AMP’s Boe Pahari ‘paid price’ for misconduct: ISS

One of Australia’s most influential corporate governance experts says AMP executive Boe Pahari has paid a price for his misconduct, after corporate filings revealed he was paid almost $1 million in bonuses.

AMP shareholders revolted last year after it was revealed Mr Pahari was promoted to lead AMP Capital despite being fined $250,000 for harassing a female subordinate.

ISS proxy adviser Vas Kolesnikoff says Boe Pahari has “paid a price” for his misconduct and the bigger problem was almost $4 million in retention payments.Credit:James Brickwood JSB

Political and investor pressure over the board’s handling of the matter escalated and eventually caused Mr Pahari to be demoted, while chair David Murray and director John Fraser resigned.

ISS head of research Vas Kolesnikoff said Mr Pahari had “paid a price” and the $937,724 bonus, disclosed in AMP’s annual report on Wednesday, was paid for his work overseeing the infrastructure portfolio.

“At the end of the day, does someone get crucified for their behaviour?” Mr Kolesnikoff said. “He’s certainly paid a price. He’s lost the top job.

“The question now is what happens internally at AMP? Can he have the confidence of the people working for him? He’s effectively been named and shamed. It’s out there. It’s up to the AMP management and the next CEO of AMP Capital to assess his performance going forward.”

More than 67 per cent of AMP’s shareholders voted against the wealth giant’s remuneration report last year, after it reported a $2.5 billion loss for the financial year.

AMP has since tried to fend off a second strike, that would prompt a motion to spill the board, by cutting bonuses and freezing wages ahead of its annual general meeting scheduled for April 30.

AMP’s remuneration committee chair Michael Sammells said the group had spent the past year engaging with shareholders to make a number of key changes to its remuneration framework, including reducing the chair’s fee from $850,000 to $660,000.

AMP also undershot on financial performance, with net profit after tax “significantly below plan” at $295 million, which fed into the decision to withhold bonuses.

Mr Kolesnikoff said AMP’s share price was at “historic lows” and there would likely be investor push-back over the use of $3.98 million in retention payments.

Mr Sammells said the decision to award retention payments had “not been made lightly” but staff needed to be rewarded for the increased workload resulting from AMP’s assets sale announced in September.

“This position was exacerbated through a series of executive departures which disrupted business operations, leaving those remaining critical to stabilising the business,” Mr Sammells said.

Mr Kolesnikoff said retention payments allowed staff to be paid bonuses without meeting performance hurdles, and historically shareholders had pushed back against this form of remuneration.

“So you’re basically saying we’re not making the money that’s needed for shareholders to get the bonuses,” he said. “Retention payments are essentially bonuses.

“Retentions are something that, from a corporate governance perspective, a lot of investors will query and have problems with.”

“The board is happy to pay retention payments. Many shareholders don’t accept it. There will be a showdown somewhere,” Mr Kolesnikoff said.

AMP’s share price fell by 0.34 per cent to $1.46 per share on Wednesday.

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