Proxy house ISS offers ‘qualified support’ for AMP vote

Proxy house ISS has given three AMP directors ‘qualified support’ for re-election.

Influential proxy house ISS has given three AMP directors, including chairman David Murray, “qualified support” for election to the board and urged investors to avoid a spill motion.

Rounding out three proxy advisers that have released reports ahead of AMP’s May annual general meeting, ISS was slightly more cautious in its recommendations.

While CGI Glass Lewis and Ownership Matters told investors to vote in favour of the four directors up for election, ISS provided “qualified support” for those involved in a controversial decision to sell AMP’s life insurance division.

“The governance and valuation issues are complex, and it is recognised that due to these concerns, shareholders may have differing views to the board and management and may seek to vote against the election of directors,” ISS said.

“However, in this report it is considered that qualified support for the election of new chairman David Murray and new non-executive directors John Fraser and John O’Sullivan is warranted, being members of the board, which voted to support the sale of AMP Life, despite the governance concerns raised by some shareholders.”

AMP shareholders including Allan Gray and Merlon Capital Partners intend to vote against Mr Murray’s election.

ISS was more definitive in its call for the election of financial services and superannuation stalwart Andrea Slattery.

“Shareholder support for the election of Andrea Slattery is warranted as she is a new appointee to the board since the AMP Life sale decision and no material issues have been identified regarding her nomination in respect of board and committee composition,” the report said.

“Shareholders concerned with the governance and valuation issues in the proposed sale of AMP Life still have recourse to regulatory review with a view to denial of regulatory approval, which is understood to be presently outstanding.”

On pay, and following a 61 per cent strike against AMP’s remuneration report last year during the royal commission turmoil, ISS saw progress being made but raised several concerns.

“The main concern for shareholders in the 2018 remuneration report is the excessive nature of the new CEO’s remuneration arrangements with fixed remuneration well above median, combined sign-on incentives valued at eight times fixed remuneration and a recovery incentive that appears to have less than challenging share-price targets including allowance for retesting,” the report said.

New AMP boss Francesco De Ferrari signed on to the top job with almost $18 million in possible performance bonuses on top of a maximum $8.3m annual salary. His pay packet — which also compensated him for forgone incentives at prior employer Credit Suisse — includes a base salary of $2.2m a year, with the potential to earn $6.1m in short and long-term incentives.

“On balance, a qualified vote for the remuneration report is warranted. The company is taking appropriate steps to realign director and executive remuneration with market expectations,” ISS said.

The ISS report also gave AMP a governance score of nine, which is deemed high risk.

Earlier, Ownership Matters cited a lack of alternatives to the current AMP board as it came out in favour of the AGM resolutions.

CGI Glass Lewis urged AMP shareholders to vote in favour of director elections and the pay report, but highlighted concerns about the $3.3 billion life insurance sale.