AMP axes $2.2m in incentives for Francesco De Ferrari after proxy pressure from Ownership Matters and CGI Glass Lewis
Embattled AMP has caved to pressure and axed a proposal to grant outgoing boss Francesco De Ferrari $2.2m in incentives.
Embattled AMP has axed a proposal to grant outgoing boss Francesco De Ferrari $2.2m in performance rights, after two influential proxy advisers urged investors to vote against the move.
Both Ownership Matters and CGI Glass Lewis had separately told investors to support AMP’s pay report, but vote against the long-term bonus grant to Mr De Ferrari.
By Wednesday afternoon, well after the reports were released, AMP announced it was withdrawing the performance rights item from its annual general meeting agenda.
The wealth and asset management group cited the departure of Mr De Ferrari from AMP’s top job at the completion of a strategic portfolio review as the reason for pulling the proposal, but did not explain why it took weeks to alter the notice of meeting.
Ownership Matters’ report to investors urged a vote in favour of AMP’s remuneration report, given executive bonuses were not awarded for 2020 because of “disappointing outcomes” for shareholders.
AMP is trying to avoid a second consecutive strike against its pay report, which would lead to a vote on spilling the board. Last year, AMP was hit with an embarrassing result against its remuneration report, amounting to more than 67 per cent of votes.
AMP’s AGM is scheduled for April 30.
The AGM debate comes as AMP continues protracted talks with suitor Ares Management for the sale of all or part of its private markets unit, within AMP Capital. US-based Ares was seeking 60 per cent of the private markets division, which spans real estate and infrastructure, although has recently flagged interest in buying the unit outright.
AMP’s shares dipped 0.8 per cent on Wednesday to close at $1.23, not far off the stock’s COVID-19 trough of $1.11.
On this year’s AGM votes, Ownership Matters noted incoming AMP CEO Alexis George’s pay was substantially lower than that of Mr De Ferrari.
“Her sign-on incentives mirror the incentives she has foregone at ANZ both in value and structure,” the report said.
Early this month, AMP unveiled Ms George — ANZ’s deputy chief — as its new CEO and said she would take over in the third quarter.
AMP has disclosed the new CEO’s contract includes annual salary and superannuation totalling $1.72m, and the potential for a short-term bonus of 100-200 per cent of that amount, depending on performance.
There is also a chunky sign-on award with a face value of $4.1m in AMP shares. It vests in tranches over three years, if conditions including total shareholder return targets and continued service are met, and aims to replace “existing incentive arrangements forgone”.
But Ownership Matters said some shareholders may wish to vote against AMP’s remuneration report, given the awarding of retention incentives across senior executives – although not the outgoing CEO.
Ownership Matters took aim at the AGM motion - that was still in place on the release of its report – to grant Mr De Ferrari performance rights with a face value of $2.2m.
“It is not clear what benefit shareholders would receive from granting additional equity incentives to the outgoing CEO, especially as he retains significant exposure to the AMP share price through unvested sign-on incentives and other previously granted equity incentives.”
CGI Glass Lewis joined Ownership Matters in urging investors to vote in favour of AMP’s pay report, but against Mr De Ferrari’s proposed incentives.
In a report, CGI advised a vote for AMP’s remuneration report, and against a potential board spill.
CGI was supportive of retention payments paid by AMP to keep key staff.
“Given the challenging context of AMP’s recent performance, retention risk is real,” the report said.
“Given the ongoing portfolio review … the benefit to shareholders of retaining key people is particularly significant.”
CGI urged investors to vote against the granting of performance rights to Mr De Ferrari, who is set to leave AMP before the end of the calendar year.
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.
Last year, ahead of AMP’s AGM, Ownership Matters joined peer ISS in telling shareholders to vote against the group’s remuneration report.
AMP’s latest annual report showed it 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 former AMP Australia boss Alex Wade.
Ownership Matters delved into the exit arrangements of Mr Wade, whose departure was linked to the sending of lewd photos to a female employee.
“In addition to the circa $500,000 payment made to former head of AMP Australia Alex Wade following his abrupt August 2020 departure from AMP. Shareholders should note Wade forfeited all unvested equity incentives on his departure,” the report said.
“AMP’s representatives said Wade had been paid six months’ gardening leave on his departure... When asked on the rationale for Wade receiving six months’ notice rather than being terminated for cause, AMP’s representatives said they were unable to provide further information.”
Ownership Matters also highlighted that 2020 was the second straight year AMP made “widespread retention” allocations.
“In May 2019 five senior executives received awards under the ‘transition incentive’ set at $500,000 and delivered in equity vesting in two equal tranches after nine and 21 months.
“Of the five recipients of the transition incentive only two continue at AMP – general counsel David Cullen and head of people & corporate affairs Helen Livesey – and both these executives also received allocations under the November 2020 retention awards.”
Ownership Matters and CGI endorsed the election of Kate McKenzie, also a director of ASX-listed Stockland. to AMP’s board.
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