Alberta Investment Management Corp. (“AIMCo”) is an Alberta-based Crown corporation with ~$160 billion of assets under its control.[1] The provincial corporation invests with the goal of generating returns for its clients. But in a twist from a regular, run-of-the-mill fund, these clients have important interests at stake. Albertan judges, teachers, management-level public service and municipal employees all look to a pension upon retirement to sustain themselves into old age,[2] and the amount of money in their pension accounts depends in large part upon AIMCo’s day-to-day investment decisions. And AIMCo is not a private entity – it is beholden to Alberta’s United Conservative (“UCP”) governing party.
In a shock decision, this Thursday the decision was made to clean house. AIMCo’s CEO and entire board are being replaced in one fell swoop.[3] While a new board has not yet been selected, a new interim CEO, Ray Gilmour has been announced. He is an Alberta public servant.[4] The ostensible rationale is that AIMCo has not been making enough money for its clients–these important members of the Albertan public. Like any other fund, AIMCo has certain return “benchmarks” that it aims to meet or exceed each year. That has not happened. At the same time, management fees–amounts paid to those who oversee the fund, and the entities that it invests in–are also climbing. Alberta’s Finance Minister (the party responsible for the firing), explained the rationale:
“I’m doing this because … I’m the minister responsible, and costs like this are borne by all its clients, Albertans in general and the pensions that they represent now.”[5]
Reviewing this decision leaves me with a few thoughts. First, directors must act with a view to the best interests of the corporation. But what are these best interests? In a typical fund, it might simply be a bottom-line return figure, which admittedly has been lacking. When, though, must we factor in the best interests of the corporation’s clients? These are everyday people trying to make ends meet in a costly economic environment. Replacing an entire director and management regime introduces a lot of change at once. It will take time to craft new investment strategies. Returns in the interim may suffer. And those returns will hit the pocketbooks of regular people, in a costly economic environment.
Normally, to oust a board of directors, an acquisition-whether hostile or friendly-must occur, or the shareholders must vote them out. But the shareholders, here, Albertan laypeople never got the chance to vote. And in the case of an acquisition, there are defences that allow the shareholders time to choose whether to tender their shares or opt out. So is this unilateral decision fair? Should one Finance Minister, a politically-connected person, be allowed to do such a sweeping change?
I also wonder about the actual reason for the change. The UCP has been dismantling Albertan public bodies – for example, Alberta Health Services has seen their power to operate Alberta hospitals taken away by the government.[6] Is this another step to insert more political friends into an important provincial resource that affects so many laypeople? Time will tell.
[1] https://globalnews.ca/news/10859202/alberta-government-aimco-board-fired/
[2] https://www.aimco.ca/who-we-are/our-clients
[3] https://globalnews.ca/news/10859202/alberta-government-aimco-board-fired/ [Supra note 1]
[4] https://www.aimco.ca/who-we-are/leadership
[6] https://edmonton.ctvnews.ca/alberta-premier-reveals-plans-to-transfer-hospitals-away-from-ahs-1.7015935
