Give reasons why financial planners have routinely recommended that investors hold dividend-paying stocks, especially in bear markets such as the period 2001-2002

23 July 2002 an article entitled “Investors Appreciate Dividends Again, See Them as Safer Bets in Bear Market,” appeared on Associated Press Newswire. The article described two reasons why financial planners have routinely recommended that investors hold dividend-paying stocks, especially in bear markets such as the period 2001-2002: First, retired investors use quarterly dividends to augment their income find dividends to be more attractive during bear markets. Second, investors search for a bird in the hand, which dividends represent. In this respect, dividends provide investors with the ability to be patient, and wait out the market decline. The article quotes Steve Wetzel, a professor of finance at New York University’s School of Continuing Education and a certified financial planner, and Arnie Kaufman, editor of Standard & Poor’s newsletter The Outlook. Discuss both reasons mentioned above, in the context of this week’s assigned readings.

Discuss the merits of the following statement:  Inside directors should constitute the majority of a corporate board, because insiders have superior understanding of the firm’s business operations.

Discuss the merits of the following statement:  Inside directors should constitute the majority of a corporate board, because insiders have superior understanding of the firm’s business operations.  What evidence can you cite in support or in opposition to this assertion?

Can the paper be extended? Provide suggestions; how about future work?

Description

Please create a peer review for the attached paper. ************ Please do not outsource this assignment, and it will be run through Turnitin*********** Paper Review – Topic – ThinAV – Truly Lightweight Mobile Cloud-based (see attachment) Grading Elements for Paper Review Summary of the paper’s problem statement, research question, and key findings Critique of paper’s dataset and sampling techniques Critique of paper’s explanation of results, analysis, and ground truth Critique of paper’s generalizability of results/models and research contributions Summary of paper’s research limitations Summary of paper’s research gap(s) Summary of paper’s mechanics (spellings, grammar, storyboard, coherence) Can the paper be extended? Provide suggestions; how about future work? Can the paper be improved? Provide suggestions

critically discuss main causes of exchange rate volatility in the foreign exchange markets.

With close reference to recent movements in UK Pound/US Dollar spot exchange rate, critically discuss main causes of exchange rate volatility in the foreign exchange markets. (Use relevant financial data and charts to illustrate your answer).

More or less 300 words for this question.

Notes:

The question requires you to display the knowledge and understanding of:

✓ movements in spot exchange rate and exchange rate volatility in the foreign exchange markets generally.

Specifically, this question requires you to:

1. a) critically discuss the main causes of exchange rate volatility in the foreign exchange markets.
2. b) make close reference to recent movements in the £/$ spot exchange rates (and not references to any other exchange rates) in your critical explanations of exchange rate volatility.

• Note that you are expected to use of relevant financial data and charts to illustrate your answer in order to earn good marks.

Criteria:

Knowledge

The work should have a substantial knowledge of relevant material, showing a clear grasp of themes, questions and issues therein.

Analysis

The analysis should be comprehensive, clear and orderly.

Argument and Structure

The argument should be well supported, focused, clear and logically structured.

Critical Evaluation

The work should contain distinctive or independent thinking; and formulate an independent position in relation to theory and/or practice.

Reference to literature

Critical appraisal of up-to-date and/or appropriate literature. Recognition of different perspectives. Very good use of a wide range of sophisticated source material.

critically assess the” efficiency” of London Stock Exchange (LSE) market in recent years. Explain the implications of your results.

With close reference to the efficient market hypothesis (EMH) literature and by using relevant empirical evidence of data and graphical analysis of stock prices and daily stock returns, for a selected 90-day period, critically assess the” efficiency” of London Stock Exchange (LSE) market in recent years. Explain the implications of your results. (Please see Guidance and Preparation Note below for further information).

More or less around 600 words for this question.

Notes:

The question requires you to: perform empirical tests of financial markets efficiency, specifically, the London Stock exchange market in recent year.

Note that an empirical test would require you:

✓ briefly review key academic literature on EMH and the London Stock Exchange market, and

✓ carry out your own financial data analysis based on graphical analysis of movements in daily share/stock prices of ONE FTSE listed company of your own choice OR FTSE all-share price index.

✓ to gather data (stock prices and daily stock returns),

✓ undergo data analysis and graphical analysis and present your data.

• Note that the requested time span of the data is 90 days (a period of 3 months).
• Note that in the presentation of your results, you have to indicate the implications of

your results for financial market efficiency.

The empirical research for market efficiency investigates if there is past available information

which can help to predict future returns profitably.

✓ We have to employ statistical and econometrics methods to test the independence of prices data and see whether the stock prices is predictable or not by exploring serial dependence of stock returns.

✓ Efficient Market Hypothesis (EMH) implies that the future price of a stock is unpredictable with respect to currently available information.

✓ EMH assumes that share price adjust rapidly for any new information consequently, the current prices fully reflect all available information’s and should follow a random walk process, which means sequential stock price changes (returns) are independently and identically distributed (IID).

You have:

• Weak form of efficient market hypotheses.
• Semi-strong form efficient market hypotheses.
• Strong form efficient market hypotheses.

The Random Walk Theory:

✓ The Random Walk Model (RWM) is the model which assumes that subsequent price changes are sovereign and homogeneously distributed random variables and changes in future prices cannot be forecasted through historical price changes and movements.

✓ The Random Walk Model is generally used to testify the weak-form Efficient Market Hypothesis. Parametric and non-parametric methods can be applied to test the random walk hypothesis (RWH).

✓ According to the random walk theory we are unable to predict the future stock price by analysing historical information.

✓ Abnormal return is generally not possible to achieve on a continuous basis.

✓ Therefore, technical analysis does not work in that particular scenario.

✓ You can test the weak-form efficient market hypothesis of a stock market by hypothesising

normal distribution and random walk of the return series.

Your focus:

The specific objectives of the study are:

✓ To study the randomness of stock market.

✓ To test the weak form of efficiency in stock market.

✓ To test whether the equity markets are weak form efficient.

✓ To test the weak form efficiency of the different sectoral indices of LSE.

Empirical Test:

✓ Due to time constraints and our levels of econometric awareness, It would be appropriate if we limit ourselves to the application of 2 or 3 of the methods indicated here. The following simple statistical and econometric methods are therefore recommended:

1. Unit root test (Stationary test)
2. Variance ratio test
3. Jarque-Bera (Normality test)

We focus our attention on these three statistical and econometrics tools.

Please get your stock market data ready in an Excel file.

What Software?

✓ Excel (NumXL) is my suggested/recommended software.

