Investors can get rewarded today because AMP forgot yesterday

“We built in purpose – Help people create tomorrow – throughout our business over the past 12 months,” AMP chief Alexis George told the audience at the group’s AGM last week.

But the new sense of purpose has unsettled investors with generous executive compensation plans for a company that was only yesterday a diversified financial services giant, not today’s small Australian bank and midsize TransTasman wealth management firm. could not be encouraged to fully support the

Nearly half of AMP investors voted against the company’s compensation report, triggering a “first strike” rule to notify the board of directors ahead of the 2024 AGM.

Under Australia’s ‘speak on remuneration’ rule introduced in 2011, listed companies retain their board ‘run-out’ votes if more than 25% of investors reject remuneration reports for two consecutive years. need to do it.

Current AMP Chairman Debra Hazelton told the AGM audience that the company “has made significant changes to its compensation framework in the last 12 months.”

Hazelton said investors had criticized the board’s plan to significantly increase AMP executive bonuses and criticized the lack of clarity on short-term incentives.

“While we are disappointed with the first strike we are expecting today, we are listening to feedback from our stakeholders and are committed to continuing to evolve our approach,” she said.

However, Hazelton said the wage increase reflects results measured against the “Balanced Scorecard” and a 30% increase in AMP’s stock price in 2022.

AMP shares started 2022 at just AUD$0.96, nearing previous lows, returning to A$1.05 before finishing the year above A$1.30.

“…share prices outperformed the market in 2022 reflecting significant progress in strategy…” George said. “Our recent performance has reversed some of this price increase, but we remain focused on continuing to execute on our strategy for long-term growth and delivering value for our shareholders.”

The company completed most of its “simplification” plan last month, completing the sale of the last portion of AMP Capital less than 12 months after its more than 170-year existence as a life insurer. bottom.

“These are all major transactions and, importantly, allow us to shift management’s focus squarely on driving our Australian banking operations and future wealth management operations in Australia and New Zealand. ,” said an AMP official.

The NZ division, previously slated for sale, remains a repurposed AMP junior player, but George praised the business for its “resilient earnings”.

“We continue to be the leading corporate pension provider in the New Zealand market,” she said in a comment, but failed to excite the Australian press or move the share price.

Meanwhile, AMP is pouring the last of its A$1.1 billion capital surplus (generated from the sale of assets) into investors, with a further A$500 million potentially ending up in shareholders’ pockets. suggests that there is

George suggested more restructuring and weight cuts are ahead as AMP adapts to the reduced situation.

“…Now we are a smaller business. The next step is to right-size our operating model for agility and efficiency,” says George. “This means reducing costs and simplifying our operating model.”

AMP investors have yet to buy this year’s model, based on the soft stock price. The model came four years after the older model entered financial services after having a near-death experience at the Royal Australian Commission.

“… [the] The Royal Commission has completely turned AMP’s business model upside down. This means that the vertical integration business model has been completely turned upside down. It had a huge impact on AMP.