AMP staff raise concerns over share-plan metrics for ASX demerger proposal

AMP is facing staff ructions over its proposed spin off, as employees question key performance and return hurdles linked to a share ownership plan.

AMP CEO Alexis George, pictured, and PrivateMarketsCo boss Shawn Johnson are pushing ahead with the demerger of the infrastructure equity and real estate businesses.

AMP is facing staff ructions over the proposed spinoff of its marquee private markets unit, as employees question key performance and return hurdles linked to a share ownership plan.

After selling its infrastructure debt unit to US-listed firm Ares Management on Christmas Eve, AMP has had to rework aspects of the demerger which was to include its real estate and infrastructure equity and debt divisions.

Sources said some staff were pushing for AMP to change the performance metrics linked to its management share plan, which is being used to help retain key employees and better align them with the business.

Staff received extensive documents detailing the management equity plan in December and were initially asked to sign them by the month’s end, but an extension was granted after the sale of the infrastructure debt division.

AMP will recalibrate the management equity plan to account for the fact that one business is no longer included, but the wealth and asset management group is holding firm on the performance measures linked to the share plan for PrivateMarketsCo.

“Following the decision to sell our Infrastructure Debt business, the PrivateMarketsCo Management Equity Plan will apply to our Infrastructure Equity and Real Estate businesses,” a PrivateMarketsCo spokesman said. “There is no change to the MEP details … and we’ve been communicating with employees as we finalise its implementation.”

AMP held an investor day in late November to provide a blueprint for the demerged entity and a time line for its separation on the ASX.

That document outlined that the management share plan would account for a 12 per cent equity interest in PrivateMarketsCo, with it reflecting both length of service and performance.

The performance-based component is 75 per cent weighted toward earnings-per-share growth and 25 per cent weighted to total shareholder returns relative to the ASX200.

There has been a push for those metrics to be softened given the infrastructure debt business was a high-growth unit, and it is no longer included in the entity being spun off.

Sources said more senior staff departures were expected in the remaining private markets division after bonus days in late March and early April, given that was when retention payments were also rolling off.

The sale of the infrastructure debt unit to Ares – which walked away from a $6bn-plus bid of AMP in its entirety almost a year ago – means PrivateMarketsCo will have about $44bn in assets under management. The infrastructure debt team and about $7bn in assets under management are transferring to Ares as part of the deal, scheduled to complete in the March quarter.

PrivateMarketsCo chief Shawn Johnson is said to have told employees in the other two divisions that the sale of the infrastructure debt strategy would give the new entity more capital to help support growth in its real estate arm.

The sale for $428m in cash valued the infrastructure debt unit at $578m, because about $150m in investments and rights to carried interest in closed-end funds are staying with PrivateMarketsCo.

AMP intends to lodge a demerger scheme booklet with investors in March, with the spin-off becoming effective by June 30.

Investors were pushing for a demerger to realise some value, given the underwhelming performance of AMP in recent years and the sharp drop in its market capitalisation.

The stock closed flat at 96.5 cents on Wednesday, compared to a 52-week high of $1.59.

AMP group chief executive Alexis George has outlined her growth plans for the company’s remaining businesses including financial advice, wealth, investment platforms, the banking unit and operations in New Zealand.

Separately, AMP on Wednesday announced the appointment of Pendal Group’s Stuart Eliot as the Multi Asset Group’s head of portfolio management from early April.

He will work with AMP’s chief investment officer Anna Shelley and oversee portfolio construction and asset allocation across MAG’s investment portfolio.

AMP had more than $104.8bn in multi-asset funds under management as at September 30, and the company moved the business from the capital division to within its Australian wealth unit last year. The AMP statement said the MAG team delivered investment returns as high as 23.8 per cent for MySuper members last financial year.