AMP (ASX:AMP) share price down, facing shareholder revolt this week

The AMP Limited (ASX: AMP) share price will be closely watched leading up to Friday’s annual general meeting (AGM). The embattled company is facing a second strike to its remuneration report.

At the time of writing, the AMP share price is 2% lower to $1.12.

Two strikes and it’s time to change

The news of a demerger and slowed decline rates in capital flows have not been enough to put a floor under the AMP share price. Instead, the financial services company has gained further attention from shareholders for some questionable remuneration plans.

At the AGM on Friday, the not-for-profit Australian Shareholders’ Association (ASA) will vote against the AMP remuneration report. This action follows ASA with other proxies and shareholders voting against the remuneration report last year.

If Friday results in a vote of greater than 25% against the report, AMP will cop a second strike. As a consequence, a vote will be held for a ‘spill meeting’, which essentially is a vote to put the current directors up for re-election.

However, ASA will vote against the spill motion. As mentioned in correspondence, ASA stated:

The recent changes to the Board and management have seen considerable disruption, while we may not agree with the remuneration decisions in full, we can see the necessity to provide some incentive to retain staff during this difficult period.

The proxy holder does not view a spill motion as a productive move to revitalise the AMP share price.

Short term incentives cause for concern

While ASA notes some improvements have been made to the previous plan, the new proposed remuneration plan is seen to emphasise the short-term too heavily. Only 25% of the planned pay is made up of long-term incentives. Given the track record of AMP, this doesn’t bode well with investors.

On top of that, ASA opposes the use of retention payments and incentives that are not bound to performance. Despite not being held to any performance measure, AMP dished out up to 100% of fixed remuneration to key management personnel, excluding the CEO, amounting to $3.89 million.

Boe’s bad timing weighs on AMP share price

In response to AMP’s first strike, the company detailed it must balance the need to retain talent and reward performance. Though, ‘balance’ might be brought into question by Boe Pahari’s rumoured golden handshake to be.

As reported by the AFR, the Global Head of AMP Capital, Mr. Pahari, could stand to receive $50 million in entitlements as he walks out the door. The payment is as per the fund’s contractual entitlement to 20% of the excess investment returns achieved above its benchmark. If only shareholders experienced the same windfall in AMP’s share price performance.

Whether or not Pahari’s payments will occur, it certainly doesn’t attract a glowing endorsement for the company’s remuneration structuring.

More reading

• Could value finally be emerging for the embattled AMP (ASX:AMP) share price?
• History is on the side of the battered AMP (ASX:AMP) share price as it plans its demerger
• AMP (ASX:AMP) is the most traded ASX 200 share today
• Why Accent, AMP, De Grey, & Nuix shares are charging higher
• ASX 200 down 0.1%: Kogan crashes, AMP’s demerger plans, Telstra strengthens 5G network

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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