AMP's David Murray

AMP chair David Murray has offered his resignation to accompany the demotion of AMP Capital CEO Boe Pahari, citing unrest from the group’s major shareholders as the reason behind the move.

Shortly after 8am Monday morning a missive went out from AMP announcing that Murray had resigned and was being replaced as chair by audit and risk specialist Debra Hazelton, while Pahari was relegated to a divisional leadership role in AMP Capital’s infrastructure equity business.

Former Treasury secretary John Fraser also resigned from the board of AMP and AMP Capital.

Murray admitted that while he still believed Pahari was “penalised accordingly” for misconduct in 2017 and deserved to be appointed to the top job at AMP Capital, the weight of shareholder discomfort took its toll.

“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,” Murray stated.

One of AMP’s biggest shareholders, contrarian investor Allan Gray, has been vocal about the need for cultural accountability at the group in light of the Pahari appointment and the abrupt resignation of AMP Australia CEO Alex Wade amid further accusations of misconduct.

This morning Allan Gray portfolio manager Simon Mawhinney applauded the move, telling Professional Planner the change was needed to create “a safe workplace” and sound culture.

“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,” Mawhinney told Professional Planner.

After last week’s uncomfortable H1 results call – where AMP CEO Francesco De Ferrari pleaded with journalists to ask about something other than culture – Mawhinney said the groups’ ability to deliver cultural change will be “crucial” to its long-term success.

Another major shareholder, Vanguard, stressed the importance of corporate governance when asked about AMP.

“Whilst we aren’t commenting on AMP specifically, we certainly take any matters that relate to human capital management seriously,” a representative said.

Tenuous social license

Less than 24 hours before the AMP announcements, Conexus Financial CEO and publisher of Professional Planner, Colin Tate, released an editorial calling out AMP’s “cultural cancer” and questioning whether the $6.2 billion company still has a “social license to operate”.

While much has been written about shareholder outrage, Tate said, now is the time for “acta non verba” (action, not words).