Unit Root Test (ADF and PP):

• Unit root tests are among widely statistical tests used to examine the randomness of the return series.
• Basically, the test is done to investigate the presence of a unit root, that is, non-stationary of the return series.
• Unit root test can be applied for testing the efficiency of markets.
• An efficient market needs to be in the random form because market efficiency demands randomness in the daily returns of commodities and unit root test investigates whether the time series is non-stationary or not.
• As the efficient market hypothesis propounds that release of new information are instantaneously reflected in the stock prices, so with these information future stock prices cannot be predicted.
• As stock prices cannot be predicted according to efficient market hypothesis so the daily return series should be non-stationary.
• As a random walk has a unit root, so, if the variable in question follows a random walk, it is therefore not stationary. Therefore testing to determine stationarity of the variable, is said to be testing for a ‘unit root’.
• If the test statistic is more negative or smaller than the critical value (Mackinnon tabulated value) then the null hypotheses will be rejected which means data is not non-stationary.
• There are various types of unit root tests, only two types of unit root tests namely: (i) the Augmented Dickey-Fuller (ADF) and (ii) the Phillips-Perron Test (PP) are usually employed to investigate the randomness behaviour of the stock market return series.
• Efficiency in the weak-form requires that the return series are non-stationary at level, hence the use of ADF unit root test to know if the stock market all share index for the period is stationary at level or not.
• The series containing unit root is said to be non-stationary, that is, behaving in random fashion which supports the weak form efficiency hypothesis.
• Market efficiency demands randomness (i.e. non stationary) in behaviours of price of the security.
• So, if the test results show the return series are stationary then the market cannot be regarded as efficient. Random walk of a time series requires the time series to contain a unit root. No unit root implies stationary and returns/prices not random.
• If stock market return series of does not contain unit root, absence of unit root point towards the stationarity in the data, hence predictability is possible in calculating future returns. So, price/returns do not follow random walk.
• If a market is non-stationary, then it is unpredictable or cannot be forecasted. In a stationary situation, a market can be predicated beforehand and there is a possibility of achieving arbitrage profit.
• The daily returns have no unit root, thus implying that the null hypothesis was rejected, meaning that index’s daily return series was stationary, i.e., not random.
• The non-stationarity of data at level series indicates that the behaviour of stock market all share indexes conforms to and is consistent with the weak form efficiency of the market, which states that financial time series behave as random walks.
• Both ADF and PP tests use the following null and alternative hypotheses in unit root tests:

𝐻0 = The series does contain a unit root (non-stationary) – there is random walk (returns/prices are random).

𝐻1 = The series does not contain a unit root (stationary) – there is no random walk (returns/prices are not random).

• According to the ADF test, null hypothesis assume that daily return series has a unit root. A series having unit root means it is non-stationary in nature.
• If the return series are stationary, the series can be modelled and hence predictions of future movements are possible, implying that the stock market is not efficient in the weak form and security prices do not reflect all past information and it is possible to earn super-normal gain by utilising past information as share prices do not adjust instantaneously in response to any new information release in the market.

Notes on Interpreting the Unit Root Test:

✓ For daily return series, if calculated ADF test statistic negatively go above from the MacKinnon tabulated value and p-value is also smaller than alpha (i.e. 0.05), it leads to the rejection of null hypothesis.

✓ If the ADF test statistic for negatively exceeds the MacKinnon tabulated value and the p-value is well below 0.05 (5% significance level), reject null hypothesis that daily return series contains unit root, implying that the return series are stationary and does not exhibit randomness in nature.

✓ Analysing the data from a period, with almost zero probabilities indicates that, it rejects the null hypothesis of random walk.

✓ Watch the p-value. In general, a p-value of less than 5% means you can reject the null hypothesis that there is a unit root.

• If t* > ADF crtitical value, ==> accept null hypothesis, i.e., unit root exists.. mean data is non stationary
• If t* < ADF critical value, ==> reject null hypothesis, i.e., unit root does not exist. mean data is stationary

Variance Ratio Test – Heteroskedasticity assumption:

✓ Variance ratio test has been employed to examine the predictability of asset returns proposed by Lo and Mackinlay (1988).

✓ The single variance ratio test, proposed by Lo and Mackinlay (1988), demonstrates that the variance ratio test.

✓ The test uses the fact that if a series of stock prices follows a random walk, then the increments are said to be serially uncorrelated and that the variance of those increments should increase linearly in the sampling intervals.

✓ The test is based on the assumption that the variance of increments in the random walk series is linear in the sample interval.

✓ Specifically, if a series follows a random walk process, the variance of its q-differences would be q times the variance of its first differences.

✓ According to this test, variance of difference of time series has compared over dissimilar intervals.

✓ In a random walk of a time series, variance of p periods must be p times the variance of single period difference.

✓ Variance ratio test statistics are used to examine the random walk behaviour of time series under homoskedastic and hetroskedastic assumption with the help of asymptotic distributional.

✓ The variance ratio test assesses the null hypothesis that a univariate time series is a random process.

The variance ratio test hypothesis are stated thus:

H0: Data series follows a random walk.

H1: Data series does NOT follow a random walk.

Notes on the Interpretations of Variance Ratio Tests – Heteroskedasticity assumption:

✓ Watch the p-value.

✓ If the P-value for the joint test is below alpha (0.05) and therefore the test is statistically significant at 5% , which suggests the rejection of the null hypothesis of the random walk in daily return series.

✓ If the p-value of less than 0.05, reject the null hypothesis and concluded that daily return series do not follow random walk.

✓ If the p-values for a share index is greater than the significant level of 5%, accept the null hypothesis to conclude that the stock exchange index is a random walk across all sample periods.

✓ If variance ratio is not equal to one then study has to reject the null hypothesis of random walk behaviour.

Jarque-Bera Normality Test:

✓ Efficiency in the stock market requires that the return series are normally distributed; hence, the normality test for normal distribution of the data.

✓ Jarque-Bera normality test statistic has been used to examine whether the stock returns follow a normal distribution.

✓ JB test is a statistic for testing whether or not a series is normally distributed. It measures the difference of the skewness and kurtosis of a series with those from a normal distribution.

✓ JB test measures the degree of deviation in the kurtosis and skewness of the distribution of daily returns with the kurtosis and skewness of a normal distribution.

✓ For a normally distributed series, skewness = 0 and kurtosis = 3.

✓ Therefore, the JB test of normality is a test joint hypothesis that skewness and kurtosis are 0 and 3 respectively. If JB > χ2 (2) where 2 is the degree of freedom, then the null hypothesis is rejected.

✓ This is when the p-value is lower than the level of significance, 1% in this case.

✓ Under the null hypothesis of normality in distribution, the JB is equal to 0.

The Jarque-Bera test hypothesis are stated thus:

H0: Data is normally distributed.

H1: Data is NOT normal distributed.

✓ If Jarque-Bera test firmly rejects normality, this implies that the stock exchange daily returns series is not normally distributed.

Notes on Interpretation of JB Normality Test:

✓ If the p-value of JB test is less than the significance level of 0.01 (1%), JB test rejected the null hypothesis (that stock returns are not originated randomly), hence, the stock market index of daily return series did not follow a normal distribution; thus suggesting that the returns of the stock exchange do not follow the theory of random walk.

✓ If Jarque-Bera test statistics is less than 0.05 (5%) significant level, it indicates the non-normality in the distributions.

✓ The Jarque-Bera with their corresponding probabilities revealed that daily is not normally distributed with a probability of 0.001901 but weekly and monthly are normally distributed with 0.707594 and 0.120037 respectively at 5 percent.

