The phone call that changed AMP

Simon McKeon was on his way to the airport for a flight to Beijing when he received a phone call from his personal lawyer.

Simon McKeon at his AMP office in November 2015. Picture: David Geraghty

Simon McKeon was on his way to the airport for a flight to Beijing when he received a phone call from his personal lawyer. It was April 14, 2016 and McKeon, chairman of AMP, was joining a delegation led by Malcolm Turnbull on his first official trip to China as prime minister.

The lawyer raised an issue already under discussion between them, and he asked McKeon if he thought AMP director Catherine Brenner was harbouring an interest in replacing him as chairman.

Brenner was head of the AMP board’s nominations and governance committee, which was overseeing a 360 degree report providing feedback on McKeon. That report had thrown up a small number of spiky criticisms of the chairman.

The lawyer asked McKeon: “Does Catherine have an interest in becoming chairman?” If she did, it would be a conflict of interest for her to continue managing an assessment of the present chairman.

McKeon would spend the next three days out of the country with a dozen or so other chairmen and chief executives eager to promote Australian business in the Middle Kingdom. But this was also a moment in time that would change the course of AMP history.

The lawyer repeated that if Brenner had an eye on the chair, she could not run the 360 process.

McKeon did not object to his lawyer’s suggestion to raise this in writing with one of AMP’s external lawyers. If Brenner had an interest in the chair, she could not oversee feedback on McKeon. She could not do both.

McKeon had been chairman of AMP for two years. He was a former executive chairman of Macquarie Group’s Melbourne business and a leading business figure. His AMP board, a mix of old and new directors — some ambitious on the upswing, others on the ready-to-retire downswing — already had a mutiny under way.

The 360 degree report — a management tool to provide anonymous feedback — had been commissioned earlier. There had been widely differing views coming back in the 360 from directors and management. Some were highly complimentary but a minority were sharply critical. It alarmed the chairman and that alarm would soon crystallise.

Within a couple of days, with McKeon still in China, his phone beeped with a message from his lawyer. It contained the astonishing news that Brenner had suddenly stood aside from leading the nominations committee. The lawyer’s letter appeared to have hit a target.

For months, McKeon had felt increasing pressure from some directors. At least one, John Palmer from New Zealand, had raised questions about his style. There had been complaints that he lived in Melbourne and not Sydney, where AMP was headquartered.

For McKeon, the message from his lawyer was a turning point. There was a contender for his job in the ranks of the board but, more importantly, some of the comments in the 360 had indicated a coterie that did not support him. He considered his options carefully. It was not an easy decision but he resolved to quit; life was short and he had no interest in running a split boardroom.

Resigning would bring personal embarrassment but staying would not be in the company’s best interests. AMP faced significant challenges to overhaul its culture and McKeon knew it required a united board with strong leadership.

Eight days after returning from China, McKeon called a board meeting on Anzac Day, April 25, 2016. He resigned, effective at the coming AGM on May 12. Two directors, Palmer from New Zealand and Brenner from Sydney, phoned in. An important matter was the wording of the press release. McKeon would say in the release that he was “disappointed to leave the board after a change in my circumstances”.

McKeon left AMP less than three weeks later after the AGM. Palmer stood in as interim chairman overseeing the search for a successor. The non-explanation about McKeon’s departure generated countless words of media analysis.

At the AGM on May 12, Palmer said the board was committed to a rigorous process to ensure the best possible appointment. “This will involve benchmarking of any potential internal and external candidates. We are not putting a time frame on the appointment,” he said.

Catherine Brenner was appointed chairwoman six weeks later. She was from hometown Sydney and in her first press conference declared that she wanted chief executive Craig Meller to move “a little bit faster” implementing the strategy. There were muted gasps across corporate Australia, where the rule was chairmen and chief executives were joined at the hip.

Brenner said any suggestions there had been divisions on the AMP board leading to the earlier, mysterious departure of McKeon could not be further from the truth. If there had been anything more, requiring continuous disclosure, “we would have told you”, she said.