is primarily based on an assessment of AGL’s material strategic risk exposures.

Internal audit

Group Audit is AGL’s internal audit function, which provides assurance over the governance, risk management and internal control frameworks of AGL. Group Audit provides the Board and senior management with an independent and objective evaluation of the adequacy and effectiveness of management’s control over risk. Group Audit’s responsibilities include providing regular reports to the ARMC and raising any significant issues with the ARMC. The Head of Group Audit has a direct reporting line to the Chair of the ARMC and an administrative reporting line to the General Counsel & Company Secretary.

Group Audit is governed by a Charter approved by the ARMC that sets out the purpose, role, scope and high level standards for the function.

Group Audit delivers its objectives through accessing the professional skills and capabilities of:

  • trained audit professionals who are part of the Group Audit function;
  • other professionals within AGL’s business with specific skills and experience; and
  • services provided by external consultants in respect of specialist technical or operational areas.

Financial Reporting

The Board receives reports from management about AGL’s financial condition and operational results at each scheduled Board meeting.

The ARMC reviews and discusses with management and the external auditors the half-yearly and annual financial reports, including the disclosures made in those reports and recommends to the Board whether the financial reports should be approved.

Before the Board approves the financial statements for a financial period (including the full year and half-year), the CEO and CFO provide declarations to the Board that, in their opinion, the financial records of 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 on the basis of a sound system of risk management and internal control, which is operating effectively.

External auditor

The role of the external auditor is to provide an independent opinion that AGL’s financial reports are true and fair and comply with applicable regulations.

AGL’s external auditor is Deloitte who attends the AGM. Shareholders have the opportunity to ask the auditor written questions in advance of the AGM or to ask questions at the AGM relevant to the audit.

AGL’s Auditor Independence Policy contains details of the procedures for the selection, appointment, independence and performance of the external auditor.

Under the Auditor Independence Policy, the external auditor is precluded from providing any services that might threaten their independence, or conflict with their assurance and compliance role.

Reports on the provision of auditing and related services are provided to the ARMC on a regular basis. The ARMC and the Board concluded that non-audit services provided during the financial year ended 30 June 2017 did not compromise the external auditor's independence requirements under the Corporations Act.

The performance of the external auditor is discussed by the ARMC following completion of the full year financial statements. The Chairperson of the ARMC subsequently meets with the external auditor to discuss recommendations for improvements to the conduct of the audit.

 

Diversity and Inclusion

AGL’s Diversity and Inclusion Policy describes AGL’s approach to diversity and inclusion and how these attributes are to be embedded in AGL workplaces. In this context, diversity covers demographic characteristics such as age, gender, sexual orientation, religion or national or social origin and personal characteristics such as disability, medical condition, pregnancy and other individual characteristics.

The Policy includes specific provisions regarding gender diversity and the positive correlation between increased representation of women on company boards and in senior management positions and the achievement of better financial performance, higher employee retention rates and enhanced corporate image and reputation.

AGL has established a Diversity & Inclusion Council to support the achievement of a diverse workforce and an inclusive workplace culture. The Council is chaired by Andy Vesey, AGL’s CEO, and during FY2017 comprised 14 other leaders from across AGL’s major businesses, geographies and representing different diversity interests.

The People & Performance Committee recommends measurable objectives for achieving gender diversity to the Board for adoption each year and receives regular reports on the progress in achieving those objectives.

Set out below is a summary of AGL’s gender diversity objectives for FY17 and progress made in achieving those objectives.

 

FY17 Diversity Objective

Progress made

 1

AGL will increase the representation of women in the Senior Leadership Pipeline to 40% by 30 June 20191

The percentage of women in the Senior Leadership Pipeline as at 30 June 2017 was 38%. This represents an increase of 4 percentage points over the twelve months since 30 June 2016. 

This result includes the appointment of 2 women to AGL’s Executive Team during the reporting period.

 2

At least 30% of AGL’s non-executive Directors will be female by 1 January 2018.

As at the date of this statement, the target is being achieved with women representing 37.5% of non-executive directors.

                 

As at 30 June 2017, the proportion of women employed by the AGL Group (as compared to 30 June 2016) is as follows:

 

 FY16

 FY17

 Female directors on the Board

 33%

 33%

 Female employees in Executive Positions2

 14%

 30%

 Female employees in Enterprise Leadership Team3

 39%

 44%

 Female employees in Senior Leadership Pipeline

 34%

 38%

 Female employees in the AGL Group

 30%

 31%

                 

AGL has supported a number of priority activities to increase the proportion of women in senior leadership roles. Progress against these actions is summarised below.

