Not much of it was picked up in the mainstream press today, but
there were some very interesting exchanges at the AMP AGM yesterday.
For starters, the company continues to have the most inaccurate balance
sheet in Australia’s top 50 companies, although it’s now massively
undervalued rather than massively overvalued.

The 2002 annual report claimed AMP had net assets of $18 billion when
the market value had slumped to about $8 billion. This was all about
the $10 billion that AMP dropped on its UK misadventure, but now that
this has been demerged, the new AMP only claims to have net assets of
$2.8 billion, yet the current market capitalisation is $17.8 billion.

Asked how on earth AMP’s balance sheet could go from being $10 billion
over the odds to $15 billion under in just three short years, chairman
Peter Mason dodged the question and declined to invite long-time
auditor Brian Long to speak.

Mason was also reluctant to engage over the large derivatives contract
with UBS in late 2002
de-risk AMP’s UK business by protecting itself on the downside of UK
equities but surrendering much of the upside. CEO Andrew Mohl told the
2003 AGM this had saved the company “hundreds of millions of of
pounds”, but the UK market has doubled since then. Mohl got quite
animated after the meeting in a private chat as he defended the
arrangement and he told shareholders the deal retained “most of the

Crikey has written previously about the perception problems of
appointing Mason chairman when he is a “senior adviser” with its main
adviser, UBS, which pocketed upwards of $100 million from AMP during
its capital crisis over the previous five years. Mason defended the
arrangement, denied he would be involved in any AMP work and said he
left JP Morgan because they wouldn’t allow him to take on the AMP gig,
which will pay a very tidy $480,000 in 2006 after yesterday’s increase
in directors’ fees.

I gave the board a bollocking for returning all this excess capital in
2005 and 2006 when they massively diluted shareholders in 2002 and 2003
by issuing 711 million new shares – more than 60% of the shares on
issue at the time – at an average of only about $4.20 each. Mason gave
some meek line about history suggesting you could do things
differently, but with the stock pushing $10 this week, shareholders
were not particularly angry even though most would remember the stock
trading above $20.

The most disappointing aspect of the meeting was not rolling James
Hardie chairman Meredith Hellicar on the show of hands. She got back
with about two-thirds support so clearly the clarion call to “send a
message about corporate behaviour” could have been presented a lot

Check out all the proxy votes here
and you’ll see that Meredith was re-elected with more than 98.05% in
favour so clearly even the union-backed industry funds failed to
register a serious protest vote. Talk about a missed opportunity.