NextDC boss gives up bonuses as data centre boom hits resistance

• Data centre business NextDC has announced its chairman will step down and its CEO will forgo his bonuses after its share price plunged last week.
• On Wednesday, NextDC shares plummeted by more than 40 per cent after it revealed considerable community backlash to a data centre development in Melbourne.
• The business said it “recognised and shared the disappointment” of investors.

The chairman of data centre giant NextDC will step down and its CEO will forgo his bonuses after the business had almost $3 billion wiped off its value on the sharemarket last week.

In a notice to shareholders on Monday, NextDC chairman Douglas Flynn signalled his intention to retire from the board once a new chairman was chosen.

Additionally, NextDC’s CEO Craig Scroggie has agreed to forgo receiving his bonuses for the financial year.

“We recognise and share the disappointment of investors resulting from our revised FY27 guidance and share price performance,” Flynn said in a statement to the ASX.

“We are renewing the Board, and I will stand down as Chairman once my successor is in place.

“My fellow Non-Executive Directors and I have also agreed to a voluntary 10 per cent reduction in our fees.”

Flynn said NextDC was focused on regaining what it lost in a horror day of trade last Wednesday.

“The Board and management are focused on two priorities: working with our customer and the electricity distributor to minimise the impact of the M3 power delay, as well as earning back the confidence of our investors and other stakeholders,” he said.

“There is a lot for us to do, but our task is clear.”

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The dramatic development comes almost three days after NextDC saw its share price drop by 42 per cent, wiping almost $3 billion off the business’s market capitalisation.

Investors were spooked after NextDC advised it was forecasting a 36 per cent downgrade to its near-term earnings, thanks to community backlash over its M3 project.

M3 is the name of NextDC’s data centre in West Footscray in Melbourne.

To expand the data centre, NextDC needed more power, which required it to erect 22-metre-high concrete poles that would carry more power to the centre.

Residents were furious, reportedly physically blocking works to be carried out at the site and eventually Jemena, the installer of the new electrical work, said it was suspending construction until early next year.

The delay in power for the M3 project severely hit NextDC’s earnings forecast, which investors were relying upon to continue providing value for the company’s shares.

At the time of publishing, NextDC was trading at $5.40 a share, down almost 4 per cent in early trade.

Prior to the market announcement on Wednesday, NextDC was trading at around $9.18 a share.

NextDC declined to comment further beyond its ASX statement.