AMP seeks $2.2m rights package for CEO Francesco De Ferrari

AMP is seeking shareholder approval to grant chief executive Francesco De Ferrari performance rights with a face value of $2.2m.

Chief executive Francesco De Ferrari will receive fixed pay of $2.2m and a short-term bonus of up to 200 per cent of base pay. Picture: Britta Campion

AMP is seeking shareholder approval to grant chief executive Francesco De Ferrari performance rights with a face value of $2.2m, even as it looks to withstand a potential second strike and board spill at its upcoming annual meeting.

Under AMP’s executive remuneration framework for 2021, Mr De Ferrari will receive fixed pay of $2.2m and a short-term bonus of up to 200 per cent of his base pay, as well as the $2.2m long-term incentive, subject to performance.

Approximately 75 pent of the maximum remuneration he can receive for the current financial year is made up of short and long-term bonuses and was “at risk”, AMP said.

Mr De Ferrari’s long-term bonus will only vest if the wealth manager achieves relative total shareholder return performance at or above the median of its peer group.

Long-suffering shareholders will, on April 30, also vote on whether to approve the embattled wealth manager’s remuneration report.

AMP’s annual report, released last week, showed the wealth manager made $3.89m in retention payments to key executives during last year’s turmoil, which saw it demote head of the capital division Boe Pahari and part ways with AMP Australia boss Alex Wade.

Mr Pahari was demoted due to investor outrage over a prior sexual harassment complaint and Mr Wade departed due to inappropriate conduct, including sending lewd photos to a colleague.

The furore eventually also led to exit of then AMP chairman David Murray and board member John Fraser. Debra Hazelton took the reins from Mr Murray in August last year.

The retention payments, revealed by Ms Hazelton last week, were approved as the board “sought to stabilise the management team”. Similar retention awards were made to “critical talent” across the organisation.

The one-off payments were equal to 100 per cent of an executive’s fixed pay, but were deferred, with 60 per cent vesting in cash on October 31, 2021, and the remainder vesting in share rights in October 2024, subject to continuing employment.

Reflecting the drop in net profit for the year, no short-term bonuses were paid, nor were long-term incentive awards granted to Mr De Ferrari or top management.

Fees paid to non-executive directors were unchanged, while the chair’s fees were cut from $850,000 to $660,000 last March.

If 25 per cent, or more, of the votes are cast against the remuneration report, AMP will be hit with a second strike, triggering a vote on a board spill.

AMP’s first strike at last year’s AGM came after it was criticised over “disproportionately large” incentives paid to executives.

More than two-third of proxies voted against the 2019 remuneration report after proxy advisers Ownership Matters and ISS recommended shareholders vote against the pay packages.

Both proxy advisers argued that executive pay was overly generous and performance hurdles not rigorous enough.

AMP is likely to face some tough questions at the AGM, including on its proposed joint venture with Ares Management for AMP Capital’s private markets business.

Macquarie analysts have questioned Ares’ $2.25bn joint venture bid for the business, saying it “beggars belief” and will see the 172-year-old wealth manager offload “the jewel in the AMP crown” for a steep discount.

After conducting a review of the capital division, Macquarie said AMP would be “left with the scraps” if the venture goes ahead.

While Ares will acquire 60 per cent of the $2.25bn joint venture and assume management control, AMP will retain the remaining 40 per cent, as well as $900m of assets across seed, sponsor and related investments.