AMP lambasted over CEO’s salary in face of BOLR blitz

14 February 2020

AMP Limited is experiencing negative blow-back from both planners and planning related union groups as a result of its decision to upgrade the salary package of its chief executive, Francesco De Ferrari despite reporting a net loss of $2.5 billion.

While advisers made their negative views on the salary decision clear on the Money Management web site, the Financial Sector Union (FSU) pointed to the situation in which the company had left many planners.

FSU national assistant secretary, Nathan Rees said that while shareholders would be concerned about the direction AMP was taking, decisions taken by the corporation had also destroyed the livelihoods of scores of planners.

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“AMP has treated planners poorly,” he said. “A total of 440 AMP financial planners have a contract to work in partnership with AMP. That contract stipulates that in the event the planner’s business is bought back by AMP, it will be acquired at four times the value of annual revenue.”

“Late last year, AMP simply decided they would buy these businesses from their own planners for only one and a half times annual revenue. This has effectively reduced the value of each planner’s business by more than 60%,” Rees said.

He said that, to make it worse, many planners had borrowed money from AMP to establish their business but AMP still wanted the money back.

“Any reasonable person would see that this is simply wrong,” Rees said. “Planners are losing their homes and their livelihoods and there are genuine concerns about the mental health impacts of this decision by AMP.”

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For those that read the financial statements carefully, AMP now have corporate debt of more than $2Bn and they have well more than 3Bn shares on issue. So, even if they get the sale of the Life company away, the situation still looks dire. Sure AMP Capital looks good but I'm not sure it will save this mess. What is really hurting shareholders is this culture of greed and/or foolishness, that management (esp many layers of middle management) can draw big salaries and contribute very little. I think DeF has missed the opportunity to thin the ranks which he needed to do quickly to actually turn this around.

Has AMP started recording BOLR as a contingent liability in their financial statements yet, or is it still a mysterious black hole?

See page 7 of the financial statements for comment on BOLR. They cannot seem to make up their mind whether BOLR is a contract (which is stated in this report) or is a Policy (which is apparently what they have been telling Practices lately).

Mr De Ferrari is a wonderful person.. creates heartache and destruction with loyal AMP Planners and then jacks up his bonus.

It is morally and ethically unacceptable on every level.
It may be legal and it may be corporate culture but it simply doesn't stack up in relation to the recent performance of AMP and the treatment of 100's and 100's of loyal and dedicated advisers who supported their clients and provided AMP with large volumes of business.
These large volumes of business assisted in funding AMP and in turn AMP decimate these advisers businesses and provide their CEO with a salary increase.
This must be just about the worse example of corporate culture I have witnessed.
It is ethically and morally corrupt.

I want to know facts here around this broad brush statements of people losing homes. I know amp advisers who bought their client book outright and paid back the debt. Others decided to sell back. They must be worth more than the debt or it was simply a bad investment. No difference to a house changing with market value. No difference to taxi plates losing value with competitive. Both fell from poor service. I don’t like amp, but I want facts not emotive fake news. Anyone got a real story not just tears over bailing out and not getting compo for it.

The books were worth more than the loans, until amp decided not to honour the contract. In reality valuations went from 4x down to 1-1.5x
As amp decided that whatever was borrowed has to be repaid in full, regardless of change in valuation, that is what is causing a problem.

So, advisers are pilloried post the RC, even though almost nothing raised in evidence there was laid at the feet of advisers. Here is one of the greatest travesties ever perpetrated in financial services and the government and regulators are nowhere to be seen. Look up the word "cartel".

What do you mean nowhere to be seen. They are the ones doing it.

This is on top of his base salary of $2.2 million meaning his potential earnings could be $6.6 million.
Its all over the national press at a time of trying to repair public confidence and at a time of record losses for AMP and AMP shareholders.
I'm not an AMP adviser but what is being done to them under the BOLR is criminal.
This is just another Execs utter contempt for anyone but themselves. It beggars belief and is just criminal in itself

Dear Bear,
In relation to AMP Advisers debt whom bought a register of client. Some advisers were sold registers in 2019 the same year when they decided to exit Advisers. No time to build a profitable business in such a short period of time and unconscionable lending by AMP bank at 4 times valuation.

Not really MKH. 2019 was the year after the RC hearings and there was no one buying at that time (following the testimony of Regan et al). Most of the unfortunate buyers were everyone after 2010 pretty much.

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