It's ironic that after Kenneth Hayne's royal commission revealed...

It's ironic that after Kenneth Hayne's royal commission revealed the poor treatment of insurance policy-holders, the pressure it exerted on AMP sparked the offloading of its life insurance arm to Resolution Life, described on its own website as a "Bermuda-exempted limited partnership". We're sure that'll be a step up for policy-holders!

And they're not alone in potentially getting a raw deal. A good portion of the register is convinced the sale isn't in their interests, and the ones who didn't immediately sell out are trying to stop it. AMP's chairman David Murray, fully in character, is holding firm. And in the course of doing so, he made some very interesting comments about executive pay in a profile run in this newspaper last week.

"We operate in a market economy," he said. "So we can't have it both ways, where we believe in a market, and then we say 'but, we don't believe in attracting talent from that market to do complex executive work.' "

It's a rather different tune to the one Murray struck during the tail end of the global financial crisis in 2009, when questioned whether it was appropriate to pay "boomtime salaries" when, "from an investors' point of view, share prices have fallen dramatically". AMP's share price, as any investor will tell you, is down 50.9 per cent year-on-year.

At AMP, Murray is in the business of buying talent. It seems he'd like an open chequebook to do so. His mindset raises the intriguing question of just what, if anything, he's going to do about Francesco De Ferrari's pay.

Higher hurdles

That Resolution Life deal we were discussing sent AMP's share price down 25 per cent the day it was announced. It's barely recovered. Which means AMP's incoming CEO has been handed a massive pay cut. And all before he had a chance to set up his office furniture.

When he was appointed on August 22, Ferrari had to engineer a share price resurgence to at least $4.50 for any of his options or share rights to be in the money. When he was appointed on August 22, that was 32 per cent above that day's $3.39 share price.

His hurdles are considerably higher now. On Tuesday's closing price of $2.52, he needs to bring about a mammoth 78 per cent increase in the share price by February 15, 2021, to qualify for the least of his share rights. And when it comes to the shares he'll receive merely for continuous employment, these are now worth $4 million less than they were in August!

Which begs the question: could Murray and AMP's board be considering tweaking some of Ferrari's arrangements? It'd make logical sense, if you accept Murray's argument on executives getting what they're worth on the global market. One to watch ...