More Blue Blood Spills At Amp
Sydney Morning Herald
Wednesday February 26, 2003
AMP has put the cleaners through its board for the second time in less than three years after five directors, including chairman Stan Wallis, yesterday agreed to leave the struggling insurance and financial services group.
The bad news is expected to continue this morning when the group unveils a disastrous $900 million annual loss for 2002.
AMP also belatedly admitted it was in dispute with former managing director Paul Batchelor over his termination payments, suggesting it could take some time yet before shareholders are told how much they are up for.
While the group declined to say how much he is seeking, it is believed both parties are keen to avoid legal action.
``While we'll be fair to Mr Batchelor, we will act vigorously to protect shareholders' interests," said Peter Willcox, who will replace Stan Wallis as chairman from today.
AMP not only confirmed that chairman Stan Wallis would exit with a $1.5 million retirement payment, but added fellow directors Patricia Cross, Sir Malcolm Bates, Paul Mazoudier and Ian Renard to the latest round of corporate bloodletting. Sir Malcolm, Mr Mazoudier and Mr Renard will retire over the next six months; Ms Cross retires immediately along with Mr Wallis.
``The directors themselves decided to stay or go," Mr Willcox said. ``The board as a whole accepts that its accountable to its shareholders, customers and employees for the performance of the company."
The changes could not stem another slide in AMP's share price, which dropped as low as $7.64 before finishing 19c lower at $7.92. Barely six months ago, the shares were trading at more than $14, but even takeover talk has failed to stem the retreat as the market anticipates more bad news from the UK operations.
Last year was a ``tough and disappointing year for AMP and its shareholders", Mr Willcox said, adding ``we recognise that we were not as well prepared for the storm as we could have been".
Search firm Spencer Stuart is looking for three board replacements, suggesting a departure from the blue-blood appointees for which AMP is famous.
Remaining on the board are managing director Andrew Mohl and Henderson boss Roger Yates. Non-executives Richard Grellman and Lord Killearn will stay on ``to provide continuity".
Mr Willcox flagged the end of generous retirement benefits to directors, providing a long-awaited and much-lauded precedent for other companies to abandon such schemes. Benefits to all directors will be disclosed in the accounts today, though Ms Cross is not part of the retirement scheme.
Corporate governance experts say director retirement benefits are inappropriate because directors generally have already benefited from generous superannuation schemes in their normal full-time employment. Mr Willcox said retirement benefits also ``rewarded longevity".
The Australian Shareholders Association's Michael Perry said he was ``appalled" by the $1.5 million payment to Mr Wallis but it was ``not before time" that AMP had abandoned retirement benefit schemes.
On Mr Batchelor, Mr Perry said he should get ``the bare minimum". ``I would be pressing them to be taking an extremely hard line [on the payout]."
Mr Batchelor yesterday said: ``All I can say is that I have a written contract with the company that sets out my entitlements."
In other changes, directors' terms will be no more than nine years, unless they are annually re-elected by shareholders.
Yesterday's events were a case of history repeating itself. In April 2000, chairman Ian Burgess and four other directors resigned in the wake of the disastrous GIO acquisition.
Mr Willcox said the board had decided to announce the changes yesterday because it did not want to distract from the financial accounts to be released today.
© 2003 Sydney Morning Herald
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