Alexis George confronts a mammoth task at AMP

While investors and analysts have endorsed her appointment to AMP’s helm, taking the reins from Francesco De Ferrari, immense challenges at the company remain.

Incoming AMP CEO Alexis George. Photographer: Adam Yip

AMP’s new chief executive, Alexis George, confronts a mammoth task to turn the under-pressure wealth group around, while stemming fund outflows, cutting costs and restoring the 172-year-old group’s tarnished image.

While investors and analysts have endorsed her appointment to AMP’s helm, taking the reins from Francesco De Ferrari, immense challenges at the company remain.

The handover was announced after a whirlwind week at AMP, given the company twice late last month played down speculation that Mr De Ferrari was resigning. In a second ASX statement on March 26, AMP said Mr De Ferrari had not resigned, although admitted a leadership review was under way.

AMP on Thursday unveiled Ms George — ANZ’s deputy chief — as the new group CEO and said she would take over in the third quarter.

That was only six days after the controversial March 26 statement. The CEO changeover will result in a lengthy transition ­period as Mr De Ferrari continues to work on a proposed deal to sell AMP’s private markets division to US firm Ares Management.

Ms George also has several weeks left at ANZ, ahead of a ­period of gardening leave.

AMP’s shares jumped 4.7 per cent to $1.325 on Thursday as ­investors welcomed the CEO ­announcement, but the stock remains below the $1.385 at which it was changing hands before the CEO speculation emerged on March 25.

Australian Eagle Asset Management portfolio manager Alan Kwan, an AMP shareholder, said the CEO appointment made him a little more positive on the ­company’s prospects, despite the remaining challenges.

“At least there is some certainty after quite a dramatic March for AMP,” Mr Kwan said.

He said Ms George would “have her own thoughts about the strategy and what’s left. It gives them some breathing room and some certainty.”

Mr Kwan said it would be ideal if Ms George was able to address investors at the AMP annual general meeting late this month, if her gardening leave allowed it. But he noted the private markets divestment remained a “work in progress”.

An AMP analyst, who declined to be named, said the incoming CEO was “extremely well regarded”, due to her relevant ­experience across wealth management, banking and leading cultural change.

“Ultimately the big question is the same as it was for Francesco De Ferrari: are there business challenges that are greater than any individual?” the analyst said.

“Is the new person the right one to get costs out when nobody else can?”

Mr De Ferrari was undertaking a three-year turnaround plan, which he announced in 2019, but had struggled to get any traction given fallout from the Hayne royal commission, scandals among executives he appointed and the impact of COVID-19.

Over his tenure, which began in December 2018, AMP’s shares have tumbled more than 45 per cent.

AMP chairman Debra Hazelton has declined several interview requests over the past 10 days, including on Thursday to discuss the CEO appointment.

In Thursday’s statement, Ms Hazelton said Ms George was a “strong fit for the future” of AMP.

“She has outstanding industry experience in wealth management and banking, and is committed to continue the trans­formation of AMP’s business, and importantly, our organisation’s culture,” she said.

Ms Hazelton will front investors at an AMP annual general meeting on April 30, as the group attempts to avoid a second strike against its pay report.

Sources said headhunters from Korn Ferry conducted the CEO search on behalf of AMP’s board. They said Ms George took the role for a new challenge and that the opportunity had arisen at the right time.

However, AMP is seeking to sell or spin off its marquee capital division, which would result in Ms George running a smaller entity than Mr De Ferrari.

The protracted deal negotiations have also plagued AMP, after Ares dumped a $6bn-plus whole-of-company bid in February, and a 30-day exclusivity ­period on an indicative deal to sell a majority stake in its private ­markets unit expired last month.

AMP and Ares remain in talks over the indicative transaction terms, which would result in the US firm acquiring 60 per cent of the $2.25bn private markets joint venture and take management control. AMP would own the remaining stake.

But Ares has also signalled its interest in buying 100 per cent of the private markets division, which houses real estate and infrastructure investments.

On Wednesday, US time, Ares showed it could seal a binding deal as one of its subsidiaries entered a definitive agreement to buy secondary markets investment manager Landmark Partners.

Outgoing AMP chief Francesco De Ferrari. Picture: Britta Campion / The Australian

The transaction was valued at $US1.08bn ($1.31bn), including $US787m in cash and about $US293m in Ares operating group units.

Sources close to Ares said that the deal would not hinder the firm’s ability to also agree on an AMP transaction for its private markets division.

AMP investors will also closely scrutinise the pay arrangements of Ms George and exit payments to Mr De Ferrari.

AMP on Thursday said the new CEO’s contract included a salary and superannuation totalling $1.72m a year and the potential for a short-term bonus of 100-200 per cent of that amount, depending on performance.

There is also a chunky sign-on award with a face value of $4.1m in AMP shares. It will vest in ­tranches over three years, if required conditions including total shareholder return targets and continued service are met, and they aim to replace “existing incentive arrangements forgone”.

Mr De Ferrari’s exit arrangements include access to his short-term 2021 bonus, and being able to stay on after the July proposed chief executive change “to assist with handover and ongoing ­support”.

AMP also said the outgoing CEO would receive a payment of $300,000, less applicable tax, for the additional work he undertook in 2021 to support the AMP Capital business.

In addition, Mr De Ferrari will receive a lump sum of $200,000 as a gross reimbursement of some of his relocation costs, and access to taxation and visa advice.

An item on his long-term incentives that was to be voted on by investors at AMP’s annual meeting is expected to be withdrawn.