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$1 million in 53 days: Absurd pay packets of disgraced AMP executives

·Personal Finance Editor
·5-min read
(Source: AMP Limited)
(Source: AMP Limited)

In the last 12 months AMP has faced scandal after scandal, from poor management to sexual harassment claims and the leaders of each arm of the business have resigned.

AMP Limited chief Francesco de Ferrari announced his resignation this month after swirling rumours and the collapse of merger plans with Ares Management.

Boe Pahari is set to leave the business all together after having to step down from his role of CEO of AMP Capital after sexual harassment claims surfaced.

And former CEO of AMP Australia Alex Wade’s sudden departure was reportedly triggered by a series of complaints over explicit photos.

But despite the damaging claims surrounding each executive, they were all getting paid the big bucks.

How much were these AMP executives paid?

Pahari was paid over $1.3 million in the 53 days he served as CEO of AMP Capital.

According to AMP’s annual report, Pahari was paid a cash salary of $137,000, another $3,000 in short term benefits, $132,000 in rights and options and $104,000 in deferred incentives.

That amounts to $376,000, but then comes the profit from the AMP Capital Enterprise Profit Share (EPS) plan.

After Pahari stepped down from his role as CEO of AMP Capital, he was still eligible to profit from the shares awarded to him during that time.

In the span of 53 days Pahari was paid an additional $937,724 for the time he served as CEO of AMP Capital.

In total, Pahari was paid $1.3 million before stepping down due to sexual harassment allegations brought to light by a former employee.

Wade, who served as CEO of AMP Australia for around 10 months, stepped down suddenly in August last year.

For his total time spent in the top spot Wade took home around $3.5 million. The Australian reported his undoing came from a series of explicit photos sent to staff members.

According to the AMP annual report Wade held over 2.5 million shares which at the time would have been worth around $4.85 million.

Finally, De Ferrari, the man at the helm of the ship, announced his resignation on 1 April this year.

His tenure was overshadowed by poor performance for the company as well as the above mentioned executive scandals.

Last year De Ferrari was paid $2.2 million as his fixed salary, $17,000 in short term benefits, $3.6 million for rights and options, $910,000 in restricted shares and $9,000 in ‘other’ payments for a total of $6.75 million.

Granted, this is significantly less than the $13.4 million he took home in 2019 because he chose to forgo some of his benefits due to the pandemic.

His job was to restore AMP to its former glory after the explosive allegations from the banking Royal Commission saw heads roll, but the business is still struggling.

After the failed merger attempt with US-based Ares, De Ferrari decided it was time to leave.

In De Ferrari’s resignation announcement, he said: “While there is no optimal time for transition, the Board and I agreed that for AMP to deliver on the next phase of its ambitious transformation, at this juncture long-term certainty of leadership is critical for our business, our employees and our clients.”

‘Cycle’ of poor leadership: analyst

Despite the leadership changes over the past year, investors, shareholders and analysts are still not pleased.

Deep Data Analytics CEO Mathan Somasundaram said AMP’s reputation has been damaged to the point of no return.

“AMP was a great organisation when I started in finance in the 90’s. As a broker, AMP was the first port of call with any deals,” Somasundaram told Yahoo Finance.

“It is sad to see a great brand being decimated and shareholders taking all the hits while the people in charge are getting paid top dollar. It won’t change anytime soon.

“Management are gutting shareholders while the brand slides into a slow death before a low ball bid comes.”

Somasundaram said AMP has long been following the same poor system of over-paying executives who don’t change a thing.

“After three to four years, some of them leave and new leadership comes in and the cycle starts again. Since the model is a moving target, you never know where you are in the rebuild cycle,” he said.

“AMP is the classic example of the weak standard of CEOs and boards in Australia."

"You only realise how good a management team is when they get tested, a bit like politics. When things are going well, it’s easy and everyone looks good.

“AMP has failed the management test for the last decade and it continues to deliver lower standards in management clarity every year.”

InvestSMART deputy head of research Gaurav Sodhi told Yahoo Finance that culture at AMP is a direct result of the board and senior management, as it was their responsibility to to illustrate what is expected of employees.

“The dismal performance of the business over a long period of time damns the board and management more than I or any analyst could ever do,” Sodhi said.

“Here is a company shown to be acting poorly for its customers and that has already lost billions for its shareholders. Is it really a surprise to see large, questionable remuneration being paid to executives? I'd say it fits the script rather perfectly of an organisation that has been poorly run and in decline for a long time.”

Looking to the future

For Somasundaram and Sodhi, there is no point savaging the business now. They believe the damage has been done and it’s best to walk away.

“The recent management changes in AMP over the last three to four years has been more about burying the mess and selling it than turning it around. Management has never been able to articulate a model going forwards,” Somasundaram said.

“It has not been a good investment from the day it listed and it hasn’t been investment grade for the last five or six years.”

“The only valuable part of the business, AMP Capital, is likely to be split off or sold. The rest of the business probably won't survive and don't deserve to,” Sodhi said.

“Even the final act of salvaging value has been botched. The split of AMP Capital is too late and the remains will be worth little. AMP might be cheap but it is uninvestable.”