AMP CEO Francesco De Ferrari

As far as timing goes, this one was a doozy.

On the same day AMP revealed FY19 results headlined by a $2.5 billion loss for shareholders and the exit of 440 advisers in the period, it announced an increase in the short-term incentive (STI) opportunity for its CEO, Francesco De Ferrari, from 120 per cent of base salary to 200 per cent.

While AMP had an underlying profit of $464 million in FY19, down from $680 million in FY18, impairments taken “to address legacy issues and position AMP for the future” cost the company $2.35 billion after tax, according to a statement.

As expected, the board will not declare a final dividend in FY19.

Wealth management loomed heavily over AMP’s morning results call. De Ferrari touted significant progress towards a “compliant, professional and more productive” advice network, yet the raw results were stark.

Operating earnings for advice in Australia decreased nearly 50 per cent from $363 million in FY18 to $182 million in FY19. Wealth management suffered net outflows of $6.3 billion in the period with $3.9 billion being attributable to lost customers and decreased new business

The turnaround in wealth management would take time, he said on the call. “We’re only six months into what is a multi-year strategy.”

De Ferrari was reluctant to address the STI bonus increase the AMP board had awarded him and the poorly timed release of the news.

“Our bonuses are discretionary,” he said. “I suppose if I don’t perform, I don’t get paid.”

De Ferrari’s received a base salary of $2.2 million in his first year at AMP and was in line to reap more than double that if he could turn the provider’s fortune around and increase its share price to $5.25. The share price hasn’t broached the $3.00 mark since his ascension and remained steady at around $1.75 after the announcement.

When it was pointed out that he wasn’t compelled to accept the bonus hike, the CEO said he had nothing further to add.

He also wouldn’t be drawn into commenting on possible legal action from advisers aggrieved by AMP’s decision to cut valuations on its controversial buyer-of-last-resort contracts from a multiple of 4.0x down to 2.5x.

“We have not received any legal action,” he said. “We believe we were in our legal rights to reset the terms.”

De Ferrari put AMP’s advice issues into broader context, saying wider disruption was playing out in the industry as a whole. “It leaves me worried about the future affordability of financial advice,” he said. “This is a big social problem we need to face into.”