AMP to cop first ‘strike’ on executive pay, weak share price
Investors in AMP are set to deliver the company a rebuke over its executive pay packets, with the wealth manager receiving a first “strike” against its remuneration report amid concerns about bonuses and its weak share price.
At the company’s annual general meeting in Sydney on Friday, chair Debra Hazelton acknowledged the company had received negative feedback from shareholders on its executive pay, and she expected a vote of 25 per cent or more against its remuneration report.
This is known as a “strike”, and if AMP receives a no vote of more than 25 per cent next year – therefore incurring a second “strike” – it would trigger a vote on whether to spill the board.
Hazelton said issues raised by investors included the board’s use of discretion to pay larger bonuses amid a sharp fall in its share price last month, and a lack of disclosure of its short-term bonus targets.
“I would like to take some time now to talk about AMP’s remuneration approach and acknowledge some negative shareholder feedback as demonstrated by votes already cast on today’s remuneration report resolution,” Hazelton said in her prepared remarks, before the formal vote.
“Based on the votes already cast, we are expecting to receive a first strike on the adoption of the remuneration report.”
The investor backlash over pay comes after proxy advisers ISS and CGI Glass Lewis had both recommended shareholders vote against the company’s remuneration report, criticising the board’s decision to use its discretion to pay bigger bonuses.
CGI said AMP’s board had used its discretion to increase the bonus pool for executive from 68 per cent of target to 85 per cent of target, citing higher returns over 2022.
But it pointed out AMP shares plunged 16 per cent on the day of its full-year results in February, and said the “results were a clear disappointment to the market, which suggests that the board may have misread shareholders’ expectations”.
ISS said the short-term incentive bonus appeared to be based “mainly on discretionary or non-financial/strategic initiatives”, rather than financial targets.
AMP, one of the country’s oldest financial institutions, has been through a period of major upheaval in recent years after selling a series of businesses following a bruising royal commission.
While the company’s share price outperformed the ASX in 2022, its annual results in February were received poorly by investors, and its share price is down about 17 per cent so far this year, to $1.08.
Hazelton acknowledged shareholder concerns about its weak share price, and said the decline in AMP shares in February was “extremely disappointing”.
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Source: Thanks smh.com