The swift removal of the chief executive officer, three executives and the 11-person board at the Alberta Investment Management Corp. is a dramatic move that raises red flags about the influence of Alberta’s provincial government, says Anthony Guindon, a partner at Koskie Minsky LLP.
“We don’t entirely know at this stage but it makes one question [if] these decisions related to investments are going be to be driven by fiduciary considerations.”
Read: Alberta government fires AIMCo CEO, board, citing rising costs and poor performance
Richard Powers, national academic director at the University of Toronto’s Rotman School of Management, also questions what the independence of the AIMCo will look like moving forward. “What autonomy will they have to make decisions that are in the best interest of the pensioners?”
Last Thursday, Alberta’s finance minister Nate Horner announced the dismissal of CEO Evan Siddall and the entire board of directors at the investment organization, due to increases in operating costs related to third-party management fees. According to the provincial government, management fees at the AIMCo have increased 96 per cent between 2019 and 2023. The investment organization reported a net return of 5.4 per cent for the first half of 2024.
Powers adds it’s understandable that in times of crisis institutional investors need to act quickly and remove a risky management team if needed, but he’s unsure if that was the case at the AIMCo. “There’s changes all the time in organizations, but good governance would be reflected in a proper succession plan.”
Read: Alberta budget announces fund transfers to AIMCo for management
The AIMCo has appointed Ray Gilmour, a public servant in Alberta with a banking and financial services background, as interim CEO, with Horner serving as the investment organization’s sole director and chair until a new board chair is appointed.
“I have complete confidence in [Gilmour’s] ability to get costs at the AIMCo under control and restore stability to the corporation,” said Horner, in a press release.
The investment organization is facing a high rate of executive turnover this year with its chief investment officer Marlene Puffer having stepped down from the role in September.
Read: Alberta government facing backlash after changing terms of public sector pensions
Overall, the AIMCo oversees the investment results of nine public service plans in the province, including the Local Authorities Pension Plan, the Management Employees Pension Plan, the Management Supplementary Retirement, the Provincial Judges & Applications Judges Registered Pension Plan, the Provincial Judges & Applications Judges Unregistered Pension Plan, the Special Forces Pension Plan and the Universities Academic Pension Plan.
In a press release, the ATRF issued a statement to plan members throwing their support behind the leadership change. “Nothing that has happened with regard to the changes at the AIMCo thus far has caused us concern about the status of our investments. At the same time, we have in the past raised issues regarding costs at AIMCo with both the Government of Alberta and with AIMCo.”
Keith Ambachtsheer, executive-in-residence at the Rotman School of Management at the University of Toronto and president at KPA Advisory Services, says the removal didn’t make sense to him given the recent turnover at the investment organization.
Read: AIMCo, Alberta Teachers’ investment agreement aligning interests of both organizations
“When you make the kind of major changes that they’ve made over the course of the last few years, it takes years for that to have a measurable impact on changes in strategy; this is just barely off the ground and then this [firing happens].”
Ambachtsheer says the removal by the provincial government could have a negative impact on the stability of the AIMCo as a workplace for investment professionals. It could also affect the investment organization’s deal making ability in specialized industries like private markets where trust and reputation are essential.
Powers questions how quickly things will go back to business at a time when speed is essential for institutional investors. “There’s a race for assets in the world right now, so many pension plans and investment institutional investors are looking for strong assets to get. . . . [The AIMCo] can’t sit on the sidelines.”
Read: AIMCo making key appointments to executive team as CIO steps away from role