NextDC to replace chair and cut board fees after M3 delay and guidance downgrade
NextDC chairman Douglas Flynn will leave once a successor is in place and CEO Craig Scroggie will give up his FY27 incentives, as the operator answers investor anger over the M3 Melbourne delay and lower FY27 guidance.
NextDC has set out a package of governance changes before its AGM on 20 November, after investors reacted badly to the delayed M3 Melbourne project and a cut to FY27 earnings guidance. Chairman Douglas Flynn will depart after the board names a replacement and a brief handover is finished, the ASX-listed company said. Director Stuart Davis plans to retire when the renewal process concludes and new directors have joined.
Spencer Stuart, the executive search firm, has had its brief widened to cover a new chair as well as one more independent non-executive director. The board wants candidates with backgrounds in data centres, energy, infrastructure development and capital management, given the scale of its planned capital spending. If suitable people are found, it expects to appoint both directors in the first quarter of calendar 2027.
NextDC has dropped its plan to lift the maximum total pay pool for non-executive directors. Sitting directors have agreed to an immediate voluntary 10 per cent reduction in their fees, and Scroggie will forgo both his FY27 short-term and long-term incentive opportunities.
Flynn acknowledged investor frustration over the revised outlook and the share price. He said the board and management were focused on "minimising the impact of the M3 Melbourne power delay and rebuilding the confidence of investors and other stakeholders".
NextDC recently disclosed that M3 is late because network operator Jemena partly halted construction, citing "community and stakeholder opposition". The affected work is Jemena's 66kV line augmentation, parts of which were suspended in September, and Jemena has formally advised NextDC it does not expect to restart until February 2027. NextDC is also waiting longer than anticipated for a ruling on its planning permit for stages six and seven.
Updated FY27 guidance leaves out M3 contracts, and net revenue previously forecast at $615 million to $640 million is now between $475 million and $500 million.