✓ Interpretations: A tiny p-value and a large test statistics value from this test means that you can reject the null hypothesis that the data is normally distributed.

✓ This indicates that the test statistic is 2209.871, with a p-value of 0.000. We would reject the null hypothesis that the data is normally distributed in this circumstance. There is enough evidence to conclude that the data in this scenario is not normally distributed.

✓ This indicates that the test statistic is 0.057628, with a p-value of 0.971597. We would not be able to reject the null hypothesis that the data is normally distributed in this scenario. It is evident here that the data in this scenario is normally distributed.

Critically explain how Quantitative Easing (QE) by the Bank of England in recent years, via open market operations in the money markets, has impacted bond and stock, prices including housing prices in the capital markets in the United Kingdom.

1.b. Critically explain how Quantitative Easing (QE) by the Bank of England in recent years, via open market operations in the money markets, has impacted bond and stock, prices including housing prices in the capital markets in the United Kingdom. (Please include recent financial charts and tables to support your analysis)

More or less 600 words for this question.

Notes:

The question requires you to: explain critically, the impact of the Bank of England’s Quantitative Easing on prices of bonds and stocks and housing within the United Kingdom’s financial markets (capital markets and money markets).

✓ Please note that the requirement of the question is about Quantitative Easing by the Bank of England and in the United Kingdom.

✓ Please note that the question is about the Quantitative Easing in the Bank of England and with the UK’s financial markets.

✓ Please avoid discussions outside the Bank of England and the United Kingdom’s money and capital markets.

✓ Please note that the question requests you to illustrate your analysis with financial charts and tables in order to earn good marks.

Quantitative easing is an unconventional monetary policy strategy in which a central bank purchases government securities or other securities from the market in order to lower interest rates and increase the money supply.

Quantitative easing is a monetary policy action whereby a central bank purchases predetermined amounts of government bonds or other financial assets in order to inject money into the economy to expand economic activity.

In the words of the Bank of England, quantitative easing is when the Bank buys bonds to lower the interest rates on savings and loans. That helps the Bank of England to keep inflation low and stable.

➢ It increases the money supply by flooding financial institutions with capital in an effort to promote

increased lending and liquidity.

➢ It is considered when short-term interest rates are at or approaching zero, and does not involve the

printing of new banknotes.

It involves Central Bank increasing the money supply, using electronically created funds to buy government bonds or other securities.

These are not purchased directly from the government but from other parties such as banks, insurance companies and pension funds in the secondary market.

QE therefore provides these financial companies with extra money.

The Central Bank (BOE) expects this to boost the economy via a variety of different channels:

Aims of Quantitative Easing:

➢ Increase bank liquidity:

✓ when commercial banks sell bonds to the Central Bank, they have an increase in their cash reserves.

✓ this increase in cash deposits should, in theory, encourage commercial banks to lend to businesses.

➢ Increase in market price of bond:

✓ this happens through the purchases of government bonds; it leads to a reduction in long term interest

rates.

✓ lower interest rates should encourage greater economic activity in the economy.

How Quantitative Easing Works:

• QE essentially involves a central bank creating new money and using it to buy existing financial assets, usually government bonds (debt issued by the government).
• The central bank creates money electronically.
• This is similar effect to printing money, except they are increasing bank reserves which don’t need to be printed in the form of cash.
• The Central Bank uses these extra reserves to buy various securities.
• These include government bond and corporate bonds.
• This extra demand for bonds drives up the price, thereby lowering the bonds’ yield (or rate of interest you receive on the bond).
• The yield on government bonds is a key benchmark for other interest rates in the economy.
• As a result, lowering the government bond yield lowers interest rates across the economy.
• This incentivizes businesses to invest and take on more risks, as well as consumers to spend more, boosting economic growth.

So, quantitative easing is about money printing?

• In a roundabout way, yes.
• The central bank injects new money into the economy to spur growth.
• However, it is important to note that the central bank is making its purchases on the secondary market and not directly providing the money to the Government.

Buying these securities achieves two things:

Banks sell assets (bonds) for cash.

➢ Therefore, banks see an increase in their liquidity (cash reserves).

➢ In theory, the bank will then be more willing to lend to customers.

➢ This lending will be important for increasing investment and consumer spending.

Buying assets reduces their interest rate.

➢ Lower interest rates on these securities may also encourage banks to lend rather than keep securities

which are paying low interest.

➢ Higher lending should help improve economic growth.

Channels through which QE Works:

1. Increases asset in prices, provides a ‘wealth effect’ to firms and consumers as their assets increase in value, this potentially leads them to spend more
2. Reduces borrowing costs by driving down interest rates on gilts (increased demand for gilts, pushes up their price, which reduces their yield, or interest, on them)

iii. As interest rates on gilts fall, financial institutions buy other assets like shares (which would increase

wealth) or corporate debt (which would reduce borrowing costs for companies); this is also known as the portfolio balancing channel

1. Increased lending from banks to companies and households (increasing incomes and spending in the economy).

Problems with the QE:

• Central Bank creating money out of thin air with very little additional assets to support.
• This could potentially lead to high inflationary pressures.
• Future borrowing by the banks/government via issues of bonds might be difficult in the future.
• There may have been many sellers of gilts but there may not be many willing buyers when the bank wants to sell its holdings.
• Significant adverse effect on savers and pensioners.

Quantitative Easing in Practice in the United Kingdom:

• QE is used to stimulate an economy near recession, that when there is successive fall in output (GDP), unemployment, rising inflation, and low level of banking sector lending.
• This was the situation in the UK during 2009 (still is the current problem).
• In the UK, to stimulate the economy, Bank of England electronically created £200 billion in 2009 via QE operations.
• The Bank of England uses the Money Market to buy back UK government assets, mainly low risk government bonds/gilts from the commercial banks, insurance companies, pension funds and other companies.
• The Bank of England calls this the asset purchase scheme.
• Note the purchase back mainly has involved the most risk free asset available –The GILTS.

✓ Gilts are bonds that are issued by the British government

✓ Gilts are fixed-interest loan securities issued by the UK government, generally considered low-risk investments.

✓ Gilts are the U.K. equivalent of U.S. Treasury securities, and the name originates from the original certificates, issued by the British government, which had gilded edges.

https://www.bankofengland.co.uk/monetary-policy/quantitative-easing

https://www.youtube.com/watch?v=J9wRq6C2fgo

explain in detail how each of the four (4) interventions you have chosen to implement will become part of the day-to-day organisational operations of AMP (ie. How do you make change ‘stick’?).

Refer to Question 3 and explain in detail how each of the four (4) interventions you have chosen to implement will become part of the day-to-day organisational operations of AMP (ie. How do you make change ‘stick’?). (10 marks – 1000 words)

Please type your response below

Case Study: AMP

Introduction

In August 2020, media headlines in Australia named and shamed AMP as a corporate bully and warned it is “a company that kills careers”. The vehicle for this reputational crisis is a culture of sexual harassment and sexual discrimination, which has dogged AMP for over 20 years and continues to do so in 2021.

