The Alberta government has dismissed all 10 members of the board of the Alberta Investment Management Corporation (AIMCo) as part of a leadership overhaul.

CEO Evan Siddall was among four executives fired as the government cited AIMCo’s below-benchmark investment returns and rising operational costs, including increasing management fees and staffing expenses as the causes of the shake-up. A new board will be appointed after Siddall’s permanent replacement is hired, the province announced.

Longtime bureaucrat Ray Gilmour has been appointed interim CEO. Finance Minister Nate Horner will serve as AIMCo’s sole director and board chair for a 30-day period, the government annunced.

AIMCo ranks among Canada’s largest pension fund managers, managing a portfolio worth $169 billion. The company manages investments for Alberta’s pension, endowment, insurance, and government clients.

As the Globe and Mail noted, the move marked rare government intervention in Edmonton-based AIMCo, which has a mandate to operate independently and at arm’s length from government.

“It’s something we’ve been monitoring with concern for a while,” Horner told reporters at the Legislature in Edmonton. “We’ve been watching this closely and it was my determination it wasn’t going to change without a major reset.”

According to Horner, costs have been a primary concern, with high salaries—some exceeding $1 million—borne by AIMCo’s clients, who include Albertans and various pension funds.

“They’re going to have to look at their cost trajectory and structure,” Horner said. “I am going to offer a challenge to the new board chair around costs, and I would expect that challenge would be applied on the executive level as well.”

But industry sources told the Financial Post that AIMCo’s expenses align with industry standards and that performance may be linked to the risk profile of its clients rather than lagging investment strategies.

Jim Leech, former CEO of the Ontario Teachers’ Pension Plan, expressed doubt to the FP that “a few basis points of performance or costs” were solely responsible for the boardroom shake-up.

Opposition finance critic Court Ellingson criticized the government’s handling of AIMCo, suggesting the shake-up indicates a lack of effective oversight.

“If they’ve been monitoring this for a while, they had many opportunities to do something that was not so drastic and earth-shattering as today’s move,” Ellingson.

He expressed concern about the impact on AIMCo’s clients, which include 375,000 public-sector employees whose pension assets are managed by AIMCo.

The shake-up came just six weeks after AIMCo’s chief investment officer, Marlene Puffer, announced her departure after less than two years in the role.

The Alberta Teachers’ Retirement Fund (ATRF), one of AIMCo’s key clients, acknowledged prior concerns about rising costs in a note to members published on its website.

“Nothing that has happened with regard to the changes at AIMCo thus far has caused us concern about the status of our investments,” the ATRF noted. “At the same time, we have in the past raised issues regarding costs at AIMCo with both the Government of Alberta and with AIMCo.”

Although AIMCo reported a 6.9% return in 2023, its performance fell short of its benchmark return of 8.7%. AIMCo ended 2023 with $160.6 billion in assets under management. Investment challenges in real estate, infrastructure and renewable resources contributed to the lower returns.

Meanwhile, AIMCo’s total operational costs rose significantly. From 2019 to 2023, third-party management fees increased by 96%, the workforce grew by 29%, and wage and benefit costs rose by 71%, all while AIMCo managed a smaller percentage of funds internally.

The province says Gilmour, a former deputy minister, will assist in the leadership transition, drawing on his experience across multiple ministries and 15 years in banking.

Siddall spent about three and a half years at AIMCo’s helm. Before moving there in 2021, he served as president of the Canada Mortgage and Housing Corporation for approximately seven and a half years.

Siddall said on LinkedIn that he is taking a “career break” following his dismissal.

“[I’m] tying up loose ends, smelling wildflowers, reading, writing, playing guitar (badly), restoring my health and focusing on [wife] Sonia, our family and friends,” he wrote.

Pictured: Evan Siddall, former CEO of AIMCo

Photo: AIMCo