The AMP Limited (ASX: AMP) share price is up this morning, following the resignation of 3 senior executives. Chair David Murray, CEO of AMP Capital Boe Pahari, and non-executive director John Fraser have all resigned from their positions following pressure from major shareholders.
AMP is embroiled in a storm over its internal culture, with media reporting allegations of sexual harassment and a culture of fear.
Why the resignations?
AMP has reported the resignations are in response to feedback by major shareholders regarding the appointment of Boe Pahari. Pahari was appointed as CEO of AMP Capital on 1 July 2020. The promotion was followed by widespread outrage by female employees of AMP, who called for the sacking of Pahari and cultural change across the business. Prior to his appointment, Barahi had been penalised $500,000 following a sexual harassment claim brought by a female subordinate who no longer works at the company
Harassment complaint
According to media reports, Pahari encouraged a culture of regular socialising and drinking at after work engagements. “If you didn’t go out with him you were ostracised in the business and in the office,” once source told the Australian Financial Review (AFR). “You are either in his good graces or his enemy; there is nothing in between,” said another.
According to the alleged victim of the 2017 harassment complaint, the executive said she made him look like a “limp dick” when she declined to use his credit card to buy clothes, and encouraged her to use Whatsapp to communicate to evade company scrutiny. An external investigation was conducted into the 2017 complaint, which resulted in the aforementioned settlement.
CEO David Murray said:
The Board has made it clear that it has always taken the complaint against Mr Paharii 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.
Pahari will resume work at his previous level with a focus on AMP Capital’s infrastructure business.
Chair replaced
As reports of the alleged harassment gained traction, shareholders took issue with Pahari’s promotion to one of the most powerful positions in AMP.
The AMP board is now dealing with the fallout of the decision to promote Pahari, with David Murray saying his resignation reflects his accountability as chair. He will be replaced by Debra Hazelton, who has some 30 years experience in financial services.
In light of Murray’s resignation, John Fraser also decided to resign as non-executive director. CEO Francesco De Ferrari will assume direct leadership for AMP Capital while a new head of the business is sought.
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More reading
- AMP to release sexual harassment details, won’t sack anyone
- Investors call for AMP Capital CEO’s head
- Why today is a great day to add to your ASX share portfolio
- ASX 200 drops 0.7%, Telstra falls 7.7%
- Earnings: AMP share price soars despite $107 million drop in profits
Motley Fool contributor Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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