The spotlight on AMP’s culture and leadership was red hot in 2020 after a public outcry by staff and shareholders on the appointment of Boe Pahari to the top job of CEO at AMP Capital (AMPC). In 2018, Pahari allegedly sexually harassed a former employee at AMPC, Julia Szlakowski, and was penalised by AMP with a 25 per cent reduction in his annual bonus, which amounted to $500,000 (Khadem, 2020). But despite that transgression, Pahari’s promotion was sanctioned by the AMP Board, which was intent on driving up profits, after the disastrous Royal Commission of 2018. (NB: The Royal Commission found AMP had misled the corporate regulator multiple times over the charging of customers for “no advice” (Gardner, 2018), and the company’s profit/dividends plummeted in 2019).

To staff and shareholders the issue around Pahari’s promotion was not money, but morality. Industry analysts savaged the company’s choice stating it was indicative of the way AMP operated: “The company went from being an inward looking mutual that existed for customers, to a profit-hungry beast focused on expanding globally” (Grieve & Knight, 2020). And according to Schmulow (2020) its focus on money over trust is central to the failures and scandals that have trashed its reputation and share price. Schultz (2020) argued that for AMP “cash is key” and its response to the outcry against Pahari revealed the board’s narrow focus. “They were managing the shareholder risk but not the rest of the risks … In their minds, it’s all in the dollars and cents,” said former executive director of the Australian Institute of Employment Rights, Lisa Heap (Schultz, 2020).

The problem is not just one of strategy, it is also AMP’s organisational culture. To understand AMP’s systemic cultural problems, Grieve and Knight (2020) provided some context. In 1998, the then CEO, George Trumbull told his top ten male executives at a lunch meeting, that a recent delegation of women executives had nominated sexual harassment and sexual discrimination as the biggest problems in AMP, and “five of the biggest offenders were seated at that table”. And in 2003, as his three-year reign as AMP chairman was drawing to an unceremonious end, a bitter Stan Wallis complained to close associates that “this company destroys people”.

Company Structure

Founded in 1849, AMP is a wealth management company with a growing retail banking business and an expanding international investment management business. It provides retail clients with financial advice and superannuation, retirement income

and banking and investment products. AMP also provides 1) corporate superannuation products and services for workplace super and self-managed superannuation funds (SMSFs); and 2) institutional clients with investment management services across a range of asset classes, both in Australia and globally.

A brief summary of AMP’s divisions is provided below:

AMP Wealth Management (AMPWM)

AMPWM assists clients to save for, and live well in, retirement. It facilitates this through extensive retail and workplace superannuation products, and self- managed superannuation funds services, as well as retirement income solutions and investments for individuals.

AMP Bank (AMPB)

AMPB provides clients with residential and investment property home loans, deposit and transaction accounts and SMSF products. It also provides loans to AMP-aligned financial adviser practices. AMPB clients have access to AMP Bank products via a variety of channels including digital and online, phone, through AMP financial advisers and home loan brokers.

AMP Capital (AMPC)

AMPC is the investment arm of the AMP Group of companies. As part of the AMP Group, it shares a heritage that spans almost 170 years. It has more than 250 investment professionals in 19 locations around the world (with a large presence in Australia) working collaboratively to share the latest insights and discover the best possible investment opportunities for its clients. AMPC’s strength in Australia and New Zealand has facilitated growth internationally, and today it operates in Dubai, China, Hong Kong, Singapore, India, Ireland, Japan, Luxembourg, the United Kingdom and the United States. Working with a network of global investment partners, AMPC leverages shared capabilities to provide greater access to new investment opportunities. It operates across all major asset classes, with a particular focus on real estate and infrastructure. Its asset class specialists, investment strategists and economists manage AUD$189.8 billion in funds under management across a range of single sector and diversified funds.

Background

The key players in this case study are as follows:

The controversies

Pahari

The most recent example of AMP’s poor behaviour centred around the case of former executive Julia Szlakowski, who in 2017 bought a sexual harassment complaint against Pahari who was then AMPC’s Head of Equity and Infrastructure. AMP hired employment law specialist Andrew Burns QC to oversee the matter in 2018, and he concluded Mr Pahari’s conduct constituted a “relatively modest breach” of the company’s code of conduct. The independence of this report was questioned by legal experts as AMP refused to provide key documents before releasing it publicly. Following the investigation, a confidential settlement was reached with Szlakowski (who then left the company) while Pahari was penalised $500,000.

Despite an acknowledgement of serious wrongdoing, in 2020 the AMP Board decided to promote Pahari to one of the company’s highest-paid and most strategically important positions as CEO of AMPC (Roddan, 2020a). His promotion signalled AMP’s single-eyed focus on future profits of the business and also recognition that Pahari had generated much of AMP’s fortunes. AMP Group CEO, Francesco De Ferrari, who had been appointed in late 2018, formulated a strategy to halt the deteriorating operations of AMP in response to the structural changes in the wealth management industry because of the decline in the financial advice and superannuation businesses (Roddan, 2020b). However, in the 9 months that followed his appointment, AMP continued to hemorrhage with AMP’s share price losing nearly 70% of its value in 2019 (Letts, 2019).

Pahari’s financial acumen paled against the public outrage at his promotion and some commentators labelled his appointment as ‘corporate kryptonite’ because he and the AMP Board neglected to pay attention to cultural change sweeping through corporate Australia in the wake of the #MeToo movement¹ (Hewett, 2020).

Media outlets were flooded with commentary from staff, shareholders, industry analysts, and other corporates calling for change while De Ferrari, AMP Group’s CEO, stayed in the background and was conspicuous by his silence on the issue. It was left to AMP Director, John Fraser, to justify Pahari’s promotion but his interview was universally hailed as one of the great train-wreck interviews of Australian corporate history. Fraser declared the AMP board had made a unanimous decision to promote Pahari because he had ‘‘made a lot of money for the company and its employees’’. The comments left corporate Australia aghast. ‘‘They handled it very badly, in talking about how valuable he was,’’ said one highly regarded chairman. ‘‘That’s a shocking message. It suggests there is a trade-off between doing the right thing and making

1 According to Gordon (2020), the #MeToo phrase was first coined in 2006 by Tarana Burke, an advocate for women in New York. Burke wanted a way to empower women who had endured sexual violence by letting them know that they were not alone—that other women had suffered the same experience they had. The phrase was reintroduced in 2017 by actress Alyssa Milano as a way to encourage women and men to share their sexual harassment stories across many different social media platforms, accompanied by the hashtag #MeToo.

money” (Maley, 2020). On August 24, 2020 both AMP chairman David Murray and fellow Board member John Fraser resigned. Despite the negative publicity Pahari has received over the past two months (which has been like no one else in corporate Australia), he survived the purge and obligingly returned to his previous and lesser role as Head of AMPC’s infrastructure equity business.

