AMP annual report reveals $3.89m in retention payments to executives in 2020

The embattled wealth giant has justified nearly $4m in retention payments to key executives by citing the “extraordinary” circumstances of 2020.

AMP chief executive Francesco De Ferrari did not participate in the retention payments scheme the company said. Picture: Britta Campion

Embattled AMP has revealed it made $3.89m in retention payments to key executives during last year’s turmoil, when the group effectively put itself up for sale and was hit by a string of scandals and senior management departures.

AMP justified the payments in its annual report on Wednesday by citing the “extraordinary” circumstances, the additional workload created by the portfolio review, and the need to stabilise the business and retain corporate knowledge to execute its turnaround strategy.

The company said that chief executive Francesco De Ferrari did not participate in the scheme.

“Faced with these extraordinary circumstances, the board, having examined market precedents and tested the concept with a range of investor representatives, sought to stabilise the management team by introducing a one-off retention payment for key management personnel and critical talent across the organisation,” remuneration committee chairman Michael Sammells said.

AMP justified the payments in its annual report on Wednesday by citing the “extraordinary” circumstances of 2020. Picture: Steven Saphore

“As part of the discussion in relation to the retention of the CEO’s direct reports, the board and the CEO agreed that the CEO should not be considered for a retention award based on the precedents, market feedback, and his previously disclosed remuneration arrangements.”

The award was equal to 100 per cent of an executive’s fixed pay, with 60 per cent vesting in cash on October 31, 2021, and the remainder vesting in share rights three years later, subject to continuing employment.

Similar retention awards were made to select individuals across the group who were seen as instrumental to AMP’s stability.

Apart from the retention scheme, the board took the axe to executive pay and incentives, reflecting the group’s underlying net profit of $295m in 2020, down from $439m in 2019.

Statutory net profit of $177m reversed a previous, $2.5bn net loss.

As a result, there were no short or long-term incentives paid to Mr De Ferrari or his key management personnel in 2020.

Fees paid to non-executive directors were unchanged, and the chairman’s pay was cut from $850,000 to $660,000 in March 2020.

New chair Debra Hazelton took over from predecessor David Murray last August.

In the new stringent environment, Mr De Ferrari copped a reduction in his actual pay from $3.53m to $2.2m.

He left $4.4m on the table because various performance hurdles attached to incentives were not achieved.

Mr De Ferrari’s statutory remuneration, including incentives awarded but not yet received, came to $7.75m, down from $13.43m.

Misconduct complaints in 2020 resulted in the demotion of AMP Capital CEO Boe Pahari and the departure of AMP Australia boss Alex Wade.

While Mr Pahari received no short-term bonus as a key group executive, AMP revealed he was eligible to participate in the AMP Capital enterprise profit share (EPS) plan in his capacity as global head of infrastructure equity and the northwest region.

He received a pro-rata EPS award of $937,724 for the time that he was chief executive of AMP Capital.

Mr Wade received statutory remuneration of $533,000 in 2020, down from $2.98m.

His pay included $545,000 in cash salary and $510,000 in termination payments, which was partly offset by forgone incentives.

Mr Murray drew $458,000 in fees as chairman in 2020, down from $850,000 the year before.

In other developments, AMP said the remuneration committee had completed a review of the group’s executive remuneration arrangements, resulting in a new approach which aligned performance, risk management and remuneration with the shareholder experience.

All changes to the framework, and any awards in 2021, would be disclosed in next year’s remuneration report.