Shareholders strike against executive pay at this ASX financial share

Shareholders have overwhelmingly voted against executive pay packets at AMP Limited (ASX: AMP).

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Shareholders have overwhelmingly voted against executive pay packets at AMP Limited (ASX: AMP). Last week's annual general meeting saw 67% of shareholders vote against the board's remuneration report for 2019.

Chief Executive Francesco De Ferrari was paid approximately $4 million in base salary and short-term rewards. Non-executive directors were paid $3.79 million as a group. 

The wealth manager delivered a $2.5 billion loss last financial year and did not pay a final dividend. The AMP share price is down around 35% in the past 12 months and is currently trading for $1.42.

What does the vote mean?

The shareholder vote does not prevent these payments being made, but puts pressure on the board. The 'two strikes' rule means a vote on a board spill will be triggered if more than 25% of shareholders vote against two remuneration reports. 

AMP struggles with legacy issues

AMP is still making amends for practices uncovered in the Royal Commission.The wealth manager continues to repay customers for inappropriate advice and for charging customers for advice never received. In its most recent financial year, AMP paid $190 million to clients in misconduct fees. Impairments of $2.35 billion were recorded to address legacy issues.

AMP failed to pay either interim or final dividends last year as its wealth management business sagged. Chairman David Murray told shareholders the decision was disappointing, but in the long-term interests of the company. He  responded to shareholder criticism of executive pay packets by saying the pay reflected the size of the challenge ahead for AMP. 

Business reset 

The wealth manager is undertaking a fundamental reset of its business. Foundational steps in a three-year transformation are underway, but there is much work to be done. CEO De Ferrari said, "2019 was a year of fundamental reset for AMP. We rebased our business, set out a new group strategy, and strengthened our capital base to accelerate the execution of our strategy."

AMP has shelved the divestment of its New Zealand wealth management operations due to the economic disruption of COVID-19. Offers did not meet expectations, so AMP has decided to retain and grow the business. 

AMP is proceeding with the sale of AMP Life. A deal was struck to sell the business to Resolution Life last year for $3 billion. Payment of the next dividend is dependent on the completion of this sale. Multiple complications have been encountered during the sale process. 

Foolish takeaway

The shareholder strike is an embarrassing blow for AMP. Previous voluntary cuts to fees were not enough to stave off shareholder anger. In April, AMP revealed at least $19.4 billion in outflows in the first 3 months of the year. The wealth manager better hope its transformation strategy brings results. 

Motley Fool contributor Kate O'Brien has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

Person pretends to types on laptop drawn in sand.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a miserly session for investors today.

Read more »

Modern accountant woman in a light business suit in modern green office with documents and laptop.
Opinions

Too high? These 2 ASX shares might be due for a correction

These popular blue chips are looking dicey to me.

Read more »

A man clenches his fists in excitement as gold coins fall from the sky.
Broker Notes

These ASX 200 shares could rise 20% to 35%

These shares are being tipped to deliver market-beating returns by analysts.

Read more »

Keyboard button with the word sell on it.
Broker Notes

8 ASX All Ords stocks downgraded to sell ratings

Find out which shares are out of favour with the experts.

Read more »

Woman smiling whilst shopping in a clothing store.
Dividend Investing

Why this quality ASX 300 dividend stock is tipped to surge 54%

A leading fund manager forecasts significant outperformance from this quality ASX 300 dividend stock.

Read more »

A group of businesspeople clapping.
Broker Notes

Bell Potter names more of the best ASX 200 stocks to buy in June

These stocks could be best buys this month according to the broker.

Read more »

A businessman looking at his digital tablet or strategy planning in hotel conference lobby. He is happy at achieving financial goals.
Share Market News

Why Clarity, Coronado Global, Iperionx, and Lynas shares are roaring higher today

These shares are having a strong session on Thursday. Why are investors buying them?

Read more »

A woman looks questioning as she puts a coin into a piggy bank.
Opinions

The ASX 200 is approaching its all-time high. Here's why I'm not buying shares

I'm not seeing what the broader market is.

Read more »