Investment consultant JANA has maintained its ‘on watch’ notice for all of AMP Capital’s investment products and said that the asset manager has “more work to do” on culture and diversity following the demotion of newly-appointed CEO Boe Pahari.
Pahari stepped down from his role as CEO yesterday as a result of shareholder pressure over how the board of AMP Limited had handled his appointment in July.
The Australian Financial Review revealed Pahari had been promoted despite being financially penalised in 2017 following the settlement of a sexual harassment claim brought against him by a female subordinate, Julia Szlakowski.
JANA had previously placed all of AMP Capital’s products ‘on watch’ in July after the existence of the claim came to light in the Australian media, meaning that the firm “will not recommend any AMP Capital strategies to clients or recommend that clients add to any existing investments”.
The consultant said in an update to clients today (25 August) it had decided to maintain the rating despite Pahari’s demotion “due to the ongoing controversy” surrounding his appointment and “resulting concerns over AMP’s decision-making and culture”.
It said that the changes AMP had made this week, which included the resignation of chairman David Murray and fellow board member John Fraser, were a positive step but that it was disappointed by the length of time it had taken.
JANA chief executive Jim Lamborn said in a statement: “AMP’s board and management badly miscalculated the response from the broader marketplace on this important matter.
“While the changes are positive, the events of the past two months have demonstrated that AMP has more work to do to improve its organisational culture and to demonstrate that it offers a working environment that embraces diversity and is free from discrimination or harassment.”
Lamborn said JANA has requested details from AMP about the initiatives it intends to put in place that will promote “appropriate staff behaviours and inclusion and diversity into the company’s culture and operations”.
JANA intends to review and discuss those initiatives with AMP and monitor progress against milestones for achievement.
“We are disappointed that an individual who had engaged in sexual harassment was promoted to a very senior role in the first place, and we are also disappointed in the length of time taken by AMP to acknowledge and address community concerns,” Lamborn said.
JANA’s client update, which it said was confidential and declined to make public in its entirety, also set out what it described as “some important markers for the business”, including the appointment of the new AMP Capital CEO and “the composition of the board and senior leadership of AMP in terms of the replacements … for those who have resigned from their positions”.
Asked to elaborate on the “composition of the board”, a spokeswoman for JANA, replied: “As with all boards and leadership teams, JANA believes the overall composition of the group in terms of background, skills and experience is important in terms of ensuring diversity of thought in the group.”
When contacted for comment on JANA’s update, AMP provided a statement on the initiatives it had announced to improve the company’s culture: “We continue to engage with investors and clients, and are committed to keeping them informed of the initiatives we have underway to drive inclusion and diversity across our business.
“Driving cultural change is a top focus of the CEO and the board. To accelerate change, we’ve implemented a number of immediate actions, including a board culture working group and the establishment of an inclusion taskforce that is chaired by the CEO and has diverse representatives from all levels of the company. In addition, AMP is in the process of engaging an external expert to partner with us to drive inclusive leadership.”