In 2019, AMP committed to a significant transformation of its business, setting out a new strategy as well as changes to its operating model. The leaders and wider employee base took on the challenge of reshaping the business, including managing the complex separation of AMP’s life insurance business and addressing the long-term legacy issues in financial advice and superannuation. This had to be conducted in an environment of rapid regulatory change.
Our CEO Francesco De Ferrari led the development of the new strategy and implemented required changes in the business in his first full year with the company. The CEO has reshaped and streamlined his leadership team, articulated a new corporate purpose, and established the new operating model. The board has established systems of oversight to track its progress of the strategy.
Following the challenges the company faced in 2018, and associated loss of shareholder value, our senior executives understood and accepted the board’s decision not to award short-term incentive payments for that year.
For 2019, the board has been cognisant that the renegotiation of the AMP Life sale, the new capital issuance, and ongoing complexity, again adversely affected the company’s share price. Accordingly, in considering the 2019 short-term incentives the board has sought to balance the need to exercise some restraint to reflect our shareholders’ experience, but at the same time be able to attract and retain the right people to work through the complexities in the business.
Improving the conduct and culture within the business forms a core element of AMP’s transformation. The board seeks to set the tone by requiring management to address legacy issues by establishing robust processes around risk management, governance, reporting and people systems.
Together, these systems are intended to build a culture which reflects the company purpose and its underlying principles, with its focus on meeting our customers’ needs and helping them to realise their broader ambitions in life.
Important steps have also been taken in articulating expected behaviours and embedding them within our performance management, remuneration and employee recognition systems. These behaviours are reinforced by our employee conduct management policy and guidelines.
A major investment to enhance our risk management, internal controls and governance was outlined to shareholders in 2018. This has included putting in place new mechanisms to identify risks, ensure they are properly managed and reported, and reinforce necessary practices within the business.
The board has been deliberate in ensuring conduct and culture of the organisation, including risk outcomes, are taken into account in remuneration outcomes. As AMP continues its transformation, the board will continue to exercise discretion to ensure there are remuneration consequences applied where warranted.
The board’s role is to ensure remuneration outcomes have appropriately considered financial returns to shareholders while balancing longer-term non-financial measures such as delivery against strategic priorities, risk management (including people risks), customer outcomes, individual behaviours and culture.
The company’s remuneration approach recognises areas of strong performance where teams and individuals have delivered and outperformed against their targets. The board is aware of the challenges implicit in the transformation and delivery of the strategic plan and that this is dependent on attracting and retaining skilled people.
The board awarded 2019 outcomes for the CEO and executives taking into account the need to appropriately motivate and retain executives while ensuring alignment with stakeholder outcomes and exercising restraint. 2019 STI outcomes ranged between 0% and 63% of maximum opportunity, illustrating differentiation for factors such as business unit and individual performance including risk management, conduct and behaviours.
For 2019, the Remuneration Committee refreshed the group incentive structures to support the new strategy through:
The priorities for 2020 include:
The board appreciates the feedback we have received from our shareholders and clients and will continue to engage as the company delivers on its transformation strategy.
The following table shows the remuneration paid to AMP Limited Non-executive Directors for 2019.
The following table shows the remuneration paid to the AMP executive team for 2019.