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Corporate governance

Approach to corporate governance

AMP has a set of values that recognises our responsibilities to all
of our stakeholders, including shareholders, customers, employees,
planners, the community and the environment.

The AMP Board places great importance on the highest standards
of governance and continually reviews its governance practices to
address AMP’s obligations as a responsible corporate citizen.

In March 2003, the ASX Corporate Governance Council (ASX
Council) published its Principles of Good Corporate Governance
and Best Practice Recommendations.

AMP has adopted the principles and practices, meeting all of the
ASX Best Practice Recommendations, with the exception of:

–
Recommendation 9.4 relating to shareholder approval of equity
based remuneration plans. This is primarily because a number
of AMP executive equity plans were established prior to the
release of the ASX Best Practice Recommendations and did not
require shareholder approval under the Corporations Act 2001
and ASX Listing Rules. However, at AMP’s 2008 Annual General
Meeting, which will be held on 15 May 2008, shareholder
approval will be sought for the continued participation of
the Managing Director and Chief Executive Officer in AMP’s
long-term incentive plan. Information about AMP’s long-term
incentive plan was previously provided to shareholders in
October 2003 when AMP proposed the demerger of its UK
operations. Although specific shareholder approval of this plan
was not required at that time, it did form part of the proposed
ongoing arrangements for AMP. Shareholders can access a
copy of the 2008 Notice of Meeting on the AMP website:
www.amp.com.au/shareholdercentre, and
–
Recommendation 4.3 states that the Audit Committee
should be comprised of at least three members. Following
John Astbury’s retirement as a director on the AMP Board in
October 2007, and consequently the Audit Committee, the
Audit Committee comprised two members (Richard Grellman
as chairman and Nora Scheinkestel). As the board is considering
succession planning and board composition generally,
the chairman was appointed as a member on the Audit
Committee as an interim measure, pending a permanent
appointment to that committee.
In accordance with the best practice recommendations,
AMP has posted copies of our governance practices in the
corporate governance section on our website: www.amp.com.au
including copies of relevant policies and terms of reference.

In August 2007, the ASX Council issued revised Corporate
Governance Principles and Recommendations, effective
1 January 2008. AMP is required to report against these in
the 2008 annual report, which will be published next year.

Role of the board of directors

(ASX Best Practice Recommendation 1.1)

Functions of board and management

The AMP Board is responsible to its shareholders for the overall
governance and performance of the AMP group.

The board

The AMP Board primarily represents the long-term interests
of shareholders by:

–
providing strategic direction to AMP through constructive
engagement with senior management in the development,
execution and modification of AMP’s strategy
–
appointing the Managing Director and Chief Executive Offi cer
(CEO), the Chief Financial Officer (CFO) and the Company
Secretary and approving succession plans
–
monitoring the performance of the CEO
–
approving remuneration policies and practices
–
reporting to shareholders and ensuring that all regulatory
requirements are met
–
providing advice and counsel to senior management
–
ensuring appropriate group wide compliance and risk
frameworks and controls are in place
–
approving policies governing the operations of the AMP group
–
approving decisions concerning the capital of the AMP group,
AMP ANNUAL REPORT 2007

including capital restructures and signifi cant changes

to major fi nancing arrangements

–
making decisions in relation to initiatives or matters
otherwise not dealt with as part of the strategy process
(e.g. major acquisitions and withdrawal from existing
major lines of business)
–
monitoring financial results on an ongoing basis
–
determining dividends and financing of dividend payments
–
ensuring the board’s effectiveness in delivering best practice
corporate governance
–
ensuring AMP’s business is conducted ethically and
transparently
–
reviewing strategic risk management including processes
for identifying areas of significant business risk, monitoring
risk management policies and procedures, overseeing
internal controls and reviewing major assumptions used
in the calculation of significant risk exposures
–
ensuring clear and transparent communication to the
market, shareholders and other stakeholders as appropriate
–
listening and responding to shareholders’ views on the
management and direction of the company, and
–
considering the interests of all stakeholders.
Role of management

(ASX Best Practice Recommendation 1.1)

Functions of board and management

The Chief Executive Officer (CEO) is responsible for the overall
management and profit performance of the AMP group. The CEO
manages the organisation in accordance with the strategy, plans
and policies approved by the board to achieve agreed goals.

Board composition and size

(ASX Best Practice Recommendations 2.1, 2.5)

Independence of directors – board composition and commitment

The directors determine the size of the board, with reference to
the Constitution, which provides that there will be a minimum of
three directors and a maximum of 16 directors. The AMP Board
is made up of a majority of independent non-executive directors
and has only one executive director, the CEO. The chairman of the
board is non-executive and independent of the role of the CEO.

AMP’s Constitution is available on AMP’s website.

Appointment of directors

Nominations of new directors, recommended by the Nomination
Committee, are considered by the full board. The Nomination
Committee considers a wide base of potential directors, taking
into account the range of skills and experience required in
relation to the:

–
current composition of the board
–
need for independence
–
strategic direction and progress of AMP, and
–
geographic spread and diversity of AMP’s businesses.
From time to time, the Nomination Committee uses external
consultants in this practice. The board assesses nominated
directors against a range of criteria including experience,
professional skills, personal qualities and their capacity to
commit themselves to the board’s activities. Any appointment
is subject to any share qualification requirement of AMP’s
Constitution (Clause 60).

A copy of the Nomination Committee terms of reference is
available on AMP’s website.

Director independence

It is important that the board operates independently of
executive management. Each of the non-executive directors is
considered by the board to be independent of management.
This means that they do not have any business interest or other
relationship that could materially interfere with the exercise of
their independent judgement and their ability to act in the best
interests of the company.

AMP also includes independent directors on the boards of
significant regulated subsidiaries.