AMP scraps £3m pay plan for chief executive after share plunge

AMP yesterday scrapped plans to pay its chief executive Andrew Mohl as much as A$7.5m (£2.99m) in cash and shares, following pressure from investors in a week when the company's shares fell more than 45 per cent.

AMP yesterday scrapped plans to pay its chief executive Andrew Mohl as much as A$7.5m (£2.99m) in cash and shares, following pressure from investors in a week when the company's shares fell more than 45 per cent.

The insurer had planned to ask shareholders at its annual general meeting in Sydney next week to approve a pay deal that would have raised Mr Mohl's A$1.5m salary by a maximum A$3m a year in cash. He would also have been given rights to 200,000 AMP shares a year.

Mr Mohl last week announced plans to spin off the company's ailing UK businesses, which include Pearl, London Life, NPI, the financial adviser Towry Law and the fund manager Henderson Global Investors.

The news of the demerger and the need to reduce the company's crippling debts through the sale of A$1.2bn of AMP shares caused its share price to plummet this week. Shares in Sydney closed down again yesterday to reach a new record low of A$5.08.

AMP reported a record A$896m loss last year, largely due to the UK businesses in which it has had to take a further A$2.6bn write down.

As part of the plan to exit the group's adventures overseas, the UK businesses will be renamed Henderson and hived off from the rest of AMP. It will be run by Henderson's current chief executive, Roger Yates, who also yesterday saw the share component of his remuneration package scrapped.

Institutional investors are understood to have raised concerns with AMP that the planned pay packages were based on the group as it is in its current form. The incentive schemes were tied to AMP's performance for periods up to 2005-06, by which time AMP will no longer exist as a single company. Shareholders wanted executives' remuneration packages to reflect the new shape of the group.

Peter Willcox, chairman of AMP, said yesterday the incentive plans set for approval at the AGM were no longer appropriate in light of the demerger, after discussing the matter with shareholders.

"The company has been reviewing these resolutions this week, in consultation with some of our investors, and has taken the decision to withdraw them," said Mr Willcox. "There were a number of complex legal and contractual issues to consider and the company will now need to consider alternative short- and long-term incentives."

The board will consider the salary packages for executives in the demerged entities as part of the overall proposal for the split.

The demerger is planned for the end of the year and a London listing is planned for Henderson.

The AMP group has already had to pump £500m into Pearl to keep it above its solvency requirements.

The UK life businesses remain thinly capitalised and analysts in London are sceptical that a London float will be successful.