AMP takes axe to executive pay, bonuses

Beleaguered wealth group AMP has taken action on executive pay by axing bonuses for all but one executive for 2018, cancelling unvested share awards and cutting director fees.

AMP has also cancelled unvested share awards and cut director fees. Picture: Hollie Adams

Beleaguered wealth group AMP has taken action on executive pay by axing bonuses for all but one executive for 2018, cancelling unvested share awards and cutting director fees to reflect a year marred by scandals.

In its annual report, released yesterday, chairman David Murray told investors the actions on remuneration reflected “consequence management for misconduct” at AMP.

“Reflecting the circumstances of last year, the board decided to award zero short-term incentives for AMP’s group leadership team in 2018, excluding AMP Capital,” he said.

“It also applied the appropriate consequence management including forfeiture of long and short term incentives for a number of former executives and a reduction in board director fees.”

But AMP admitted it was still working on how to configure a new pay structure after shareholders delivered it a 61 per cent strike against its remuneration ­report at last year’s annual general meeting.

“Arrangements for 2019 are advanced but have not been finalised,” the report said.

AMP’s board has endured a shake-out and chief executive change after the company is said to have misled regulators and was called out for charging advice fees where services were not provided.

“At this stage our view is that it is appropriate that they have taken the steps they have taken,” the Australian Shareholders’ Association AMP monitor Ian Graves said of the annual report. But whether the measures “were sufficient” remained to be seen.

“We think they should focus more on ethical behaviours not just whether it is legal or not. What we are concerned about is that previously there was a lack of vigour.”

The ASA is calling for more information regarding cultural change planned at AMP and more accountability and transparency around remuneration and other structures.

The annual report showed that bonuses were zero for all of AMP’s top executives, bar AMP Capital boss Adam Tindall.

He received a cash bonus of about $1 million for 2018, lower than his previous year’s bonus, but taking his total pay packet to $3.3m. The aggregate figure — which made him the highest paid over the period, up from $3.2m in 2017.

The former head of advice Jack Regan, who left AMP in December, was paid almost $1.8m and no termination payments.

The new AMP chief Francesco De Ferrari, who started in December, took home almost $1.3m.

Investors were watching to see whether any adjustments would be made to his overall pay package, options, share awards and performance hurdles given the sharp decline in AMP’s shares over the past six months.

“No adjustments have been made to reflect these market movements,” the report said.

Mr De Ferrari signed on to the top job at AMP with almost $18m in possible performance bonuses on top of a maximum $8.3m annual salary.

The report also outlined that former AMP chief Craig Meller and former executive Rob Caprioli would forfeit total unvested incentives of about $10.8m.

Mr Murray’s annual chairman’s fees will be cut to about $660,000 from January 2020 from $850,000, reflecting among other things “reduced complexity” at AMP following the $3.3bn sale of its life insurance unit. AMP streamlined various board structures among its divisions which will see the overall pool of non-executive director’s fees drop.

AMP’s shares fell 2.6 per cent to $2.22 yesterday, not far off a record low of $2.15 in February.

Last month, the group posted a 97 per cent slump in net profit for the year to December 31, as earnings were hit by fund outflows and repayments to customers.

AMP’s advice remediation and related costs — stemming from various scandals and charging fees where services weren’t provided — came in at $469m for 2018. The Hayne royal commission led to Mr Meller bringing forward his exit from AMP and to the ousting of chair Catherine Brenner.

Mr Murray will soon embark on a round of meetings with investors and proxy advisers ahead of a May annual meeting as some investors remain angered by the life insurance sale.

In January, The Australian revealed at least two institutional investors planned to vote against Mr Murray’s board election.