Swiss asset manager GAM’s upcoming annual general meeting on 27 April 2017 is the scene of a conflict between the company and activist hedge fund and GAM’s shareholder RBR.
The firm recently announced changes within its board of directors as the board’s chairman Johannes de Gier is retiring.
GAM’s board of directors has proposed to re-elect Hugh Scott-Barrett, chairman of the audit committee since 2009, as a member of the board and elect him as chairman.
RBR proposed the election of Kasia Robinski, William Raynar and Rudolf Bohli as members of the board of directors and the election of Kasia Robinski as chairman of the board of directors.
It also advocated the election of Kasia Robinski and William Raynar as members of GAM’s compensation committee.
The activist investor has been backed by Institutional Shareholder Services, an adviser to over 1,700 of the largest investors worldwide.
In GAM’s last statement, Scott-Barrett has urged shareholders to reject candidates’ proposals made by RBR, which owns 2.1% of the manager, at the firm’s upcoming annual general meeting.
“My fellow members on the board of directors and I are pleased with the strong improvement in the group’s performance in the first quarter. As we start to see our strategy deliver tangible results, I urge all our shareholders to fully support the candidates proposed by the board and vote against those candidates proposed by RBR at our upcoming AGM. I am pleased that our largest shareholder, Silchester International Investors LLP, is intending to fully support our Board’s recommendations regarding Board composition,” he said.
“We firmly believe that our strategy is the right one to deliver sustainable long-term value for our shareholders, whilst RBR’s plan would destabilise the business at a critical point in its turnaround.
“The board of directors is determined to deliver on the previously announced plans for greater operating efficiencies. Our focus on efficiency is relentless, and we expect there will be further opportunities for additional cost savings as we execute and make progress on our current significant change programme.
“Furthermore, as chairman, I will personally oversee a comprehensive review of the Group’s compensation structures and policies, with a focus on group management board individual and total compensation, and on a greater alignment of remuneration with the long-term success of the business. This review will be led by Nancy Mistretta, who joined our board last year and is a former partner at Russell Reynolds Associates. Nancy will be assisted by our newly proposed director, David Jacob, an experienced asset management leader and former member of the board of directors of Henderson Group Plc. In addition, this review will be conducted in consultation with shareholders.
“Our CEO, Alexander Friedman, has requested that alongside this review, any variable compensation awarded to him for 2017 be only in the form of long-term restricted shares and be capped at no more than his fixed pay,” Scott-Barrett argued.
GAM posted outflows of CHF10.7bn in 2016. The company’s investment management division has reported net outflows of CHF0.1bn for Q1 2017 and a 2% rise quarter-on-quarter of its assets under management (CHF69.9bn).
GAM said there were strong net inflows into fixed income and systematic strategies that have been offset by redemptions in other funds.
Group CEO Alexander Friedman said: “Our strategy is starting to deliver results: net flows and investment performance both improved significantly in the first quarter. It is pleasing to see the strong inflows into our specialised fixed income and systematic products. The demand for absolute return strategies is turning the corner, and we are addressing challenges around our equity capability, where our new head of equities hired last month is already playing a key role. We are also making great progress in implementing our new distribution strategy.
“We are on track to transform GAM and I am confident that the actions we have taken, and continue to take, will accelerate this improvement and enable us to deliver on our targets over the business cycle.