French investment management firm CIAM has called on Denis Kessler to step down from his role as Chairman of SCOR and continue as CEO without a Board position.
CIAM, which holds less than a 1% stake in the reinsurer, levelled several criticisms against SCOR and Kessler after its management refused to accept an €8.2 billion takeover bid from Covéa last year.
The firm now plans to ask SCOR’s shareholders to remove Kessler from the Board at the next general meeting on April 26, although it is in favour of allowing him to continue as CEO.
CIAM argues that separating the functions of Chairman and CEO is “widely accepted as better practice” in the industry and “eliminates the conflict of interest” that occurs when a CEO is responsible for self-oversight.
It added that an independent Chairman will ensure that Board meetings encourage members to “share their viewpoints and raise questions that challenge and cause the CEO to consider different approaches, delivering long-term value for all stakeholders.”
The investor also expressed concern that SCOR has not appointed a deputy CEO or publicly announced a succession plan for Kessler, who is 67 years old and has occupied the CEO and Chairman roles for 17 years.
CIAM recommended that shareholders consider existing independent Directors Kory Sorenson or Bruno Pfister as a good fit for the Chairman position.
Additionally, the fund criticised the composition of the current Board of SCOR, arguing that only four of its twelve members are truly independent, and noting that it is “constantly refreshed,” with two thirds of its members having been appointed in the last four years.
It called on shareholders to vote against the reappointment of Augustin de Romanet, Lead Director, as a Director on the Board, contending that he holds too many outside posts.
Finally, CIAM took issue with the executive pay levels at SCOR, which it claims are not aligned with the company’s true performance and are out of sync with peers in the reinsurance industry.
Data from CGLytics showed that Kessler’s total realised pay was almost €9 million in 2019, around €3 million higher than the CEO pay at Swiss Re and €7 million higher than at Hannover Re.
SCOR therefore ranks second highest in CEO pay for the reinsurers analysed by CIAM (behind Alleghany), despite ranking 6th in terms of market cap.
Catherine Berjal, CEO of CIAM, recently penned a letter to Kessler condemning SCOR’s “incredibly aggressive legal strategy” after the reinsurer said it would seek prosecution of Covéa and Thierry Derez for breach of trust related to the rejected acquisition offer.
CIAM took a 0.77% stake in SCOR as the Covéa acquisition rumours circulated last September and has since increased its share to 0.94%. Kessler has previously suggested that the firm’s indignation has been “clearly driven by (very) short-term speculative interests.”