There was widespread astonishment in the industry that Murray and Fraser quit the AMP Board. However, a high-profile board member of AMP believes it was telling that the two directors that felt the most commercial pressure to deliver were the ones who departed. Murray’s failure to appreciate why he and the board made a mistake is, arguably, symptomatic of AMP’s management for at least two decades. Simon Mawhinney, managing director of asset manager Allan Gray, which holds almost 7 per cent of AMP, said Mr Pahari would be unable to carry out the role, to which he was promoted on July 1, and hit out at Mr Murray’s board for failing to come clean over the harassment allegations. “Given the continued lack of transparency from AMP, it is difficult to know whether AMP’s cultural and moral compass is on a sustainable footing,” Mr Mawhinney said (Roddan, 2020b).

Wade

Ironically, just weeks before Pahari’s demotion back to Infrastructure Equity and while he was still AMPC CEO, there were further explosive allegations made against the CEO of AMP Australia Alex Wade. Wade was the subject of several complaints regarding his conduct including sending explicit photos to female colleagues. A number of AMP staff have relayed complaints about Wade (both personally and through AMP’s whistleblower function) to AMP’s senior management.

Those allegations were taken to Francesco De Ferrari, AMP Group CEO and the AMP board. Pahari was extricated from a scheduled board meeting to join an emergency meeting with the rest of AMP’s global leadership team to discuss the matter. Following a further meeting between De Ferrari and Wade and AMP’s Head of People and Corporate Affairs Helen Livesey, Wade was given 24 hours to submit his resignation (Roddan, 2020d). ‘‘I arrived at my decision to resign from AMP in the interests of all parties,’’ a spokesman said on behalf of Wade in response to a lengthy list of questions. ‘‘My focus now is on a period of personal reflection and the relationships that are most important to me.’’

Despite several AMP sources confirming that multiple complaints had been made about Wade, and that AMP had previously discussed matters of conduct with Mr Wade, AMP elected not to answer any questions about the matter and associated issues. This lack of explanation about the departure of Wade, who only joined AMP in January 2019, left staff feeling frustrated.

Senior staff in internal AMP meetings have since refused to comment on employee questions, including one senior employee who told staff the situation was ‘‘like our last matter [Mr Pahari]; they’re sensitive issues’’ in response to questions (Roddan, 2020d).

This debacle has once again turned the spotlight on AMP’s handling of employee concerns.

For each of the four intervention categories of human process, human resource, technostructural and strategic, identify a specific targeted intervention that may address poor culture in AMP.

Interventions are deliberate actions that disturb the status quo, to help an organisation increase its effectiveness. For each of the four intervention categories of human process, human resource, technostructural and strategic, identify a specific targeted intervention that may address poor culture in AMP. Ensure you also specify the level of the change target and depth of intervention for each recommended intervention. (10 marks – 1000 words)

Please type your response below

Case Study: AMP

Introduction

In August 2020, media headlines in Australia named and shamed AMP as a corporate bully and warned it is “a company that kills careers”. The vehicle for this reputational crisis is a culture of sexual harassment and sexual discrimination, which has dogged AMP for over 20 years and continues to do so in 2021.

The spotlight on AMP’s culture and leadership was red hot in 2020 after a public outcry by staff and shareholders on the appointment of Boe Pahari to the top job of CEO at AMP Capital (AMPC). In 2018, Pahari allegedly sexually harassed a former employee at AMPC, Julia Szlakowski, and was penalised by AMP with a 25 per cent reduction in his annual bonus, which amounted to $500,000 (Khadem, 2020). But despite that transgression, Pahari’s promotion was sanctioned by the AMP Board, which was intent on driving up profits, after the disastrous Royal Commission of 2018. (NB: The Royal Commission found AMP had misled the corporate regulator multiple times over the charging of customers for “no advice” (Gardner, 2018), and the company’s profit/dividends plummeted in 2019).

To staff and shareholders the issue around Pahari’s promotion was not money, but morality. Industry analysts savaged the company’s choice stating it was indicative of the way AMP operated: “The company went from being an inward looking mutual that existed for customers, to a profit-hungry beast focused on expanding globally” (Grieve & Knight, 2020). And according to Schmulow (2020) its focus on money over trust is central to the failures and scandals that have trashed its reputation and share price. Schultz (2020) argued that for AMP “cash is key” and its response to the outcry against Pahari revealed the board’s narrow focus. “They were managing the shareholder risk but not the rest of the risks … In their minds, it’s all in the dollars and cents,” said former executive director of the Australian Institute of Employment Rights, Lisa Heap (Schultz, 2020).

The problem is not just one of strategy, it is also AMP’s organisational culture. To understand AMP’s systemic cultural problems, Grieve and Knight (2020) provided some context. In 1998, the then CEO, George Trumbull told his top ten male executives at a lunch meeting, that a recent delegation of women executives had nominated sexual harassment and sexual discrimination as the biggest problems in AMP, and “five of the biggest offenders were seated at that table”. And in 2003, as his three-year reign as AMP chairman was drawing to an unceremonious end, a bitter Stan Wallis complained to close associates that “this company destroys people”.

Company Structure

Founded in 1849, AMP is a wealth management company with a growing retail banking business and an expanding international investment management business. It provides retail clients with financial advice and superannuation, retirement income

and banking and investment products. AMP also provides 1) corporate superannuation products and services for workplace super and self-managed superannuation funds (SMSFs); and 2) institutional clients with investment management services across a range of asset classes, both in Australia and globally.

A brief summary of AMP’s divisions is provided below:

AMP Wealth Management (AMPWM)

AMPWM assists clients to save for, and live well in, retirement. It facilitates this through extensive retail and workplace superannuation products, and self- managed superannuation funds services, as well as retirement income solutions and investments for individuals.

AMP Bank (AMPB)

AMPB provides clients with residential and investment property home loans, deposit and transaction accounts and SMSF products. It also provides loans to AMP-aligned financial adviser practices. AMPB clients have access to AMP Bank products via a variety of channels including digital and online, phone, through AMP financial advisers and home loan brokers.

AMP Capital (AMPC)

AMPC is the investment arm of the AMP Group of companies. As part of the AMP Group, it shares a heritage that spans almost 170 years. It has more than 250 investment professionals in 19 locations around the world (with a large presence in Australia) working collaboratively to share the latest insights and discover the best possible investment opportunities for its clients. AMPC’s strength in Australia and New Zealand has facilitated growth internationally, and today it operates in Dubai, China, Hong Kong, Singapore, India, Ireland, Japan, Luxembourg, the United Kingdom and the United States. Working with a network of global investment partners, AMPC leverages shared capabilities to provide greater access to new investment opportunities. It operates across all major asset classes, with a particular focus on real estate and infrastructure. Its asset class specialists, investment strategists and economists manage AUD$189.8 billion in funds under management across a range of single sector and diversified funds.

explain what you believe to be the nature of the resistance existing within AMP.

Resistance to change occurs for many reasons. Using the information from the case, clearly explain what you believe to be the nature of the resistance existing within AMP. In addressing the resistance you have highlighted, apply three (3) techniques for overcoming resistance using case evidence to support your selection. (10 marks – 1000 words)

Please type your response below

Case Study: AMP

Introduction

In August 2020, media headlines in Australia named and shamed AMP as a corporate bully and warned it is “a company that kills careers”. The vehicle for this reputational crisis is a culture of sexual harassment and sexual discrimination, which has dogged AMP for over 20 years and continues to do so in 2021.

