NextDC announced a board renewal, forfeiture of CEO incentives and a reduction in non-executive director fees following a guidance downgrade and share price fall linked to a power delay at its M3 Melbourne data centre. Craig Scroggie, the company's chief executive, forfeited all FY27 incentive entitlements, both short-term and long-term, with no substitute payment of any kind, Business News Australia reported. Non-executive directors agreed to trim their fees by 10% on a voluntary basis.
The board withdrew a resolution that had sought shareholder approval to grant Scroggie 145,916 performance rights and 145,914 restricted rights. Search firm Spencer Stuart, already engaged to find a new chairman, has had its mandate extended to identify at least one additional independent non-executive director. NextDC intends to bring on a new chair and at least one further independent director in early 2027, targeting candidates with backgrounds in data centres, energy or infrastructure.
The primary driver of the guidance reduction was the suspension by Jemena Electricity Networks (Vic) of parts of its 66kV line works that deliver power to M3, which occurred in September. Jemena has indicated the works will not resume before February 2027, leaving NextDC to forecast the next M3 grid supply increase in FY28.
When NextDC issued guidance on 27 August, the M3 contracts in question were each assigned approximately $140 million in net revenue and underlying EBITDA. Scroggie said the M3 contracts affected by the power delay were excluded from FY27 guidance pending a point at which the company could reliably estimate what they would contribute.
FY27 underlying EBITDA guidance was reduced to between $245 million and $265 million, down from $385 million to $410 million. Capital expenditure guidance was reduced to $4.5 billion to $5 billion, from $5.25 billion to $5.75 billion.
Net revenue guidance was revised down to a range of $475 million to $500 million from a prior range of $615 million to $640 million. Following the guidance downgrade, NextDC shares fell 45% to $5.07 from $9.18 previously.
Under the M3 contracts, delayed capacity delivery triggers service level credits and, in certain circumstances, customers may exercise termination rights. NextDC is evaluating whether force majeure or other contract provisions offer relief. All new development projects and land acquisitions have been halted indefinitely, and the board will also look at selling selected development sites with no near-term requirement.
Chairman Douglas Flynn confirmed he will leave the role after a successor is appointed, having earlier flagged his plan to retire following a brief transition. Stuart Davis, who led the remuneration and nomination committee during the February 2025 introduction of the Growth Incentive Plan, is on the ballot for re-election at the upcoming AGM but will leave the board once incoming directors are seated.
The remainder of the board is recommending shareholders support Davis's re-election in the interest of an orderly handover. The AGM is scheduled for 20 November as a hybrid event, with the withdrawn resolutions off the table and all other resolutions proceeding.
Shareholders attending the AGM will not vote on the withdrawn resolutions covering CEO performance rights, restricted rights or the increase to the non-executive director fee pool. Customers holding contracts for capacity at M3 may be entitled to service level credits for late delivery and, in certain circumstances, may have termination rights.
Reporting: Business News Australia, The Motley Fool Australia
Background: The Motley Fool Australia, Business News Australia
Written by Pick & Scroll News from the reporting and documents linked above.
