AMP chief gets pay rise of up to $1.8m despite company posting $2.5bn loss


Scandal-wracked financial services group AMP has given its chief executive a pay rise of up to $1.76m a year at the same time as unveiling a loss of almost $2.5bn.

Chief executive Francesco De Ferrari, who was brought in to turn AMP around after the banking royal commission hearings, said the decision to give him a 66% increase in his potential bonus was made not by him but by the company’s board.

“If I don’t perform, I don’t get paid,” he said during a conference call with reporters on Thursday morning.

No one else from the board, which is chaired by the former Commonwealth Bank CEO David Murray, was present on the call. Guardian Australia has asked AMP if Murray is available for comment.

Under his original employment agreement, signed in August 2018, De Ferrari was entitled to a short-term bonus of up to 120% of his base pay of $2.2m if he exceeded performance targets, paid in company stock.

On Thursday, AMP changed the maximum bonus payout to 200% of base salary, or $4.4m.

To earn the bonus, De Ferrari will have to deliver on his ambitious plan to revitalise a company ravaged by the banking royal commission.

Clients have been pulling their money from AMP’s investment products since a commission hearing in April 2018 during which executive Jack Regan lost count of how many times the company had misled the corporate regulator over charging fees for services that were never delivered.

AMP shares, which have already lost much of their value over the past 18 months, fell another 3.2% in early trade on Thursday after the company said it would not pay shareholders a final dividend for the year.

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Shares that were changing hands for as much as $5.44 in January 2018 are now valued at about $1.77.

Thursday’s full-year loss of $2.47bn was driven mostly by AMP’s decision to slash its valuation of the parts of its group most affected by the royal commission, financial advice and life insurance.

It followed a 97% fall in profit last year in the immediate wake of the royal commission.

In August, a year after taking the CEO job, De Ferrari unveiled a three-year plan to “reset” AMP that includes selling its life insurance and New Zealand advice businesses, simplifying its Australian advice arm and compensating customers it has ripped off.

However, superannuation customers continue to flee the company, withdrawing more than $7.7bn in the last three months of 2019 – up from $6.6bn during the same period in the previous year.

De Ferrari said the continuing outflows reflected the reputational damage done to AMP and the broader industry by the royal commission.

“I am not happy and we are not satisfied as a company, but it is not surprising,” he said.

AMP said one factor behind its decision to write down the value of its wealth management and life insurance assets was the introduction of new rules last year that barred it from charging fees of more than 3% a year on so-called “zombie” super accounts that have balances of less than $6,000.

The Australian has previously reported that more than half of AMP’s accounts are inactive, potentially reaping the company $100m a year.

De Ferrari said he did not have the number of zombie accounts held by AMP to hand.

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However, the chief financial officer, James Georgeson, said the new “protecting your super” laws had only a small impact on the writedowns.



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