 

1. Increase transparency, planning and monitoring of the representation of women in leadership

The representation of women in the Senior Leadership Pipeline is included as a closely watched number in the monthly performance reporting and discussion with the Executive Team. All business units, where the representation of women in the Senior Leadership pipeline is less than 40%, developed and monitored their progress against business unit-specific Gender Equality Action Plans.

 

2. Increase female representation on shortlists for senior roles

A stronger partnership with internal and external recruitment providers has led to more focussed search processes for qualified female candidates. As a result, 10 women were appointed into the following senior roles in FY17:

  • Executive General Manager New Energy
  • Chief Customer Officer
  • Executive General Manager Stakeholder Relations
  • Chief of Staff
  • General Manager Sales & Marketing
  • General Manager AGL Macquarie
  • Head of Group Audit
  • Head of Scenario Planning
  • Head of Wholesale Markets Risk
  • Head of Physical Markets Trading

 

3. Increase men’s and women’s access to flexible working arrangements

In FY16, AGL launched a strategy to create a workplace where working flexibly is the norm, and not the exception. This has meant that flexibility, in some form, can be considered for all new and existing roles. 60% of respondents to AGL’s 2016 Engagement Survey said they had worked flexibly in the previous 12 months. This initiative has been maintained during FY17.

 

4. Increase support and advocacy for women in the recruitment process for senior roles

AGL continues to maintain initiatives to enhance advocacy for women participating in job selection processes. For example, selection processes for senior roles required at least one woman on the short list, and a commitment to maintain any agreed flexible working arrangements for key talent who may transition into new roles. Where practicable, we try to ensure interviews are conducted by a mix of men and women.

 

5. Increase women’s access to key leadership development programs

AGL’s Leadership Development Program for emerging female leaders, Illuminate, was piloted in late 2014. Based on its success, an enhanced program was offered in 2016 and 14 high potential female leaders participated. The program combines group work, one-on-one coaching and workshops with each participant’s leader. A further five high-potential senior leaders participated in Illuminate Plus, which also provides the opportunity for those leaders to ‘shadow’ Executive Team members.

The program is achieving very positive results with 100% of participants reporting increased confidence and resilience post program and the majority taking up broader roles or promotions within 12 months post program. Development continues in 2017 with a cohort of 21 women involved across both programs.

In addition, AGL selects a high talent senior leader each year to access executive management development at a leading educational institution. In FY17, Lisa Harrington was selected for this opportunity and graduated from Harvard’s Executive Management Program. Lisa has since been appointed to the Executive General Manager Stakeholder Relations role.

 

6. Increase advocacy of men in supporting gender equality

During FY17, AGL’s CEO, Andy Vesey, joined the Male Champions of Change National Group. The group represents a diverse range of significant Australian employers spanning government, retail, financial, energy, consulting, consumer goods and mining sectors. Members have a deep personal commitment to advancing gender equality in their organisations and have extensive reach across the Australian community. The group is convened by Elizabeth Broderick.

During FY17, we launched AGL Equality, an employee network of women and men, working together to ensure that women thrive and realise their full potential at AGL. As a network of people who are passionate about gender equality, the AGL Equality network aims to harness the energy and passion of many, to support our work to shift the gender balance. The network has developed a program of work in FY2017 that is focussed on attracting and developing women and advocating for gender equality through initiatives including networking events and advocacy and support for new company programs and policies that drive gender equality. The network sponsored and delivered a series of events on International Women’s Day 2017, including internal and external guest speakers and reaching employees across all our major workplaces including regional operational sites.

 

7. Increase support and advocacy for women and men who are parents

In FY17, AGL launched an enhanced Parental Leave Policy.

AGL reports under the Workplace Gender Equality Act 2012 (Cth). Publication of AGL’s Gender Equality Indicators can be found on AGL’s website.

 

1 The Senior Leadership Pipeline includes all person in roles graded Level 12 and above as per AGL’s Position Framework. This represents approximately the top 15% of roles in AGL.

2 An AGL Executive is defined as the CEO and each direct report to the CEO. As at 30 June 2017, there were 10 Executives.

3 The Enterprise Leadership Team includes the Executive Team and generally, each direct report to an Executive Team member.

 

AGL’s Key Corporate Governance Policies

Code of Conduct

AGL has a Code of Conduct that applies to AGL and its Directors, employees and contractors (all of which are referred to as “employees” in the Code). This Code sets out the standards of responsibility and ethical conduct required of every employee.

