AMP shareholders have voted against executive pay packets at the troubled financial institution over concerns bonuses are too high for a company delivering lacklustre performance and a weak share price.
AMP has lost about three-quarters of its market value in the five years since the banking royal commission disclosed numerous poor practices at the company, including its willingness to charge insurance premiums to dead customers.
At the company’s annual general meeting on Friday, almost half of shareholders voted against its remuneration report, far exceeding the 25% threshold needed to deliver the company an official strike.
Under rules designed to hold directors accountable for executive pay, a second strike against AMP’s pay plans next year would give investors a chance to spill the board.
The Australian Shareholders’ Association, representing members with AMP shares, voted against the remuneration report, noting that the pay potential for the chief executive, Alexis George, was excessive for a company that had dramatically shrunk in recent years.
“The CEO total incentive remuneration remains unchanged at a maximum of $6.86m even though the size of the business has been significantly reduced and there is no reduction in the 2023 framework,” the ASA said.
The AMP chair, Debra Hazelton, said the size of a company was not the determining factor in the size of executive pay packets.
“You also need to look at complexity of work and the workloads involved,” Hazelton said.
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She said AMP was being transformed after the royal commission upended its business model.
George, who has been in the CEO role for about 18 months, is part of a new management team charged with resurrecting the fortunes of one of Australia’s oldest financial institutions.
She said on Friday that the business was being set up to deliver sustainable growth for investors.
“We have made great progress on the path to a new AMP,” George told shareholders.
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The 174-year-old company spent years building up a network of financial advisers to work as a distribution channel for its investment and insurance products before the 2018 hearings highlighted the conflicts in the model.
During the inquiry, regulators started unpicking the most controversial parts of the business, forcing AMP to overhaul its business.
Several shareholders at the Sydney meeting on Friday expressed their displeasure at the company’s performance.
There were suggestions its different units should be broken up and sold off, with proceeds flowing to investors. There was also a question over whether AMP needed to be renamed due to its poor reputation.
Long-term investors in the company have been through a torrid period. Shares, which were as high as $14 more than two decades ago, traded at about $1.07 on Friday.
Shareholders also raised concerns over the structure of long-term bonuses, with a significant portion of the chief executive’s pay tied to an improvement in the company’s reputation, tracked by an independent company.
The long-term bonus structure was approved by shareholders on Friday despite a reasonable-sized protest vote.