The spotlight on AMP’s culture and leadership was red hot in 2020 after a public outcry by staff and shareholders on the appointment of Boe Pahari to the top job of CEO at AMP Capital (AMPC). In 2018, Pahari allegedly sexually harassed a former employee at AMPC, Julia Szlakowski, and was penalised by AMP with a 25 per cent reduction in his annual bonus, which amounted to $500,000 (Khadem, 2020). But despite that transgression, Pahari’s promotion was sanctioned by the AMP Board, which was intent on driving up profits, after the disastrous Royal Commission of 2018. (NB: The Royal Commission found AMP had misled the corporate regulator multiple times over the charging of customers for “no advice” (Gardner, 2018), and the company’s profit/dividends plummeted in 2019).

To staff and shareholders the issue around Pahari’s promotion was not money, but morality. Industry analysts savaged the company’s choice stating it was indicative of the way AMP operated: “The company went from being an inward looking mutual that existed for customers, to a profit-hungry beast focused on expanding globally” (Grieve & Knight, 2020). And according to Schmulow (2020) its focus on money over trust is central to the failures and scandals that have trashed its reputation and share price. Schultz (2020) argued that for AMP “cash is key” and its response to the outcry against Pahari revealed the board’s narrow focus. “They were managing the shareholder risk but not the rest of the risks … In their minds, it’s all in the dollars and cents,” said former executive director of the Australian Institute of Employment Rights, Lisa Heap (Schultz, 2020).

The problem is not just one of strategy, it is also AMP’s organisational culture. To understand AMP’s systemic cultural problems, Grieve and Knight (2020) provided some context. In 1998, the then CEO, George Trumbull told his top ten male executives at a lunch meeting, that a recent delegation of women executives had nominated sexual harassment and sexual discrimination as the biggest problems in AMP, and “five of the biggest offenders were seated at that table”. And in 2003, as his three-year reign as AMP chairman was drawing to an unceremonious end, a bitter Stan Wallis complained to close associates that “this company destroys people”.

Company Structure

Founded in 1849, AMP is a wealth management company with a growing retail banking business and an expanding international investment management business. It provides retail clients with financial advice and superannuation, retirement income

and banking and investment products. AMP also provides 1) corporate superannuation products and services for workplace super and self-managed superannuation funds (SMSFs); and 2) institutional clients with investment management services across a range of asset classes, both in Australia and globally.

A brief summary of AMP’s divisions is provided below:

AMP Wealth Management (AMPWM)

AMPWM assists clients to save for, and live well in, retirement. It facilitates this through extensive retail and workplace superannuation products, and self- managed superannuation funds services, as well as retirement income solutions and investments for individuals.

AMP Bank (AMPB)

AMPB provides clients with residential and investment property home loans, deposit and transaction accounts and SMSF products. It also provides loans to AMP-aligned financial adviser practices. AMPB clients have access to AMP Bank products via a variety of channels including digital and online, phone, through AMP financial advisers and home loan brokers.

AMP Capital (AMPC)

AMPC is the investment arm of the AMP Group of companies. As part of the AMP Group, it shares a heritage that spans almost 170 years. It has more than 250 investment professionals in 19 locations around the world (with a large presence in Australia) working collaboratively to share the latest insights and discover the best possible investment opportunities for its clients. AMPC’s strength in Australia and New Zealand has facilitated growth internationally, and today it operates in Dubai, China, Hong Kong, Singapore, India, Ireland, Japan, Luxembourg, the United Kingdom and the United States. Working with a network of global investment partners, AMPC leverages shared capabilities to provide greater access to new investment opportunities. It operates across all major asset classes, with a particular focus on real estate and infrastructure. Its asset class specialists, investment strategists and economists manage AUD$189.8 billion in funds under management across a range of single sector and diversified funds.

Drawing on information from the case, explain how you would manage each of these stakeholders.

Using the stakeholder grid (covered in detail during the trimester), place each of the five (5) stakeholders you selected in Question 1(a) in the most appropriate quadrant and provide an explanation for each placement. Drawing on information from the case, explain how you would manage each of these stakeholders. (5 marks – 500 words).

Please type your response below

Case Study: AMP

Introduction

In August 2020, media headlines in Australia named and shamed AMP as a corporate bully and warned it is “a company that kills careers”. The vehicle for this reputational crisis is a culture of sexual harassment and sexual discrimination, which has dogged AMP for over 20 years and continues to do so in 2021.

The spotlight on AMP’s culture and leadership was red hot in 2020 after a public outcry by staff and shareholders on the appointment of Boe Pahari to the top job of CEO at AMP Capital (AMPC). In 2018, Pahari allegedly sexually harassed a former employee at AMPC, Julia Szlakowski, and was penalised by AMP with a 25 per cent reduction in his annual bonus, which amounted to $500,000 (Khadem, 2020). But despite that transgression, Pahari’s promotion was sanctioned by the AMP Board, which was intent on driving up profits, after the disastrous Royal Commission of 2018. (NB: The Royal Commission found AMP had misled the corporate regulator multiple times over the charging of customers for “no advice” (Gardner, 2018), and the company’s profit/dividends plummeted in 2019).

To staff and shareholders the issue around Pahari’s promotion was not money, but morality. Industry analysts savaged the company’s choice stating it was indicative of the way AMP operated: “The company went from being an inward looking mutual that existed for customers, to a profit-hungry beast focused on expanding globally” (Grieve & Knight, 2020). And according to Schmulow (2020) its focus on money over trust is central to the failures and scandals that have trashed its reputation and share price. Schultz (2020) argued that for AMP “cash is key” and its response to the outcry against Pahari revealed the board’s narrow focus. “They were managing the shareholder risk but not the rest of the risks … In their minds, it’s all in the dollars and cents,” said former executive director of the Australian Institute of Employment Rights, Lisa Heap (Schultz, 2020).

The problem is not just one of strategy, it is also AMP’s organisational culture. To understand AMP’s systemic cultural problems, Grieve and Knight (2020) provided some context. In 1998, the then CEO, George Trumbull told his top ten male executives at a lunch meeting, that a recent delegation of women executives had nominated sexual harassment and sexual discrimination as the biggest problems in AMP, and “five of the biggest offenders were seated at that table”. And in 2003, as his three-year reign as AMP chairman was drawing to an unceremonious end, a bitter Stan Wallis complained to close associates that “this company destroys people”.

Company Structure

Founded in 1849, AMP is a wealth management company with a growing retail banking business and an expanding international investment management business. It provides retail clients with financial advice and superannuation, retirement income

and banking and investment products. AMP also provides 1) corporate superannuation products and services for workplace super and self-managed superannuation funds (SMSFs); and 2) institutional clients with investment management services across a range of asset classes, both in Australia and globally.

A brief summary of AMP’s divisions is provided below:

AMP Wealth Management (AMPWM)

AMPWM assists clients to save for, and live well in, retirement. It facilitates this through extensive retail and workplace superannuation products, and self- managed superannuation funds services, as well as retirement income solutions and investments for individuals.

