boe-pahari
Former AMP Capital CEO Boe Pahari

The much-anticipated 2021 AMP annual general meeting (AGM) kicks off at 10am this Friday, April 30, and the first thing to say about it is that the board’s decision to go on with an online-only affair could land the company in hot water.

The temporary legislative relief provided by the government to allow physical AGMs to be scrapped during COVID-19 lockdowns formally expired on March 20. Proposed federal legislation to extend the relief failed to pass the Senate, leaving those ASX listed companies with December 31 balance dates in a quandary as they rolled through their AGMs in April and May.

The corporate regulator ASIC issued a statement on March 29 declaring that it would take “no action” against companies which opted for a fully online AGM up until October 31, but in the absence of new legislation, any shareholder could challenge this outcome in the courts with the reasonable prospect that a judge would order the company to hold a physical AGM.

Heaven forbid, if the AFL is now allowing 85,000 to attend games at the MCG, a couple hundred shareholders nicely spaced in a five star city hotel shouldn’t be too hard to manage.

As you can see on this comprehensive master list wrapping up all the AGM mini-season action, market practice is all over the shop. It ranges from the Rio Tinto-controlled former uranium miner ERA running a physical AGM in Darwin with no online element, to the likes of Scentre Group, Santos, Atlas Alteria, HT&E, TPG Telecom, Sydney Airport, and others which have all followed AMP’s lead and opted for online-only AGMs.

The obvious solution here was for companies to run genuine hybrid AGMs. This involves the ability for shareholders to ask questions and vote at a physical venue where the board is assembled, supplemented by those shareholders at home being able to vote and ask live unscripted questions during the meeting through an online portal.

Step forward CIMIC, OZ Minerals, Oil Search, IRESS, oOH!media and Costa Group for delivering that outcome.

Tomorrow’s AMP AGM will no doubt be one of the highlights of the season with a second remuneration strike now considered likely after media reports that outgoing AMP Capital rainmaker Boe Pahari could pocket a $50 million-plus payout on his departure from the business.

Given Pahari’s controversial legacy, I gave this idea a solid spray on ABC radio’s AM Monday morning, although the AFR’s report on the potential payout is based on unnamed sources, with no public documents to back it up.

AFR journalist Karen Maley’s source is suspected by some to be a former AMP director or executive causing mischief. In reality, quite a bit of the so-called $50 million payout to Pahari has already been expensed over the years courtesy of AMP Capital’s excellent returns in the infrastructure space, which Pahari has been leading for many years.

That said, this whole concept of “carried interest” for overpaid fund managers should be stamped out. Basically, it occurs when a fund that is receiving an out-performance bonus fee has agreed to share it with specific fund managers, but the payment is not actually made until the fund is wound up, the assets realised or the executive departs.

Therefore, Pahari and his senior colleagues may indeed pocket as much as $80 million courtesy of being AMP Capital’s biggest rainmakers over a long period of time, but this payment has been already largely expensed and would be paid for more by AMP’s clients than its shareholders.

Given the optics, it would make sense for Pahari and AMP to reach a commercial settlement which minimises the headlines and disclosable payout in the documents produced for the upcoming AMP Capital demerger vote.

The Australian Shareholders’ Association will be voting its undirected proxies against the AMP remuneration report and with at least one of the other institutional proxy advisers also recommending against, a second strike is considered likely.

If that happens, it will move to the contingent board spill, which is likely to be easily defeated, as has occurred every other time an ASX300 company has suffered a second remuneration report strike.

Whatever happens, the remuneration protest vote won’t be anything like the 67% against-vote at last year’s AGM, in part because the Pahari golden goodbye has not been confirmed and the media reports have come after most fund managers have already voted.

However, it will be very difficult for new chair Debra Hazelton to avoid addressing the issue at Friday’s AGM, along with a raft of other issues such as the failed takeover talks with US fund Ares Group and the plunging share price which hit a record low of $1.09 yesterday.

This is where the once-great AMP now ranks with other financial services companies on the ASX in terms of market capitalisation:

  • CBA: $158 billion
  • Macquarie Group: $57.5 billion
  • Afterpay: $33.5 billion
  • Bendigo Bank: $5.7 billion
  • Bank of Queensland: $5.9 billion
  • AMP: $3.85 billion.

How the mighty have fallen. And once you split this much-diminished business in two, it’s a likely prospect that at least one of the bite size demerged entities will be gobbled up by a predator before next year’s AGM.

Which is why AMP’s circa-800,000 shareholders should go to page five of the notice of meeting to watch all the online action when the 2021 AGM starts at 10am on Friday, April 30. It could very well be the last such gathering.

Stephen Mayne served on the board of the Australian Shareholders’ Association.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey

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