The Altman Group, a proxy firm founded by 35-year industry veteran Ken Altman, has revealed it will not accept new corporate proxy clients. Deep-pocketed competition in the US proxy space and an exodus of top talent have prompted the Altman Group to focus on other areas, including its main business doing proxy work for mutual funds and closed-end funds.
Altman’s exit from the US corporate proxy business coincides with the entry of New Jersey’s Alliance Advisors. By hiring at least two senior managing directors from Altman – Peter Casey and Domenick de Robertis – Alliance founders Michael and Kevin Mackey signal they’re getting back to their roots as proxy fighters.
The Mackeys sold their successful proxy firm, Corporate Investor Communications (CIC), to Georgeson in 2000 and founded Alliance in 2005 as a proxy management business, handling the whole shareholder meeting process except for solicitation. With old CIC troops like Casey and De Robertis up for grabs, Michael Mackey believes the time is right to get back into proxy, and expects more ex-CIC employees will return to the fold as Alliance moves from a 1,000-square-foot office to new 10,000-square-foot, state-of-the-art premises.
‘With all the changing dynamics of the proxy world, including say on pay, proxy access, broker discretionary voting going away and the SEC’s proxy plumbing review, we think now is a good time to get back into it,’ Mackey explains.
But Ken Altman says industry upheaval over the last several years has made it tough for independent players like the Altman Group. ‘The proxy business has moved from all the firms being in private hands to where the industry today is increasingly dominated by private equity firms and global transfer agents,’ he says. ‘The nature of competition has changed dramatically.’
Computershare’s 2003 acquisition of Georgeson began a trend that reached a dramatic turn this summer when American Stock Transfer (AST), which is owned by an Australian private equity portfolio, plunged into the proxy arena with Laurel Hill Advisory Group’s former brain trust as the guts of its new operation.
Altman says most of his proxy business referrals used to come from transfer agents. Now these referral sources are drying up in an industry where pricing is already extremely competitive and likely to become more so.
Governance consulting presents its own challenges. Proxy firms have invested heavily to offer year-round, board-level consulting services. But the boardroom is the hunting ground of major law firms and consulting giants. ‘Governance consulting will be a business for proxy firms, but they’ll be competing against A-list law firms, compensation consultants and management consultants,’ Altman says.
A thin talent pool across the industry piled further pressures on Altman as four of his top-drawer executives left in recent weeks. ‘With the loss of important talent, we had concerns as to whether or not we’d be able to bring in people at an appropriate level to serve clients the way we like to,’ Altman adds.
He says his firm is having a good year in all its other business lines – one of its best years ever – and is adding staff to those divisions, including mutual fund proxy, closed-end fund proxy, a small but high-margin IR business, asset recovery, global shareholder ID and global proxy solicitation.
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