ISS recommends AMP shareholders vote against remuneration report

Proxy adviser ISS has urged AMP shareholders to vote against the company’s pay report, setting the scene for a fiery AGM next week.

Outgoing AMP CEO Francesco De Ferrari. Picture: John Feder.

Proxy adviser ISS has urged AMP shareholders to vote against the company’s pay report, taking aim at retention payments to staff and the pay out to outgoing chief executive Francesco De Ferrari.

The ISS report — delivered ahead of AMP’s annual general meeting on April 30 — sits in contrast to those by rival proxy houses Ownership Matters and CGI Glass Lewis, which last week told shareholders to support the company’s remuneration report.

AMP’s AGM last year saw the troubled wealth group cop an embarrassing vote of 67 per cent against adoption of the pay report, sparking a strike.

Two consecutive strikes trigger a vote on whether to spill the board.

With the ISS report recommending investors vote against the pay report, the scene is set for a fiery AMP AGM next week.

“Concerns persist for misalignment of the company’s executive remuneration with performance and shareholder outcomes, and poor governance practices are identified,” ISS said.

But ISS told investors to vote against any resolution to spill the AMP board. “The board has engaged with many stakeholders and attempted to take some positive steps to address shareholder concerns,” the report said.

It noted AMP has experienced a period of marked board instability and renewal in the past three years, saying that negated the “efficacy of a board spill”.

The ISS report came as AMP reported a continuation of net fund outflows which were $1.5bn in the first quarter, including regular pension payments, with the capital division suffering $2.9bn in net outflows. AMP is also still facing uncertainty as it continues protracted negotiations with US firm Ares for the sale of all — or a 60 per cent stake in — its private markets division.

The wealth and asset management group’s shares sank 3.4 per cent on Thursday to close at $1.125, after briefly touching a record low.

The ISS report identified a number of remuneration issues at AMP including the payment of one-off retainers in 2020 to current key executives, excluding the CEO, “without any substantive performance conditions except ongoing service”.

“Payment of one-off retention bonuses to executives valued at 100 per cent of fixed remuneration being misaligned with the company’s performance and shareholder returns, with much of it front-ended and offered in cash,” ISS said.

Earlier this month, AMP appointed ANZ’s deputy chief executive Alexis George as its new CEO, saying she was likely to start in the third quarter.

Mr De Ferrari’s formal exit arrangements include access to his short-term 2021 bonus, and staying on after the July proposed CEO change “to assist with handover and ongoing ­support”.

The outgoing CEO is pocketing a payment of $300,000, less applicable tax, for additional work he undertook in 2021 to support the AMP Capital business.

Mr De Ferrari will also receive a lump sum of $200,000 as a gross reimbursement of some of his relocation costs, and access to taxation and visa advice.

ISS took issue with AMP’s payment of an additional $300,000 for additional work he undertook to support the AMP Capital business.

The report highlighted “the disruption” surrounding the internal appointment of Boe Pahari last year as the head of AMP Capital, followed by the reversal of that decision. That came after investor furore over revelations of a financial penalty levied on Mr Pahari for a prior sexual harassment complaint.

That saga also led to the exit of then AMP chairman David Murray.

The proxy adviser said AMP’s non-executive director remuneration remained high or “above median of market cap and ISS-selected peers”.

ISS is urging investors to support the election of non-executive director Kate McKenzie to AMP’s board.