AGL Energy has ditched its plans to spin off its coal plants following strong opposition from tech billionaire Mike Cannon-Brookes.
The energy giant said it didn't believe the proposal would receive the required three-quarters vote at a shareholder meeting June 15.
AGL chairman Peter Botton and chief executive Graeme Hunt plan to resign as soon as replacements are found, as the energy giant looks for a path forward. Two non-executive directors are also out.
AGL had already spent $160 million planning the demerger but Mr Cannon-Brookes managed to torpedo it on climate grounds after acquiring an 11.28 per cent stake in the utility.
"Wow. A huge day for Australia," Mr Cannon-Brookes said on Twitter, including a photo of a trail through the bush.
"Had to sit down & take it in. This live shot couldn't be a better metaphor for a better, greener path ahead. We embrace the opportunities of decarbonisation with Aussie courage, tenacity & creativity."
AGL had proposed splitting the company into an energy retailer, called AGL Australia, and a coal-fired electricity generator, called Accel Energy.
The new entities were to have targets to reduce emissions to net zero by 2040 and 2047, respectively, although AGL said on Monday that it believes the relevant dates for closure of coal-fired power stations will continue to be accelerated.
The board said it would report back to shareholders in September on a new strategic direction of the company. They will also look to replace non-executive director Jacqueline Hey, who has resigned effective as of Monday, and Diane Smith-Gander, who is resigning in August.
Climate activists have been cheering.
"AGL's humiliating demerger backflip has to go down as one of the most bungled and misguided attempts at a corporate restructure in Australian history," said Glenn Walker, senior campaigner at Greenpeace Australia Pacific.
"It should be a lesson for any company that failing to act seriously on climate carries serious consequences," he said.
Harriet Kater, the Australian climate lead with the Australasian Centre for Corporate Responsibility, called it a "bloodbath in the boardroom of AGL" that was "years in the making and well overdue" because of the utility's under-investment in renewable energy.
Ron Shamgar, head of Aussie equities with Tamim Asset Management, marvelled on Twitter that Mr Cannon-Brookes had got his way with the $5.9 billion utility.
"Stopped the demerger and basically dismantled the board and CEO," he wrote with a laughing emoji. "Not bad."
RBC Capital Markets analyst Gordon Ramsay wrote that while the $160 million spent on the failed demerger made it an "expensive exercise," perhaps some of the spend might still be useful.
"There is potential to use some of the 'extensive analytical work' and 'throughout assessment of the strategic plans' that were developed for the AGL Australia and Accel Energy for new analysis," he wrote.
AGL said the review of its strategic direction will be overseen by a board subcommittee co-chaired by directors Vanessa Sullivan and Graham Cockroft.
At 1117 AEDT, AGL shares were down 2.6 per cent to $8.64.
