Activist Investor HoldCo Asset Management Calls for CEO Chris Gorman’s Removal
HoldCo Asset Management, an activist investor, has recently urged KeyBank to dismiss CEO Chris Gorman and adopt a “no acquisitions” policy. In a 57-page presentation published on Friday, HoldCo criticized Gorman for his alleged reluctance to engage in stock buybacks and his contradictory statements regarding the bank’s stance on mergers and acquisitions.
Questionable Capital Deployment and Strategic Direction
HoldCo pointed out five instances this year where Gorman or KeyBank CFO Clark Khayat downplayed the importance of mergers and acquisitions in the bank’s strategy. Despite Gorman’s statements in various forums emphasizing organic growth over M&A activities, interpretations by Bloomberg suggested otherwise.
HoldCo highlighted a specific incident where Gorman’s remarks about the Pacific Northwest markets led to a 1.6% drop in KeyBank’s stock value, indicating investor concerns about the bank’s strategic direction.
Scotiabank’s Influence and Alleged Stealth Acquisition
The activist investor also raised suspicions about Scotiabank’s intentions, following its acquisition of a significant stake in KeyBank. HoldCo questioned Scotiabank’s claim of a “passive investment,” suggesting that the Canadian lender might be steering KeyBank towards a strategic agenda that benefits its own interests.
HoldCo, owning $142 million in KeyBank shares, emphasized the need for the bank to prioritize shareholder returns through stock buybacks and independent capital allocation decisions, free from Scotiabank’s influence.
Challenging KeyBank’s Past Decisions and Future Path
In its presentation, HoldCo referenced KeyBank’s previous acquisition of First Niagara and the subsequent shift in the bank’s strategic focus. The investor criticized the lack of transparency in KeyBank’s bidding activities and called for accountability in decision-making processes.
HoldCo’s demands for KeyBank include the deployment of excess capital towards stock buybacks, the establishment of an independent capital allocation committee, and a reassessment of the current board’s composition to align with shareholder interests.
Conclusion
As KeyBank faces pressure from activist investors like HoldCo Asset Management to reevaluate its leadership and strategic direction, the bank’s response to these challenges will be closely monitored. The outcome of these demands could significantly impact KeyBank’s future trajectory and shareholder value.
