The besieged asset manager AMP announced that it would grant its chief executive a bonus of up to $ 1.8 million on the same day, reporting an annual net loss of nearly $ 2.5 billion.
Francesco De Ferrari has received the unenviable task of turning the once powerful financial institution around after the scandals uncovered by Kenneth Hayne during the royal commission.
The question of AMP’s non-service charges was arguably the most heinous of the misdeeds that came to light during the financial services investigation, and investors have thrown the company overboard since then.
The manager, whose potential bonus has been raised from 120 percent to 200 percent of his $ 2.2 million base salary, insists, however, that he won’t take the extra kitten unless he provides an ambitious plan to restore the company ,
The move should add to the frustration of shareholders who have watched their investment in AMP collapse in the past three years, Bell Direct market analyst Jessica Amir said.
“Investors will be annoyed that the CEO’s potential bonus claim has increased 80 percent, especially at a time when he declared massive depreciation,” she told news.com.au.
“But I think the wiser investors have instead invested in companies that have stable or growing earnings, which explains why other financial stocks like Macquarie, Suncorp and CBA are bought out.”
AMP’s results show that customers pulled an unbelievable $ 6.3 billion from business, while earnings were even worse than Morgan Stanley analysts had forecast in a year that De Ferrari called it a “fundamental reset” designated for the company.
“In an era of unprecedented legislative and regulatory pressures, we have set a strong three-year roadmap for recovery,” he said in a statement to the ASX. “Our focus is now on delivery.”
The CEO admits that the customer volume it has given up was not ideal, as more than two-thirds have been deducted from the AMP share price since 2018.
“The Royal Commission has obviously had a reputation impact on AMP and is disrupting the entire industry,” he said.
During the royal commission, the then group leader for advice to asset manager Jack Regan admitted that the company had made untrue and misleading statements to the regulator about fees for non-service.
The investigation found that AMP intentionally chose to charge a group of “orphaned” customers for three months if they went into a central pool, even though they did not receive any counseling or legal advice that was unlawful.
The problem occurred when the company acted as a last resort buyer and bought a consultant’s client book when they were unable to sell it to another authorized AMP representative.
AMP is still repaying customers for the errors that were broadcast on the Royal Commission.
The company paid $ 190 million to customers in the second half of 2019, bringing the total to $ 264 million.
AMP also blamed rising regulatory and compliance costs for the lower full-year result and says significant legislative and regulatory changes are expected.
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