Financial services company AMP Ltd gave only the barest of hints in an NZX announcement on Monday of the trouble it had wrought upon itself since June.
In that announcement:
- David Murray resigned as chair & as a director
- Debra Hazelton replaced him as chair
- In light of Mr Murray’s resignation, former Australian Treasury Secretary John Fraser also decided to resign as a non-executive director and as chair & non-executive director of AMP Capital Holdings Ltd
- Boe Pahari, appointed chief executive of AMP Capital on 1 July – which made him the centre of the ructions – returned to his previous executive level; he’d been AMP Capital’s global head of infrastructure equity & director of AMP’s north-west region (the UK, Europe & the Americas)
- AMP Ltd chief executive Francesco De Ferrari assumed interim direct leadership of the AMP Capital business while the group conducts a search process for a new AMP Capital chief executive.
A female subordinate accused Mr Pahari of sexual harassment in 2017. AMP penalised him to the tune of $A500,000 after the company settled the complaint in 2018. As part of the settlement, the complainant will now – at last – be allowed to view the independent investigation report.
When the AMP board announced Mr Pahari’s elevation to his new role on 1 July – the day AMP’s sale of its life insurance business to Resolution Life for $A3 billion went through – some large shareholders questioned the appointment in light of the harassment, and Australian Financial Review senior companies reporter Michael Roddan started digging closer to the bone.
The chief executive of AMP’s Australia division, Alex Wade, resigned & left the company on 9 August. Mr Roddan reported allegations that Mr Wade had sent explicit photos to female colleagues, and followed that with the revelation that female employees “have exploded at senior managers & the male-dominated board, calling for the sacking of Boe Pahari and for cultural change across the business”.
The AMP board, in its statement on Monday, said: “These changes respond to feedback expressed by some major shareholders regarding the appointment of Mr Pahari as AMP Capital CEO on 1 July 2020.
“David Murray commented: ‘AMP needs to continue its transformation under chief executive Francesco De Ferrari with the support & confidence of its investors, institutional clients, employees, partners & clients, without distractions.
‘The board has made it clear that it has always treated the complaint against Mr Pahari seriously. My view remains that it was dealt with appropriately in 2017 and Mr Pahari was penalised accordingly. However, it is clear to me that, although there is considerable support for our strategy, some shareholders did not consider Mr Pahari’s promotion to AMP Capital CEO to be appropriate.
‘Although the board’s decision on the appointment was unanimous, my decision to leave reflects my role & accountability as chairman of the board and the need to protect continuity of management, the strategy and, to the extent possible, the board.’”
New chair focuses on business
Ms Hazelton commented: “On behalf of the board, I would like to acknowledge David Murray’s leadership of the AMP board over the past 2 years as the business has tackled critical & highly complex challenges in AMP’s transformation program.
“We would like to thank both David & John for their professionalism, dedication & commitment to AMP. Under my leadership, the board will focus on working with Francesco & his leadership team to deliver long-term value for our shareholders & clients by executing the transformation strategy. I am determined to restore the trust & confidence of our clients, shareholders & employees.”
That could be a long uphill journey, given the figures the Australian Financial Review presented on AMP’s recent downhill slalom:
- AMP shares have fallen about 40% since Francesco De Ferrari took over as chief executive in December 2018
- The stock has lost over 60% of its value since former Commonwealth Bank chief & climate change sceptic David Murray took over as AMP chair in 2018, at the age of 69
- Last week, AMP’s 2 largest individual shareholders, the US-based fund Harris Associates and Sydney-based asset manager Allan Gray, signalled their unhappiness with the company’s top managers & Mr Murray’s board, and
- The Australian Council of Superannuation Investors, representing funds holding, on average, 10% of Australian listed stocks, said Mr Pahari’s position was “untenable”.
24 August 2020: AMP announces board & executive changes
19 June 2020: AMP Capital leadership transition
AMP first half results summary
Australian Financial Review, 3 July 2020 (behind paywall): AMP women stage revolt over Pahari promotion
Attribution: AMP releases, Australian Financial Review, Sydney Morning Herald, NZX.