By Paulina Duran and Byron Kaye
SYDNEY (Reuters) - Top Australian wealth manager AMP Ltd (AX:AMP) told angry shareholders on Thursday it understood their concerns and expected some to vote against its remuneration plans after a public inquiry revealed serious board-level misconduct.
AMP also said it would defend two class-action lawsuits on behalf of shareholders for losses in the wake of allegations it deliberately charged fees for no service, doctored an independent report and lied to regulators.
The firm's share price has slumped more than a fifth, wiping A$4 billion ($3 billion) of its market value, since February when an independent inquiry into the financial sector exposed serious flaws in its governance, accountability and culture.
"We recognise that many of our shareholders have voted against the remuneration report in response to the wider business issues," Interim Executive Chairman Mike Wilkins told the annual general meeting in Melbourne.
"We understand your frustration and have heard you."
Wilkins said he expected shareholders to vote the remuneration report down. Under Australian law, two consecutive ballots against the report can trigger a board spill.
The former director stepped up after the firm's CEO and chairman quit last month over the scandal.
Two other directors stepped down earlier this week after apparently losing the support of key investors for their re-election at the meeting, and a third is facing stiff opposition at the vote due later Thursday.
AMP shares were down 1 percent in morning trading, while the broader market (AXJO) was up 0.4 percent.
LAWSUITS
The lawsuits were filed by global law firm Quinn Emanuel Urquhart & Sullivan and Melbourne-based Phi Finney McDonald on behalf of some shareholders.
Quinn Emanuel said it alleges that "amongst other things, AMP breached its continuous disclosure obligations and made misleading statements, causing shareholders significant loss".
Australian litigation financier IMF Bentham also has said it would fund another class action against AMP.
AMP, whose name has been synonymous with financial planning in Australia for decades, said in a statement ahead of its annual general meeting it would "vigorously defend" the proceedings".
The firm said costs were expected to mount as it worked to resolve the issues identified by the inquiry, which has shocked Australia with near-daily revelations of wrongdoing by the country's major financial institutions.
AMP reported subdued cash flows at its Australian wealth management business for the three months to end-March, with net outflow of A$200 million ($149.2 million), flat over previous year.
Total assets under management for the business at the end of the first quarter were A$128.3 billion, 2 percent lower than the last quarter, the company said, citing negative investment markets during the period.
Wilkins said AMP expected a review of the fees it paid financial planners would "lead to further customer remediation costs and associated expenses".
"Not surprisingly, we did see some increase in customer call centre enquiries and withdrawal requests, although this has eased back in recent days," he said.
($1 = 1.3387 Australian dollars)