AMP suffers record first strike as Mike Wilkins apologises

AMP has suffered an overwhelming vote against its remuneration report but director Andrew Harmos survived.

Mike Wilkins fronts AMP’s meeting in Melbourne yesterday. Picture: Aaron Francis

AMP has suffered the humiliation of an overwhelming vote against its remuneration report, as the embattled wealth manager warned of further customer remediation costs and higher expenses to ­modernise its systems in response to the rolling fees-for-no-service ­crisis.

Interim executive chairman Mike Wilkins yesterday offered an abject apology to more than 500 angry shareholders in Melbourne, saying AMP was “truly sorry”.

He said customer withdrawal requests and call-centre traffic had increased since the scandal broke in the financial services royal commission in mid-April, although this trend had eased back in recent days.

“We’ve heard loud and clear that you want change,” Mr Wilkins said.

“That change is already happening — and happening at pace.”

He promised that the composition of the AMP board would be very different in a year, with David Murray leading an accelerated program of renewal after he ­becomes chairman on or before July 1.

Mr Murray would appoint an additional director in the short term, replace the directors who have stepped down, and correct a gender imbalance in an emerging all-male boardroom after recent mass resignations.

Departures include former chair Catherine Brenner, ex-chief executive Craig Meller, non-executive directors Holly Kramer and Vanessa Wallace, both of whom withdrew their bid for re-election, and Patty Akopiantz, who will step down before the end of the year.

The vote against the remuneration report was 61.5 per cent, one of the highest for an ASX 200 company since the two-strike rule was introduced in 2011. Under that rule, AMP now faces the prospect of a board spill after next year’s annual meeting if there is a 25 per cent-plus vote against the report. It is understood that yesterday’s “no” vote paralleled the extent of the opposition to the re-election of Ms Kramer and Ms Wallace, who withdrew their nominations in the face of certain defeat.

AMP chairman Mike Wilkins left

The only director up for re-election yesterday, New Zealand-based lawyer Andrew Harmos, was returned. However, he had to face down a significant protest vote of 37.67 per cent.

The mood of yesterday’s meeting was occasionally hostile but surprisingly measured, sometimes even laced with humour. One shareholder attacked Mr Wilkins, saying retail investors would like to see him “on a spit”.

Mr Wilkins responded: “Let me tell you, I don’t think I’d be very tasty on a spit.”

AMP has been in crisis mode since April 17, when its head of advice Jack Regan admitted in the royal commission that the company had misled ASIC in its investigation into the company charging fees without providing ­financial advice.

Senior counsel assisting Rowena Orr told commissioner Kenneth Hayne that it was open to him to recommend criminal charges against AMP, leading to an emergency board meeting on April 30.

Ms Brenner stepped down, Mr Meller’s end-of-year retirement became immediate, and group counsel Brian Salter, a former partner at law firm Clayton Utz, was shown the door.

However, AMP strenuously denied in its submission to the royal commission last Friday that the company had committed a criminal offence in providing the Clayton Utz report on the scandal to the Australian Securities & Investments Commission.

AMP directors Andrew Harmos and Patty Akopiantz at yesterday’s AMP meeting. Picture: Aaron Francis

Mr Wilkins said the number of misrepresentations by AMP was not the point, because one misleading statement was “one too many”.

“Trust means honesty, even when the news is bad,” he said.

“On both counts, the behaviour was absolutely unacceptable.”

Despite the turmoil over the past few weeks, the chairman said the advice division that seeded the crisis remained “a cornerstone of our business”.

“With the right measures, implemented decisively, and at speed, I’m confident that we’ll rebuild trust and confidence in AMP,” Mr Wilkins said. “But I am also realistic.

“The rebuild will not happen overnight.

“I know from my own experience that it is possible to turn a business around, and at speed, if the focus and commitment are right. And these attributes are undoubtedly present at AMP.”

*Excludes insider votes- Top protest votes*

Mr Wilkins maintained that the AMP brand was still well-­regarded, and that a provision for impairment was unnecessary.

In its first-quarter update yesterday, AMP said cash flow was subdued in its Australian wealth management division, with assets under management down 2 per cent from the previous quarter to $128.3 billion due to weaker investment markets.

AMP Capital had $1.6bn in net external cash flows, driven by strong cash flows in real assets.

AMP’s North platform had strong net cash flows of $1.2bn, up 14 per cent on a year ago.

The company also said yesterday it would vigorously defend two shareholder class actions, one lodged in the Supreme Court of NSW and another in the Federal Court of Australia.

Both actions allege AMP breached its disclosure obligations by not revealing the fees-for-no-service scandal.

Mr Wilkins told shareholders yesterday that the matter had been investigation by regulators at the time.