Apologies just don’t cut it any more, judging by the outcome of the AMP board meeting yesterday.
Investors agreed with that assessment and sent the shares down to their lowest level since January, 2012.
Despite the 4th apology from the company and its senior executive, stand in CEO, Mike Wilkins, in four days to shareholders yesterday, they still gave the company a big thumbs down.
As a result AMP suffered the largest shareholder “first strike” ever recorded against an Australian top 50 company, with 61.5% of investors voting against the company’s remuneration report (the way shareholders no indicate their view on the performance of the company and its management). Shareholders also levelled a protest vote of 37.6% against the re-election of AMP director Andrew Harmos.
The votes came after AMP executive chairman Mike Wilkins issued yet another apology to shareholders – the fourth in recent days – in the wake of the wealth’s giant’s plunge into crisis.
At the same time the AMP learned of a second class action against the company over the $2 billion dropin value since the banking royal commission started.
The combination of that news, the votes at the meeting and the lack of anything concrete from the company at the meeting saw the shares fall to new lows yesterday before closing at $3.96, down nearly 3%.
Tht’s a six year low, and the shares have only a few cents more to fall before they hit all time lows – levels not even hit during the GFC in 2008-09.
"We are truly sorry. We let you down. We have let our customers down. And we have let the wider community down. We understand you want change,” Mr Wilkins told the meeting. Seeing he was an non executive director, the apology sounded a bit hollow to many shareholders.
“We recognise that many of our shareholders have voted against the remuneration report in response to the wider business issues, but we acknowledge that others have concerns about the new remuneration framework. We understand your frustration and have heard you,” Mr Wilkins said.
“Our remuneration approach must appropriately balance the needs of our shareholders and executives for a common and successful future.”
“We’re committed to moving forward, and will consider specific feedback on the remuneration report, as well as wider concerns, when deliberating how to progress.”
A strike means more than 25% of votes cast at the meeting oppose the adoption of the remuneration report.
While the vote is non-binding, a subsequent strike at next year’s meeting would trigger a vote on whether to spill the entire board. Unless the AMP lifts its performance in the next year, then its game over for the board. That is a big task for incoming chair, David Murray.
AMP said it will vigorously defend two class actions bought against it after shedding more than $2 billion in market value since it began giving testimony at the royal commission.
It has to say that, but in reality it will try and negotiate settlements to satisfy the sharks and shareholders really upset. Before the meeting AMP issued a mixed March quarter (first quarter for it) update on its trading performance.
AMP reported a net cash outflow of $200 million from its Australian wealth management arm for the three months to March, which was in line with the first quarter of 2017.
The subdued performance in AMP’s wealth management arm came as AMP Capital’s net external cashflows for the quarter hit $1.6 billion, driven by strong cashflows in real assets. AMP Bank grew its loan book by 2% to $19.8 billion during the quarter.
More importantly, AMP revealed there are more costs ahead. It said it expects to have to make further allowances for remediation of customers and other expenses stemming from the Royal Commission revelations and subsequent investigations into the advice sector and would update the market on those costs before or at its first-half results in August.
