A hedge fund prepares to demand the resignation of GAM CEO Alexander Friedman tomorrow. The shareholder also wants further radical measures implemented to help turn the fortunes around at the Zurich-based asset manager.
Asset manager GAM in recent weeks caught the headlines for negative reasons. The company posted a drop in pretax profit of 40 percent for the past year and still awarded its chief executive, Alexander Friedman, a pay increase of 20 percent. The manager received 6.1 million Swiss francs in 2016, a considerable sum for a company with a little more than 1,000 employees.
The shares of the company dropped more than 40 percent since reaching a record in April 2015. Small surprise then that not all shareholders are happy. Last month, RBR Capital, a Swiss hedge fund, announced that it planned to propose the election of three new board members, replacing GAM Chairman Johannes de Gier. The latter since has announced his intention to step down.
Bohli: New Board Members, New CEO
Now, the hedge fund aims to go a step further. Tomorrow Thursday it will hold a telephone conference to outline its plans for the asset manager. Rudolf Bohli (pictured below), head of RBR Capital, will likely demand the resignation of Friedman, because he is the «wrong» man to lead the turnaround, according to a report by «Finanz und Wirtschaft» newspaper.
RBR at the beginning of the month raised its stake in GAM to 3.28 percent. Bohli is said to have a manager ready to replace Friedman, but first needs to install his own board members, which he wants to achieve at the annual general meeting on April 27, 2017.
A Turnaround Case
GAM not only had a substantial drop in pretax last year, but also a decline in assets under management of more than 10 billion francs. During the tenure of Friedman, which started at the end of 2014, assets under management at the Investment Management division declined to 68.2 billion francs from 76.1 billion. The CEO conceded that the company had become a turnaround case.
Bohli wants to take the lead in turning around the fortunes of the company. He will demand a cut in costs to the tune of 100 million francs, more than 25 percent of the current expenditure. He also aims to cut the number of jobs, in particular in the back offices, «Finanz und Wirtschaft» said.
