Investors ignore AMP ‘stability’ plea

Pleas from AMP’s emergency leadership team for investors not to vote out three directors are falling on deaf ears.

Pleas from AMP’s emergency leadership team for investors not to vote out three directors are falling on deaf ears, with one of the big proxy advisers reversing its previous support and recommending institutional clients vote against three directors facing election this week.

The Australian Council of Superannuation investors, which represents 32 funds managing $647 billion, has also decided against changing its opposition to the director elections, despite the resignation of chairman Catherine Brenner last week.

The Australian Shareholders Association, representing retail investors, will also oppose the re-election of retail veteran Holly Kramer and Vanessa Wallace and the appointment of Andrew ­Harmos.

ACSI is also calling a for a vote against the remuneration report in a move that could see a “first strike” against the company.

CGI Glass Lewis, which advises a number of institutional clients in Australia and overseas, had originally advised clients to vote for the directors. But it issued a revised report last week recommending against the director elections and in favour of the remuneration report.

Director of research Jana Jevcakova said the original report had been issued before the royal commission hearings into “fees for no service” and evidence that AMP misled the Australian Securities & Investments Commission.

“But given the extent of breaches and the governance failures at the company, it would not send a very good signal to vote in favour of those directors,” Ms Jevcakova said.

“Our main issue is the fact that the board was aware of the breaches in December 2017 — the whole board was aware of it — but they have only announced it and their response to it when it became public at the royal commission.

“If there was no royal commission we might not have known about it.” The voting recommendations will be a blow for the board and raise a risk of significant “no” votes at the annual meeting in Melbourne on Thursday.

$4.12 AMP closed down 2¢

Board directors across Australia are usually elected with votes of 90 per cent or more of shares voted. At last year’s annual meeting six directors, including Mr Wilkins and Ms Brenner, were elected with votes of at least 97.65 per cent of shares voted and 53.6 per cent of shares on issue.

Executive chairman Mike Wilkins and incoming chairman David Murray both pleaded for shareholders to support the board and provide stability during a crisis that has badly damaged the company’s reputation.

The crisis over AMP’s “fees for no service” at the royal commission peaked last week, with the resignations of Ms Brenner and the sacking of chief counsel Brian Salter. Chief executive Craig Meller’s previously announced retirement was brought forward to last month.

“Frankly I think voting out three directors on Thursday is really going to add to further instability in the organisation,” Mr Wilkins told The Australian over the weekend.

“It’s the last thing the organisation needs at the moment.”

Mr Wilkins was elevated to acting chief executive and then executive chairman last week as damaging revelations about the company’s practice of charging fees for no service sparked recommendations at the royal commission for criminal charges against AMP.

Mr Wilkins will hand over to Mr Murray — the former long-running chief executive of Commonwealth Bank and inaugural chairman of the Future Fund — sometime before July 1 and is overseeing the hunt for a new chief executive and a new board director.

AMP is losing support among the investment community, with leading analyst James Coghill slapping a “sell” recommendation on the stock — down from a “hold” — and lowering his price target from $5.40 to $3.80 amid expectations the company faces years trying to rebuild trust.

AMP shares have plunged from a March high of $5.47 to as low as $4.02 last week.