The provincial government of Alberta has appointed Stephen J. Harper, the former prime minister of Canada, as the new chair of the board of the C$168.9 billion ($124.5 billion) Alberta Investment Management Corp., Edmonton.
In addition, AIMCo’s board has been reconstituted. Three former AIMCo members have been reappointed as board directors, including Navjeet Singh Dhillon, Jason Montemurro and James Keohane.
A spokesperson for the Alberta government said any additional board appointments would involve “discussions with the new board chair.”
The provincial government also said that to “ensure more consistent communications” between AIMCo and Alberta’s government, the province's deputy minister of treasury board and finance, Katherine White, will now also be a permanent board member of AIMCo and will not be compensated for this role.
A spokesperson for the Alberta government said there are currently five members of the board, including Harper as the chair.
“I am taking on this role, and doing so on a pro-bono basis, because I believe it is a meaningful act of public service to my adopted home province of the last 46 years,” Harper stated in a Nov. 20 news release. “I also feel uniquely positioned to help the organization improve its governance. Over several decades, Canadian pensions have earned a global reputation thanks to professional operations, upstanding ethics and prudent risk management. I have accepted the role of board chair because I want to see AIMCO further embody these values and to positively contribute to this culture.”
“We’re incredibly fortunate that Mr. Harper has agreed to take on this leadership role with AIMCo,” said Danielle Smith, premier of Alberta, in the release.
Nate Horner, president of treasury board and minister of finance of Alberta, stated: “Mr. Harper’s almost decade-long governance experience as a G7 leader and his strong track record as a steward of tax dollars makes him the ideal candidate to serve our province as chairman of the newly reconstituted AIMCo board of directors.”
As a result of Harper’s appointment, Horner’s prior appointment as interim board chair has been rescinded.
AIMCo has not had a board chair since March 2023 when Mark Wiseman stepped down. The interim chair Kenneth Kroner was terminated on Nov. 7 along with the former CEO Evan Siddall and the entire board. A replacement for Siddall has not yet been named. Ray Gilmour, the province’s deputy minister and secretary to cabinet, was appointed the interim CEO at AIMCo on Nov. 8.
In defending these dramatic changes, the government stated in the release that “in recent years, AIMCo’s operating costs, management fees and staffing have increased significantly without a corresponding increase in returns for their client funds.” Smith’s government added: “To protect Alberta workers, pensioners and taxpayers directly affected by these funds, Alberta’s government took the necessary steps to reset AIMCo’s focus.”
Harper, who co-founded the Conservative Party of Canada in 2004, served as the country’s prime minister from 2006 to 2015, winning three consecutive national elections.
Sebastien Betermier, associate professor of finance at McGill University in Montreal and the executive director of the International Centre for Pension Management, commented that in his view “an important part of the announcement is the re-appointment of several existing board members. This is important because having continuity on the board will provide institutional memory on key matters.”
Betermeier added: “The big question moving forward is whether Mr. Harper will be able to run the fund independently from the provincial government, or whether he is a political appointee acting directly on behalf of the government’s interests.”
Keith Ambachtsheer, director emeritus of the International Centre for Pension Management, commented that the appointment of Harper was “widely expected.”
“He (Harper) is an intelligent man, with a wide range of experience in government, and more recently, in the business sector,” said Ambachtsheer. “It is good news that three members of the previous AIMCO board will be rejoining the new AIMCO board, thus providing some continuity in the governance of the organization.”
Ambachtsheer, who is also executive-in-residence at the University of Toronto’s Rotman School of Management, also said the new board’s first task “will be to attract a truly qualified individual to the CEO position. This process will be watched with great interest by both Albertans and by those of us outside its borders.”
A spokesperson said AIMCo “welcomes” Harper and White to the board, as well as the reappointment of Dhillon, Keohane and Montemurro, citing that “their proven expertise will provide important continuity for AIMCo.” The reestablished board, the spokesperson added, is “an important step forward as we continue to work to restore stability to our organization.”
As previously reported, the Alberta government cited AIMCo's significant increases in operating costs, management fees and staffing without a corresponding increase to return on investment in explaining its decision to overhaul AIMCo's leadership.
From 2019 to 2023, the government noted, AIMCo’s third-party management fees 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%.
For calendar 2023, AIMCo returned a net 6.9%, below the benchmark return of 8.7%. For the three- and five-year periods ended 2023, the fund returned a net 5.8% and 6.1%, respectively, vs. benchmarks of 3.6% and 5.9%.
However, the fund underperformed in calendars 2019 and 2020, returning a net 10.6% and 2.5%, respectively, compared with benchmarks of 11.1% and 8% for those years. In the first half of 2024, AIMCo returned a net 5.4% (no benchmark was provided for this period).
