The annual meeting of Aecon Group Inc., a TSX-listed company that defines itself as “a Canadian leader and partner-of-choice in construction and infrastructure development,” promises to be more interesting than usual.
On June 29, shareholders will have a chance to vote for a slate of nine directors, one more than last year. But it’s the ninth director which has people talking and wondering about the back story.
New York-based Eric Rosenfeld, of the New York-based “principal investment firm” Crescendo Partners, is standing for election. Rosenfeld, who worked for 14 years at Oppenheimer & Co. before starting Crescendo, is a well-known and successful activist, whose focus is on finding value opportunities where the gap between a company’s trading price and its full value is about 50 per cent.
When it made the announcement of Rosenfeld’s nomination, Aecon noted that “maintaining good governance is central to the successful management of every board and to the creation of shareholder value.” A statement from the company spokesperson added that “Rosenfeld has proven himself to be an excellent, long-tenured director at a number of companies. We look forward to having his input to the business and strategic direction of the company.”
Reached in New York Wednesday, Rosenfeld said his nomination follows discussions “over the last few months.”
“Both us and the company thought it would be a good idea for me to join the board,” he said. Crescendo owns 214,200 shares.
Asked for his plans, Rosenfeld said, “he will be going on the board at the end of the month (and will) see how I can help.” He has had related experience with a construction company having been a director of the U.S. based Primoris Corp.
He also believes Aecon’s share price “is undervalued.”
“Hopefully I will be a productive board member and help to bring about value,” he added.
As for being undervalued, here are some numbers to consider: Since the beginning of 2007, the stock has traded in the range $5.72 to $23.05 with an average price over the period of $12.96.
Rosenfeld is also arriving at the company while it is in something of a state of flux. Last November, Terrance McKibbon stepped down as the company’s chief executive. He had been in the position for two-plus years. Executive chairman John Beck replaced McKibbon on an interim basis. A search is underway for a permanent chief executive.
“It’s one of the most important decisions a board makes. So it’s important to get it right particularly when the last CEO didn’t last very long,” noted Rosenfeld who has been on about 20 boards, split about equally between the U.S. and Canada.
Asked whether he has added a few potential candidates into the pot, he replied, with a laugh, that he “wasn’t on the board yet.”
Rosenfeld has been plying his trade in Canada for almost 20 years having started in 1998 with Spar Aerospace, the company that developed the Canadarm that was used in space flights. With other investors, Rosenfeld was voted to the board. A new chief executive was named and over the next few years a series of changes, including asset sales, was made. In early 2002 the rest of the company was sold to L-3 Communications Canada.
Cott Corporation was another Canadian company to come onto Crescendo’s radar. In 2008, after acquiring an eight per cent stake, he engaged the board and negotiated four director positions out of 11. At the time the stock was less than US$2; it closed Wednesday at US$14.96. Rosenfeld is lead independent director.