NextDC Chairman to Step Down, CEO Gives Up 2027 Bonuses

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NextDC chairman Douglas Flynn will retire once a successor is found, and chief executive Craig Scroggie will forfeit his 2027 financial year bonuses. The data centre operator announced the changes on Monday after its share price fell more than 40% last week.

Flynn will still stand for re-election at the annual meeting next month, then step down. Another director, Stuart Davis, will do the same. Non-executive directors have agreed to a voluntary 10% cut to their fees, and a planned request to lift the directors' pay pool by $300,000 to $2.5 million has been withdrawn.

"We are renewing the board, and I will stand down as chairman once my successor is in place," Flynn said in a statement to the ASX.

Flynn also said the board and management are focused on two priorities: working with customers and the electricity distributor to limit the impact of the M3 power delay, and earning back the confidence of investors and other stakeholders. “We recognise and share the disappointment of investors resulting from our revised FY27 guidance and share price performance,” he said.

What set off the fall

Last week NextDC cut its profit forecasts and construction spending. Jemena, the energy distributor, had to suspend a power upgrade for the company's M3 data centre in West Footscray after community opposition, and the local council is withholding consent until more consultation takes place. The drop wiped about $3 billion from the company's market value within hours.

Scroggie gives up all of his short-term and long-term incentive payments for the 2027 financial year. They would have been worth about $7.5 million if the share price had stayed near $16, as it did in June. At $5.61 they are worth about $2.8 million. He could have received incentives of more than $100 million had he met share price growth targets.

The company was already facing a possible board spill at the November 20 annual meeting if shareholders reject its remuneration report for a second year in a row. Shine Lawyers is investigating a potential class action for shareholders.

Scroggie said the changed outlook poses no risk to the group's large debt, and that it will stay in compliance with its financial covenants. Shareholders are due to hear more at the meeting about strategy changes, including a pause on land purchases and possible asset sales.

Source: The Sydney Morning Herald