Shareholder pressure claims scalps of high-profile AMP chair and director

AMP chairman David Murray has resigned, effective immediately, as has AMP director and former treasury secretary John Fraser.

Key points:

  • AMP chairman David Murray has resigned after around two years in the role, along with board member John Fraser
  • Boe Pahari has resigned as the CEO of AMP Capital but will remain with the company
  • Debra Hazelton has been appointed as AMP’s new chair after just over a year on the company’s board

The financial services company has been rocked by a series of sexual harassment complaints affecting senior managers, with allegations the company and its board of directors failed to handle them appropriately.

The recently appointed head of AMP Capital, Boe Pahari, is also stepping down from that role, effective immediately.

Mr Pahari will resume work at his previous level with the company.

AMP’s chief executive, Francesco De Ferrari, will assume leadership of the AMP Capital business for the time being while the company searches for a permanent replacement for Mr Pahari.

AMP said the resignations of Mr Murray and Mr Fraser, and the demotion of Mr Pahari, are in response to feedback from some major shareholders about the initial promotion of Mr Pahari to head one of the company’s main business units despite a previous sexual harassment allegation against him.

Mr Murray said he and the rest of the board had always treated the harassment complaint against Mr Pahari seriously.

“My view remains that it was dealt with appropriately in 2017 and Mr Pahari was penalised accordingly,” he said in a statement.

“However, it is clear to me that, although there is considerable support for our strategy, some shareholders did not consider Mr Pahari’s promotion to AMP Capital CEO to be appropriate.

“Although the board’s decision on the appointment was unanimous, my decision to leave reflects my role and accountability as chairman of the board and the need to protect continuity of management, the strategy and, to the extent possible, the board.”

Mr Murray is replaced by current AMP director Debra Hazelton, who has been on the board since June 2019 and has more than 30 years’ experience in the financial services sector.

Murray ‘stuck in the ’80s’

Shareholder pressure appears to have been the undoing of Mr Murray and Mr Fraser, with major investors concerned about the judgement involved in Mr Pahari’s initial promotion, which was approved by the AMP board.

Helen Bird, a specialist in corporate governance at Swinburne University said pressure on the company, its management and board had been building for some time, a lot of it in the background.

“I think when the Australian Council of Superannuation Investors (ACSI) became very vocal last week you started to see it really roll on,” she told ABC News.

“I think the company had to have a circuit breaker, and I think today’s announcement was intended that way.”

However, Ms Bird added that, “A circuit breaker is not a fix.”

“I do wonder if you can really say this issue’s been resolved if the very person involved in it is still in a senior position in the corporation, if not necessarily as senior as they were yesterday.”

Simon Mawhinney, portfolio manager at Allan Gray, which owns around 7 per cent of AMP’s shares, appears satisfied with the company’s response, for now.

“Change was needed in creating a safe workplace and sound culture,” he said in a statement to ABC News.

“AMP’s actions on this matter have now been decisive and we would like to give the company the latitude to execute on their stated strategy and cultural journey.”

The Australasian Centre for Corporate Responsibility’s chair, Brynn O’Brien, said she was not surprised by Mr Murray’s departure, given his views on a range of other social and environmental issues.

“ACCR has always questioned the suitability of David Murray for chair of a modern ASX50 company,” she commented in a statement.

“Murray is a well-known climate sceptic. He waged a war against the ASX’s inclusion of ‘social licence’ in its Corporate Governance Principles. It is quite ironic that AMP’s catastrophic social licence issues ultimately brought him down.

“His views on risk and governance frameworks are stuck in the ’80s and do not meet shareholder expectations of modern boards.”

AMP share price remains depressed

Mr Murray was brought in as AMP chairman to replace Catherine Brenner, who was herself pushed to resign over the company’s handling of a range of customer scandals, such as fees for no service and misleading the regulator, many of which were exposed by the banking royal commission.

The company’s share price has continued a precipitous downward march since the early revelations about it from the royal commission.

Senior banking and insurance analyst at Shaw and Partners, Brett Le Mesurier, said the handling of sexual harassment complaints by AMP’s senior management and board had been “another blow” for the embattled company.

“Responsible behaviour in the workplace and the promotion of women and the appropriate treatment of women on equal standing is something that AMP clearly seems to have struggled with across the board and it needs very significant improvement,” he told ABC radio’s The World Today program.

AMP shares were worth around $5.50 before the commission’s first hearings in March 2018, but were trading at $1.445 at 1:00pm (AEST), even after a 1.1 per cent bounce today following news of the board shake-up.

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