“We have embedded our purpose – helping people create their tomorrow – throughout our business over the past 12 months,” AMP chief, Alexis George, told the crowd at the group’s AGM last week.
But the new sense of purpose failed to sway investors to fully endorse the generous executive pay plans for a company that only yesterday was a diversified financial services giant instead of the small Australian bank and middling trans-Tasman wealth management outfit it is today.
Almost half of AMP investors voted against the company’s remuneration report, triggering a ‘first strike’ rule that puts the board on notice for the 2024 AGM.
Under the ‘say on pay’ rules introduced in Australia in 2011, listed companies are required to hold a board ‘spill’ vote if more than 25 per cent of investors reject the remuneration report two years in succession.
Current AMP chair, Debra Hazelton, told the AGM audience that the firm had “already made significant changes to our remuneration framework over the past 12 months”.
Hazelton said investors had baulked at the board plan to significantly increase AMP executive bonuses and criticised the lack of clarity over short-term incentives.
“While the first strike we’re expecting today is disappointing, we hear the feedback from out stakeholders and are committed to continuing to evolve our approach,” she said.
However, Hazelton said the pay hikes reflected results measured against a ‘balanced scorecard’ and the 30 per cent increase in the AMP share price over 2022.
AMP shares started 2022 at just A$0.96 – close to an all-time low – and ended the year over A$1.30, since falling back to A$1.05.
“… in 2022 the share price outperformed the market, reflecting the significant progress on the strategy…,” George said. “While the more recent performance has reversed some of this price gain – we are focused on continuing to execute on the strategy to deliver long term growth and value for shareholders.”
The company completed most of its ‘simplification’ plan last month, settling the sale of the final pieces of AMP Capital less than 12 months after ending its 170-year plus existence as a life insurer.
“These were all major transactions and importantly enable the focus of the management to move squarely onto driving the go-forward businesses of banking in Australia and wealth management in Australia and New Zealand,” the AMP chief said.
The NZ arm, previously earmarked for sale, remains a junior player in the repurposed AMP – although George complimented the business for its “resilient earnings”.
“We continue to be the leading corporate superannuation provider in the New Zealand market,” she said in a comment that failed to excite the Australian press or move the share price.
Meanwhile, AMP has the last of its A$1.1 billion capital surplus (accrued from asset sales) to funnel back to investors and hints of a further A$500 million of loose change that might eventually end up in shareholder pockets.
George signaled more restructuring and weight loss ahead, however, as AMP adjusts to its reduced circumstances.
“… now that we are a smaller business – the next step is to right-size our operating model for agility and efficiency,” George said. “This means reducing our costs and simplifying our operating model.”
Based on the soft share price action, AMP investors have yet to buy into this year’s model, which has been spun into life four years after the old one suffered a near-death experience at the Australian Royal Commission into financial services.
“… [the] royal commission totally upended AMP’s business model. It meant that the vertical integration business model was totally upended. It had an enormous effect on AMP, almost existential,” Hazelton told the AGM.