AGL’s commitments under the Code are as follows:

  • We act with honesty and with integrity.
  • We observe the law, voluntary commitments and internal standards.
  • We value and maintain professionalism in all of our dealings.
  • We respect confidentiality.
  • We manage conflicts of interest.
  • We look after our employees.
  • We look after the communities in which we operate.
  • We deal with and report on suspected breaches.

Training on the Code of Conduct is part of the induction process for new AGL employees. It is also a requirement that AGL employees complete on-line refresher training about the Code of Conduct on an annual basis.

The Code of Conduct provides a mechanism to enable employees to report actual or suspected breaches, including an independently monitored telephone service to allow for anonymous reporting. An Ethics Panel oversees the application of the Code of Conduct in AGL, including investigating alleged breaches of the Code, monitoring compliance and recommending amendments to the Board. The Ethics Panel comprises the General Counsel & Company Secretary, the Executive General Manager of People and Culture, the Head of Group Audit and an independent person who has expertise in managing employee grievances. The Ethics Panel met four times during the financial year ended 30 June 2017.

Compliance Management Policy

AGL operates in a highly regulated environment. Accordingly, the compliance risk inherent in AGL’s external and internal operating environments is complex and diverse. Meeting our compliance obligations is considered critical to enabling successful and competitive operations. AGL has adopted a Compliance Management Policy.

AGL’s Compliance Management System is illustrated in the diagram below.

Compliance management system

Continuous Disclosure

AGL’s Market Disclosure Policy describes AGL's continuous disclosure obligations and how they are managed by AGL.

AGL has established a Market Disclosure Committee comprising the CEO, the Company Secretary, the CFO and the General Manager, Capital Markets. The Committee is responsible for monitoring compliance with the Market Disclosure Policy including determining whether market sensitive information should be disclosed to the ASX. In addition, all members of the Executive Team provide a quarterly confirmation in relation to continuous disclosure compliance.

The Company Secretary reports to the Board at least quarterly on matters that were either notified or not notified to the ASX. Directors receive copies of all announcements immediately after notification to the ASX. All ASX announcements are available from AGL’s Media Centre.

Dealings in AGL Shares

AGL’s Securities Dealings Policy outlines when AGL employees may deal in AGL securities, or the securities of other companies.

The policy specifically prohibits AGL Directors, Executives and employees from using derivatives in relation to any unvested AGL securities that have been granted under any of AGL’s equity based remuneration schemes.

Derivatives may be used in relation to AGL securities that have vested, provided any dealing in those derivatives complies with the other requirements of AGL’s Securities Dealings Policy.

 

Shareholder engagement

AGL operates an investor relations program to facilitate effective two-way communications with investors. This program seeks to keep shareholders informed about AGL’s activities and to listen to issues or concerns raised by shareholders.

AGL holds regular investor briefings and asset tours, webcasts these events (where practicable) and provides all materials, archived recordings and transcripts via its website. In November 2016, AGL held an investor day in Sydney, which included detailed presentations on AGL’s strategy, operations and growth investments. In March 2017, AGL hosted a site tour of the AGL Torrens power station in South Australia.

As well as attending broker-sponsored conferences, AGL participates at several industry conferences throughout the year. Key presentations are lodged with the ASX.

AGL also regularly engages with corporate governance advisory firms and shareholder representative bodies to understand market expectations on topics including governance, ESG and remuneration.

The Chairperson of the Board and the Chairperson of the People and Performance Committee both participate in meetings with such organisations so the Board can be in a better position to receive direct feedback about the effectiveness of AGL’s corporate governance arrangements.

Fundamental to AGL’s investor relations program is the management of its continuous disclosure obligations, which facilitates all shareholders having access to important company information. In addition to lodging this information with the ASX, AGL uses its website to make available to shareholders information about the company and its activities. The Investor Centre on AGL’s website contains a wide range of information relevant to shareholders including copies of past Annual Reports and ASX announcements and an Investor Calendar.

Shareholders may elect to receive all shareholder communications, including dividend statements and announcements by e-mail and may also communicate with AGL and the Share Registry electronically.

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. The Chairperson also encourages shareholders at the AGM to ask questions and make comments about AGL’s operations and the performance of the Board and senior management. The Chairperson may respond directly to questions or, at his discretion, may refer a question to another Director, the CEO or a member of the Executive Team.

Shareholder meetings are webcast and analyst/media briefings in relation to half-year and full year financial results and other significant events can be heard by teleconference.

The AGL Share Register is managed and maintained by Link Market Services Limited. Shareholders can access their shareholding details or make enquiries about their current shareholding electronically by quoting their Shareholder Reference Number (SRN) or Holder Identification Number (HIN), via the Link Market Services investor centre or by emailing aglenergy@linkmarketservices.com.au.

 

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