AMP Bank (AMPB)

AMPB provides clients with residential and investment property home loans, deposit and transaction accounts and SMSF products. It also provides loans to AMP-aligned financial adviser practices. AMPB clients have access to AMP Bank products via a variety of channels including digital and online, phone, through AMP financial advisers and home loan brokers.

AMP Capital (AMPC)

AMPC is the investment arm of the AMP Group of companies. As part of the AMP Group, it shares a heritage that spans almost 170 years. It has more than 250 investment professionals in 19 locations around the world (with a large presence in Australia) working collaboratively to share the latest insights and discover the best possible investment opportunities for its clients. AMPC’s strength in Australia and New Zealand has facilitated growth internationally, and today it operates in Dubai, China, Hong Kong, Singapore, India, Ireland, Japan, Luxembourg, the United Kingdom and the United States. Working with a network of global investment partners, AMPC leverages shared capabilities to provide greater access to new investment opportunities. It operates across all major asset classes, with a particular focus on real estate and infrastructure. Its asset class specialists, investment strategists and economists manage AUD$189.8 billion in funds under management across a range of single sector and diversified funds.

Background

The key players in this case study are as follows:

The controversies

Pahari

The most recent example of AMP’s poor behaviour centred around the case of former executive Julia Szlakowski, who in 2017 bought a sexual harassment complaint against Pahari who was then AMPC’s Head of Equity and Infrastructure. AMP hired employment law specialist Andrew Burns QC to oversee the matter in 2018, and he concluded Mr Pahari’s conduct constituted a “relatively modest breach” of the company’s code of conduct. The independence of this report was questioned by legal experts as AMP refused to provide key documents before releasing it publicly. Following the investigation, a confidential settlement was reached with Szlakowski (who then left the company) while Pahari was penalised $500,000.

Despite an acknowledgement of serious wrongdoing, in 2020 the AMP Board decided to promote Pahari to one of the company’s highest-paid and most strategically important positions as CEO of AMPC (Roddan, 2020a). His promotion signalled AMP’s single-eyed focus on future profits of the business and also recognition that Pahari had generated much of AMP’s fortunes. AMP Group CEO, Francesco De Ferrari, who had been appointed in late 2018, formulated a strategy to halt the deteriorating operations of AMP in response to the structural changes in the wealth management industry because of the decline in the financial advice and superannuation businesses (Roddan, 2020b). However, in the 9 months that followed his appointment, AMP continued to hemorrhage with AMP’s share price losing nearly 70% of its value in 2019 (Letts, 2019).

Pahari’s financial acumen paled against the public outrage at his promotion and some commentators labelled his appointment as ‘corporate kryptonite’ because he and the AMP Board neglected to pay attention to cultural change sweeping through corporate Australia in the wake of the #MeToo movement¹ (Hewett, 2020).

Media outlets were flooded with commentary from staff, shareholders, industry analysts, and other corporates calling for change while De Ferrari, AMP Group’s CEO, stayed in the background and was conspicuous by his silence on the issue. It was left to AMP Director, John Fraser, to justify Pahari’s promotion but his interview was universally hailed as one of the great train-wreck interviews of Australian corporate history. Fraser declared the AMP board had made a unanimous decision to promote Pahari because he had ‘‘made a lot of money for the company and its employees’’. The comments left corporate Australia aghast. ‘‘They handled it very badly, in talking about how valuable he was,’’ said one highly regarded chairman. ‘‘That’s a shocking message. It suggests there is a trade-off between doing the right thing and making

1 According to Gordon (2020), the #MeToo phrase was first coined in 2006 by Tarana Burke, an advocate for women in New York. Burke wanted a way to empower women who had endured sexual violence by letting them know that they were not alone—that other women had suffered the same experience they had. The phrase was reintroduced in 2017 by actress Alyssa Milano as a way to encourage women and men to share their sexual harassment stories across many different social media platforms, accompanied by the hashtag #MeToo.

money” (Maley, 2020). On August 24, 2020 both AMP chairman David Murray and fellow Board member John Fraser resigned. Despite the negative publicity Pahari has received over the past two months (which has been like no one else in corporate Australia), he survived the purge and obligingly returned to his previous and lesser role as Head of AMPC’s infrastructure equity business.

There was widespread astonishment in the industry that Murray and Fraser quit the AMP Board. However, a high-profile board member of AMP believes it was telling that the two directors that felt the most commercial pressure to deliver were the ones who departed. Murray’s failure to appreciate why he and the board made a mistake is, arguably, symptomatic of AMP’s management for at least two decades. Simon Mawhinney, managing director of asset manager Allan Gray, which holds almost 7 per cent of AMP, said Mr Pahari would be unable to carry out the role, to which he was promoted on July 1, and hit out at Mr Murray’s board for failing to come clean over the harassment allegations. “Given the continued lack of transparency from AMP, it is difficult to know whether AMP’s cultural and moral compass is on a sustainable footing,” Mr Mawhinney said (Roddan, 2020b).

Wade

Ironically, just weeks before Pahari’s demotion back to Infrastructure Equity and while he was still AMPC CEO, there were further explosive allegations made against the CEO of AMP Australia Alex Wade. Wade was the subject of several complaints regarding his conduct including sending explicit photos to female colleagues. A number of AMP staff have relayed complaints about Wade (both personally and through AMP’s whistleblower function) to AMP’s senior management.

Those allegations were taken to Francesco De Ferrari, AMP Group CEO and the AMP board. Pahari was extricated from a scheduled board meeting to join an emergency meeting with the rest of AMP’s global leadership team to discuss the matter. Following a further meeting between De Ferrari and Wade and AMP’s Head of People and Corporate Affairs Helen Livesey, Wade was given 24 hours to submit his resignation (Roddan, 2020d). ‘‘I arrived at my decision to resign from AMP in the interests of all parties,’’ a spokesman said on behalf of Wade in response to a lengthy list of questions. ‘‘My focus now is on a period of personal reflection and the relationships that are most important to me.’’

Despite several AMP sources confirming that multiple complaints had been made about Wade, and that AMP had previously discussed matters of conduct with Mr Wade, AMP elected not to answer any questions about the matter and associated issues. This lack of explanation about the departure of Wade, who only joined AMP in January 2019, left staff feeling frustrated.

Senior staff in internal AMP meetings have since refused to comment on employee questions, including one senior employee who told staff the situation was ‘‘like our last matter [Mr Pahari]; they’re sensitive issues’’ in response to questions (Roddan, 2020d).

This debacle has once again turned the spotlight on AMP’s handling of employee concerns.

Toxic corporate culture

JANA (investment consultants) chief executive Jim Lamborn stated: ‘‘The marketplace looks to the board and senior management to set the culture, values and behaviours of quality companies, and in this instance it appears the board has seriously misjudged the expectations of staff, clients and the market (Roddan, 2020c). There is no doubt that the AMP affair has exposed major fault lines in corporate Australia (Maley, 2020) and the silence from the male-dominated ranks at the top of corporate Australia remains deafening (Roddan, 2020d). Both Male Champions of Change, a group of 230 business and government leaders established to advance gender inequality, and former Australian Sex Discrimination Commission Elizabeth Broderick, who launched Male Champions of Change, declined to comment on the AMP matter.

