Ross Greenwood speaks to Former NSW Premier and current Deputy Leader of the Finance Sector Union Nathan Rees after shareholders grill the AMP (ASX:AMP) board at the Annual General Meeting.
Introduction: Furious shareholders launch attack
Ross Greenwood: A day that set just a little record and that was in the AMP annual meeting today when 61% of shareholders voted against that company’s remuneration report, the highest no vote to a company’s pay deal that’s ever been seen certainly for a company that size. In fact, today, as you are well aware, have this particular meeting there were two directors who stood down. Now, those two directors it would appear have heard the call from shareholders, in other words, had they stood today there was an all likelihood that they would have been voted off the board. They jumped before they could be pushed.
Today, the other director Andrew Harmos, who is up for reelection at the AMP, he retained his seat. However, there was a significant 37.6% vote against him as well. Now, just to bring you into light with what happens now in terms of the AMP. Well, clearly there is still all of the class actions at go. There are two of those that are now in the courts against the AMP alledging it misinformed shareholders over many years and as a result, there are potentially hundreds of millions of dollars in payments out if they are successful. They could be the largest class actions Australia has ever seen.
The other thing also is it’s going to then answer the claims that will come from the Australian Securities and Investment Commission and also for any charges that may arise as a result of the Royal Commission in the misconduct in the banking supper annuation and financial services. Today was the day where the investors, the shareholders got their chance finally to talk to the board, to talk to the management to vent their splains. Now, the interesting side is, if you think about this the AMP has lost it’s chairman Catherine Brenner replaced by Mike Wilkins. Its chief executive who for the time being is also Mike Wilkins, its chief legal counsel Brian Salter, who is likely to sue the AMP for the AMP appears to want to throw him under the bus for having effectively passed off a report to ASIC as being independent when it appears it was not.
Then you got the three directors who have resigned, one of which Patty Akopiantz will stay there until the end of this year. I was at the AMP meeting today, the annual general meeting in Melbourne. This just how a few of those conversations went with shareholders as we walked into that meeting.
What are you hoping to hear? What are you expecting to hear?
Interviewee 1: Well, I wish to hear them apologize for actually robbing their own customers and giving bad advice and taking insensitive bonuses to be paid for the winger. I’m very disappointed with the Ethics or lack of ethics of directors.
Ross Greenwood: What you’ve heard from the AMP out of the Royal Commission, surprise shock what’s your reaction?
Interviewee 2: Well, I think that management has a lot to answer for and I think corporate Australia is really like a boys club and I think ASIC and all those people are useless.
Ross Greenwood: But the company that you’ve worked for 27 years, Australias oldest largest life insurance company.
Interviewee 2: It’s lost its trust now. It’s lost its trust, unfortunately. It’s been a great company, I’ve loved working for the AMP but going to take a long time to get their trust back again.
Ross Greenwood: Rob, you’re a shareholder in AMP. Why did you come here today? What do you want to hear?
Rob: I’d like to hear how change and about the culture. I look back over the years since it was demutualized and I think, my goodness me I’m a cattleman and I wonder and I wonder may the benefit of hindsight that the stained will actually be worth. At one point 6 million square kilometers of financially 5 million petacattle, all gone to pay for the mistakes that have been made all the way down to demutualization.
Ross Greenwood: The shareholders here, what are they going to be telling the board here today either?
Rob: How to smarten up, how to get confidence and trust back. There’s a whole host of stuff. Far too long to list and for a company like this there shouldn’t even be a list.
Ross Greenwood: Now, Rob there is now a cattle farmer, a shareholder in the AMP and he came from Sydney to Melbourne to get to that annual meeting. Not necessarily a big shareholder but with the normal cockies charm he said, “Well, listen if we’re out in the bush, we generally pay for the things that we get on the farm. We don’t provide services for nothing.” That’s, of course what the AMP is accused of having done in the royal commission.
Now, there were all sorts of interesting people shareholders and others for the meeting. Well, the most interesting I discovered today is the former New South Wales Premier, Nathan Rees. Now the reason why Nathan Rees was at the AMP’s shareholders meeting today in Melbourne is not only because he personally is a shareholder in the AMP but also because of his role now as the deputy leader of the Finance Sector Union. He’s online right now. Many thanks for your time Nathan.
