SYDNEY (Reuters) - Three directors quit top Australian wealth manager AMP Ltd (AMP.AX) ahead of Thursday’s annual general meeting, as big investors signaled their displeasure with the embattled firm’s response to allegations of criminal misconduct.
The resignations follow the exits of AMP’s chairman, CEO and in-house lawyer in the wake of damaging revelations at a government-ordered inquiry that the once-venerable firm had lied to regulators and allegedly doctored an independent report.
Major shareholders rejected AMP’s calls to back directors who are up for re-election at the meeting, demanding renewal instead of continuity and signaling more upheaval for companies that have been named and shamed by the banking sector inquiry.
“Our shareholders are demanding board accountability and need to know that meaningful change is underway,” said Interim Executive Chairman Mike Wilkins, a director who stepped up after former CEO Craig Meller quit last month over the scandal.
Three months into the Royal Commission inquiry into financial industry misconduct, AMP has been accused of charging thousands of customers for financial advice it never gave then doctoring a supposedly independent report to the regulator about it. The commission has said it may recommend criminal charges.
None of Australia’s Big Four banks - Westpac Banking Corp (WBC.AX), National Australia Bank (NAB.AX), Commonwealth Bank of Australia (CBA.AX) and Australia and New Zealand Banking Group Ltd (ANZ.AX) - have emerged unscathed from the year-long inquiry so far, with all promising to transform how they conduct themselves and rebuild consumer trust.
But AMP has suffered the worst reputational damage. While it denies criminal conduct, shareholders have revolted, wiping A$4 billion from the company’s market capitalization in a month and vowing to vote out three directors - Vanessa Wallace, Holly Kramer and Andrew Harmos - on Thursday.
Having stood by the directors, AMP caved into the pressure on Tuesday and said Wallace and Kramer would leave along with longest-serving director Patty Akopiantz. It said Harmos would stay on despite investor calls for his head as well.
Australian companies receive proxy, or absentee, votes two days before their AGM, and proxy advisers have recommended shareholders vote against the three directors up for re-election - including Harmos.
CGI Glass Lewis, a proxy adviser which had urged clients to vote against all three, said in a client note that “none of our recommendations have changed” after the resignations.
Bill Watson, CEO of First Super, an AMP shareholder, said the organization would vote against Harmos’s re-election in the interests of board renewal.
Australian Shareholders Association monitor Ian Graves also said Harmos should “review his position”.
Louise Davidson, CEO of the Australian Council of Superannuation Investors (ACSI), which holds AMP shares, said the exit of four women from senior roles at the firm raised concerns for gender diversity as the board rebuilds.
“We strongly encourage AMP to make sure they don’t end up with no women on their board as a result of this development,” she said.
“There is no shortage of appropriately skilled, experienced and talented women for directorships in Australia.”
Reporting by Byron Kaye and Paulina Duran in SYDNEY, Rushil Dutta in BENGALURU; Editing by Stephen Coates