So it is left to the current leadership group in AMP and their collective conscience to right the perception that the AMP Board and senior managers appear to be tone deaf to the cultural issues at play (Roddan, 2020b). To add weight to this perception, staff were only informed of Pahari’s appointment and the allegation of sexual harassment through a news article published by the Australian Financial Review (Roddan, 2020a). Following its publication, Head of HR Helen Livesey hosted her weekly virtual town hall meeting, which normally is a general question-and-answer session for about 100 staff, many working remotely. The meeting focused on Pahari’s appointment with the majority of staff expressing their displeasure. One staffer wrote:

“The press today surrounding Boe has been very upsetting and demotivating. We are all focusing on building a great culture in AMP, however the fact that Boe being promoted to CEO and that we have only found out about this through an AFR article says to me, as an employee: culture kind of matters, but if you are making the big bucks then you can still get ahead in this place, even with serious accusations of misconduct. How does this make you feel as a senior female leader in the organisation and how should we position our culture when we are dealing with external talent knowing this out in the market?”

These comments and others were leaked to the press and suggest staff didn’t feel their concerns would be acted upon by management. JANA said it was concerned about the ‘‘reflection on the AMP Group’s culture from the multiple leaks of information including the details of internal meetings to the media’’, which it said ‘‘may be an indication that some staff believe that internal mechanisms for expressing views and ‘being heard’ are inadequate’’ (Roddan, 2020e).

Several senior AMP employees said they felt compelled to speak out because of their concerns about the perceived mismatch between AMP chief executive Francesco De Ferrari’s public commentary about improving culture, and the company’s internal response to the crisis. AMP had responded by threatening its employees with possible ‘‘termination’’ if they were found to be leaking information to the press, which the company stated was damaging its ‘‘reputation’’. AMP chief risk officer Phil Pakes sent all staff an email warning them against leaking information outside the company. ‘‘It’s a commitment we take extremely seriously to ensure we protect AMP, our clients, staff and our reputation and to ensure we are doing the right thing with data,’’ Mr Pakes said.

One employee said there was a ‘‘huge’’ program aimed at identifying people leaking to the media. ‘‘I think this is a battle for the heart and soul of AMP, in my view. It’s

moving from a culture of harassment to a culture of fear. They are telling us they’re trying to take it seriously, that we have set up all these organisations, and at the very time they’re saying that publicly, really the focus is to try and find out who is leaking,’’ the employee said (Roddan, 2020e).

‘‘The difference between their public response and their internal response – it’s incredible,’’ the employee said. ‘‘Who is interested in the good of the firm? Who is operating in the good of the firm?’’

At the same time in July 2020, investment consultant Jana placed all AMPC’s products on “watch” meaning the firm would not recommend any AMPC strategies to clients or recommend that clients add to any existing investments (Kemp, 2020). The asset manager claimed AMP had more work to do on culture, and it was concerned over AMPs decision making and culture. The ‘watch’ notice continued in August despite resignations from Murray and Fraser because JANA was disappointed with the length of time taken to redress AMP’s poor culture.

AMP response

Following internal outrage and pressure from shareholders, Mr De Ferrari established a taskforce on inclusion; a board-directed cultural working group; a review into workplace conduct; and a revamp of its procedures for whistleblowers (Yeates, 2020). He has also flagged he would appoint consultants to help them achieve the goal and said at AMP’s half-year results, reported on in August 2020, that culture would be his ‘‘number one priority’ (Vickovich & Roddan, 2020). True to his word, AMP in September 2020, appointed diversity consultant Symmetra to review AMP’s conduct, policies, leadership, governance and behaviour in order to accelerate cultural transformation. However De Ferrari’s position remained tenuous. Following the Board coup in August 2020, where David Murray resigned as Chairman, together with non- executive director John Fraser (some believe in protest against Murray’s removal), Mayne (2020) suggested “De Ferrari isn’t out of the woods yet either as he was responsible for Pahari’s appointment as AMPC CEO, as well as recruiting his old Credit Suisse colleague Alex Wade to run the company’s Australian advice business”.

Mayne (2020) flagged part of Debra Hazelton’s stewardship of AMP would be to oversee the departure of both De Ferrari and Pahari before the next annual general meeting in May 2021. And in March 2021, Mayne got his wish with De Ferrari’s resignation to take effect on July 1. For the first time in AMP’s history, it will have both a female CEO – AMP’s new chief executive is 25-year financial services veteran Alexis George, who is currently deputy chief executive at ANZ – and chair, Debra Hazelton (Ryan, 2021).

[NB: Information was sourced from AMP’s annual reports, news and internet

sources, and industry analysis].

References:

Gardener, J (8 May 2018) Banking Royal Commission: AMP says we must look at the context of evidence, Australian Financial Review, accessed 12 April 2021.

Gordon, S (n.d.) What is the #MeToo movement? accessed 12 April 2021.

Grieve, C and Knight, E (22 August 2020) AMP’s curse: the company that kills careers,

Sydney Morning Herald, accessed 28 August 2020.

Grieve, C (27 August 2020) AMP scandal a ‘watershed’ moment, says Sex Discrimination Commissioner, Sydney Morning Herald, accessed 12 September 2020.

Hewitt, J (24 August 2020) What AMP and Rio have in common. Australian Financial Review, accessed 1 April 2021.

Kemp, D (25 August 2020) Culture concerns keep AMP Capial on JANA’s ‘watch’ list,

Investor Infrastructure, accessed 13 April 2021.

Khadem, N (25 August 2020) AMP’s “MeToo” moment raises bigger questions for

corporate Australia about sexual harassment, ABC News accessed 1 April 2021.

Letts, S (8 August 2019) AMP plunges to $2.3b first half loss and asks shareholders for another $650m, ABC News accessed 12 April 2021.

Maley, K (20 April 2018) The curse of AMP, Australian Financial Review accessed 12 September 2020.

Maley, K (24 August 2020) What went so disastrously wrong for Murray at AMP?

Australian Financial Review accessed 12 April 2021.

Mayne, S (24 August 2020) AMP coup: rainmaker stays as old blokes go – and more to come. Crikey accessed 12 April 2021.

Roddan, M (30 June 2020a) New AMP Capital boss accused of harassment Australian Financial Review, accessed 12 April 2021.

Roddan, M (3 July 2020b). ‘Women don’t work again’: AMP taken to task. Australian Financial Review, accessed 12 April, 2021.

Roddan, M (9 August 2020c) Inside Alex Wade’s final month at AMP. Australian Financial Review, accessed 28 January 2021.

Roddan, M (18 August 2020d) David Murray’s ‘tone deaf’ AMP board in shareholders’ sights, Australian Financial Review, accessed 30 September 2020.

Roddan, M (24 August 2020e) ‘Culture of fear’: AMP threatens to sack leakers.

Australian Financial Review, accessed 31 January 2021.