The provincial government of Alberta, Canada, has terminated the entire board of the C$168.9 billion ($124.5 billion) Alberta Investment Management Corp., Edmonton, citing underperformance issues and rising costs.
Alberta Premier Danielle Smith's government said in a Nov. 7 news release that a new board chair will be appointed within 30 days and that a new board will be established after a permanent chair is named.
In the interim, Nate Horner, Alberta’s president of treasury board and minister of finance, has been appointed the sole director and chair for AIMCo, effective immediately.
Smith’s government assured in the release that Horner will not make any investment decisions, nor will he receive any compensation from these roles. In addition, AIMCo clients will not experience any disruption to their portfolio during this transition.
Evan Siddall has reportedly also been let go as CEO of AIMCo. On his LinkedIn page, Siddall describes himself as the “former CEO” of the pension fund.
“After years of AIMCo consistently failing to meet its mandated benchmark returns, the minister of finance will be making changes to restore confidence in Alberta’s investment agency,” Smith‘s government stated.
Among other factors, the Alberta government cited that AIMCo has seen significant increases in operating costs, management fees and staffing without a corresponding increase to return on investment. From 2019 to 2023, the government noted, AIMCo’s third-party management fees have increased by 96%, the number of employees increased by 29% and salary wage and benefit costs increased by 71.4%. Over that time, the fund delivered an average annualized return of 7.62%.
These costs all increased while the number of funds AIMCo internally managed declined by 18%, the government added.
AIMCo is a “crown corporation” of the province of Alberta, meaning it is a government-owned organization. According to AIMCo’s latest annual report, the board comprised 10 people as of June 30. Kenneth F. Kroner has served as interim chair since Jan. 1, after the term of the prior chair, Mark Wiseman, ended on Dec. 31, 2023.
AIMCo has undergone some internal turmoil recently. In late September, CIO Marlene Puffer departed. At that time, the pension fund named Justin Lord to the newly established role of global head of public markets and also named David Scudellari as senior executive managing director and global head of private assets and strategic partnerships.
For calendar year 2023, AIMCo returned a net 6.9%, below the benchmark return of 8.7%. In the first half of 2024, AIMCo returned a net 5.4%. No benchmark was provided for this period.
Sebastien Betermier, associate professor of finance at McGill University and the executive director of the International Centre for Pension Management, said this latest development has him “very concerned.”
“A major reason why Canadian pension funds have been able to perform so well is that they operate at an arm’s length from government,” he added. “The funds’ boards oversee performance and compensation matters and make strategic decisions with a long-term horizon. So when a government suddenly interferes and dismisses the entire board, it undoes the careful work done by the boards and undermines long-term results.”
Neither AIMCo nor the provincial government of Alberta could be immediately reached for comment.
Court Ellingson, Alberta's shadow minister for finance, member of the legislative assembly of Alberta and a member of the opposition Alberta New Democratic Party (NDP), criticized the government’s move.
“It makes Albertans question whether or not that fund (AIMCo) really is under the thumb of the premier and the finance minister,” he told local media. “There were options; this government had options they chose not to exercise those options. This government is incompetent.”
Smith and Horner are both members of the ruling United Conservative Party,
