Alberta Finance Minister Nate Horner wants us to believe he sacked the CEO and entire board of the Alberta Investment Management Corp. last Thursday because, as his news release put it, “the corporation has seen significant increases in operating costs, management fees and staffing without a corresponding increase to return on investment.”
After reciting a couple of out-of-context statistics about increases in fees and the number of employees, the release proclaimed, “Alberta’s government has decided to reset the investment corporation’s focus. … All board appointments have been rescinded and a new board will be established after a permanent chair is named.”
According to a report of The Canadian Press that day, Horner suggested he’d been keeping a careful eye on the pension fund management Crown corporation and had “determined changes weren’t going to happen without a ‘major reset’.”
This intentionally leaves the impression Horner had concluded the board’s members were a bunch of inattentive jerks who had to be fired without so much as a thank-you-for-your-service. But a glance at the resumes of the members of the former board strongly suggests this is not the case.
Some are exemplary. Some not quite so much. But the board was big enough to encompass a range of experience, and the experience of several former members is impressive.
Collectively, the 10 board members were clearly capable of carrying out their legal mandate to “act honestly and in good faith with a view to the best interests of the Corporation and … exercise due care, diligence and skill, and manage risk appropriately in their oversight of AIMCo.”
Indeed, if circumstances were as serious as those Horner wants us to believe, one would have thought they might have fired the CEO Evan Siddall themselves.
The governance page of the AIMCo website notes that all directors of the Crown corporation are appointed by the Lieutenant Governor in Council, that is, the provincial cabinet. To be appointed, they “must have experience in investment management, finance, accounting or law, or have served as an executive or director with a large, publicly traded company. Individuals should also have, to the extent practicable, experience in executive management of a substantial corporation. All directors are fully independent of management.”
So, let’s consider the qualifications of the 10 fired directors:
Kenneth Kroner, the board’s vice-chair and acting chair at the time of the purge, holds a PhD in economics from the University of California San Diego, where he is also a member of the university’s board of trustees. He has served as a board member, vice chair and chief executive officer of U.S.-based corporations, worked as an economics professor at the University of Arizona, and was for close to 22 years a senior managing director of BlackRock Inc., the world’s largest asset manager.
Phyllis Clark is the former vice-president and chief financial officer of the University of Alberta. She chairs the Royal Canadian Mint and the Edmonton Symphony and Concert Hall Foundation, and sits on the board of Inuvialuit Investment Committee. In the past, she has been a member of the boards of the Bank of Canada; the AMA Insurance Services Board; chair of the Universities of Alberta Academic Pension Plan and its Investment Committee and a board member of the Canadian University Reciprocal Insurance Exchange. She is a former Chief Economist of Ontario, assistant deputy minister to the Management Board of Ontario’s cabinet and of its finance ministry.
Bob Dhillon is the founder, president and CEO of Calgary-based rental apartment manager Mainstreet Equity Corp., a board member of the Canada Mortgage and Housing Corp., Invest Alberta, and Strathcona Resources Ltd. He was the key donor, to the tune of $10 million, to the Dhillon School of Business at the University of Lethbridge. He is a member of the Order of Canada.
Jon Horsman is CEO of Horsman Enterprises Ltd. Before that, he was 14 years in senior management positions with ATB Financial, as Crown-owned Alberta Treasury Branches is now known, and chair and CEO of AltaCorp. Capital Inc.
Joel Hunter recently joined Calgary-based TransAlta Corp., the electricity generating and marketing corporation, as executive vice-president and chief financial officer. From 2021 to this year, he was executive VP of TC Energy, the former TransCanada Corp., also based in Calgary. He is a Chartered Financial Analyst and holds bachelor’s degrees in commerce and economics from the universities of Calgary and Regina. He was appointed to the AIMCo Board by the Premier Danielle Smith’s cabinet in March.
Jim Keohane is the former president and CEO of the Healthcare of Ontario Pension Plan. That’s all his LinkedIn resume says, but that would seem to be enough.
Lorraine Mitchelmore is a member of the Suncor and BMO Financial Group boards. She was previously president and CEO of Enlighten Innovations Inc. and president and country chair of Shell Canada Ltd. She has served in the past on the boards of Shell Canada and Trans Mountain Corp. She was named the recipient of the 2024 Calgary Influential Women in Business Lifetime Achievement Award.
Jason Montemurro is tax lawyer who was appointed to the AIMCo board by the UCP cabinet on the same day as Hunter. His LinkedIn resume includes jobs as a principal of The Targeted Strategies Group, a partner in Azimuth Capital Management, a director of CIBC Capital Markets, and an audit manager of Deloitte Canada.
Roger Renaud is the former Global Chief Operating Officer and Canadian president of Manulife Asset Management and the former President of Standard Life Investments, both companies based in Montreal. He is a board member of Fonds de solidarité FTQ, which was created by the Quebec Government, and a member of numerous boards.
Theresa Whitmarsh is the executive director of the Washington State Investment Board. She is past chair of the Council of Institutional Investors and the Pacific Pension & Investment Institute and a past director of the International Centre for Pension Management. She is based in Seattle.
As these thumbnail bios suggest, all the AIMCo directors were arguably qualified to fill their positions. Hunter and Montemurro were criticized last spring when they were appointed because they lacked pension experience. Some have connections to past and current Conservative governments in Alberta. But by and large this is not the sort of board that you would think would be at risk of a wholesale purge.
So what was the actual problem?
As noted, Horner says the board wasn’t acting fast enough to cut costs and improve the results achieved by Siddell and his management team.
Remember, AIMCo’s most serious recent problems took place in 2020 under President and CEO Kevin Uebelein, when it lost $2.1 billion in what was described at the time as an amateurish bad bet on market volatility.
Siddell, the former president and CEO of the Canada Mortgage and Housing Corp., was clearly hired to get AIMCo on track as a sober and thoughtful investor in which Albertans could have confidence, as befits a corporation managing $169 billion in workers’ retirement savings.
Is it possible the real problem was that the board was too cautious for the UCP’s taste, unwilling to take big risks on questionable investments motivated by politics, not prudent investment strategies?
The investment industry is already abuzz with just such speculation.
“Alberta’s Premier Danielle Smith has made it clear she wants the pension fund to put more capital to work in Alberta,” an investment newsletter reads. “Some stakeholders have already voiced concerns that this could mean more investment in fossil fuels.”
Top1000funds.com quoted “pension system luminary” Keith Ambachtsheer of the University of Toronto asking, “What makes the government think it can improve on the high quality of the board and executive team it just fired?”
Good question. But perhaps the UCP has something completely different in mind. “Danielle Smith I think looks at AIMCo as a bit of a cookie jar,” said a Globe and Mail business columnist.
Siddell has been temporarily replaced by Ray Gilmour, a veteran senior civil servant trusted by the UCP but who has little experience in pension management.
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