Interview with: Nathan Rees, Deputy Leader, Finance Sector Union
Nathan Rees: Good Ross, how are you doing?
Ross Greenwood: Good thank you. You were there on a personal but also in a professional capacity. Just explain why you turned up to that meeting today.
Nathan Rees: Well, look our members, our union looks after those members who work for AMP and other banking institutions across Australia and finance sector generally. The Royal Commission has been a serious blow to morale for our members. Our members are the people that you deal with when you go into a bank, the people that you deal with over the phones to get your insurance sorted and so on and so forth. They come to work each day trying to do the right thing by the customer, trying to do the right thing by their employee and the reputation of our employee and the big banks has been trashed in recent weeks and our members have been doing it tough and that’s not appropriate, it hasn’t been them that has been making the decisions that have led to toxic cultures and poor practice.
Ross Greenwood: Okay, let’s just pick up a little here. This is the executive of the interim executive chairman of the AMP, Mike Wilkins today. The first of what was many apologies. Just have a listen to this.
Mike Wilkins: It’s only right that I begin by reiterating and reaffirming our unreserved apology. We are truly sorry. The issues highlighted in our advice business are unacceptable. We let you down, we’ve let our customers down and we’ve let the wider community down. We understand that you won’t change and we understand that you want answers.
Ross Greenwood: Nathan Rees I mean those apologies came thick and first though understandable but are they sufficient to change the culture, to change the way in which the AMP has behaved. To make certain in fact that 169 year old company has got decades and decades to run yet.
Nathan Rees: No, they’re not sufficient. It’s too little too late and Mr. Wilkin’s problem is he’s simply not believed. Today, he went through an exercise which was basically putting on a brave face through a difficult AGM. He refused to allow questions to be asked of the directors individually even though half of them have had to resign. There’s a lack of accountability here that is alarming for mums and dads who are shareholders in this business and their first strike was totally justified.
Ross Greenwood: That being the case obviously you’re there also as I said in a personal capacity being a shareholder in the AMP I mean is it a company that you have confidence in going forward given what you’ve heard today?
Nathan Rees: Well, I think the profile in the pudding, there was one gentleman who asked a question today, it was a clever question, he said, “You’ve committed to being compliant,” he said, “We want you to be ethical.” I think that nails it. There is a distinction between the mums and dads investors and people like myself and some of the large institutional investors. We want the AMP to have a future going forward 20, 50, 100 years but it won’t do that unless it rebuilds trust and rebuilds its reputation and that has to have had its core ethical practice.
Ross Greenwood: Okay, well you have been the premier of New South Wales, you know what its like to run what can sometimes be desperate group of people and a very large group of people when you include the public service as well, do you believe it is easy for an organization as large as the AMP to change its culture?
Nathan Rees: They have no choice. The notion that half the board is sitting there today and they argue that we know instability on the board. Stability for what? Continuity of the poor practice and the poor culture of the past, it’s a rubbish excuse. There’s no shortage of good directors out there that could reach out the future of AMP and frankly those people who have been here to date don’t deserve to be there end of the future.
Ross Greenwood: Do you think that there is a boys and girls club on director’s seats in Australia?
Nathan Rees: I think there is and this is hidden from the broader community. Most people don’t have any idea what goes on at the lofty hearts, the boardrooms across Australia’s top 200 and beyond companies. People assume that they will run well intention people but the dotted lines that run between directors across the boards in Australia is deeply concerning. There is a club, you see it when they appoint auditors, you see it when they appoint people to derive so called independent advice. The dots are always there. There needs to be greater independence.
The key feeling today out of the AGM for mums and dads investors was a desire for greater transparency. I wanted to know, hang on how the hell was David Murray appointed without any reference to us? People want greater transparency. They’re putting their heart on cash that they’ve spent tens of decades in some cases tens of years earning and putting aside for their families future. They want some transparency around how decisions are made.
Ross Greenwood: I’ll tell you what, good to have you on the program Nathan Rees who is not only the deputy leader at the Finance Sector Union but also the former Premier of New South Wales today at that meeting of the AMP and Nathan I appreciate your time this evening.
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