AllianceBernstein’s chief executive officer for almost a decade, Peter Kraus, was fired April 28 along with nine board directors, a shake-up that gives more influence to the firm’s majority owner AXA, according to a regulatory filing.
French insurer AXA removed all AllianceBernstein board members except for AXA’s own chairman, Denis Duverne, and AXA chief executive Mark Pearson, AllianceBernstein said in the filing Monday. The asset manager announced the same day that Seth Bernstein, a longtime JPMorgan Chase & Co. executive, will replace Kraus as CEO.
Six new directors, including Bernstein and Robert Zoellick, a former World Bank Group president who served in both Bush administrations, were also appointed to the board, with Zoellick serving as the new chairman. The other board appointees – Ramon de Oliveira, Barbara Fallon-Walsh, Daniel Kaye, and Anders Malmström – are all directors at AXA, except for Malmström, who is its chief financial officer.
“They’re all AXA people. They got rid of everybody else and put their own people in place,” Surinder Thind, an equity research analyst at Jefferies, said in a phone interview. “Any kind of executive decision can be streamlined because they’re all on the same page.”
In a conference call with analysts Monday morning, Duverne said AXA planned to exercise a “closer and more strategic relationship” with AllianceBernstein. Throughout the call, Duverne, along with Bernstein and Zoellick, dodged analyst questions regarding the reason behind the sudden leadership change. Instead, the new executives looked ahead, praising the firm’s strategic direction and offering an optimistic outlook for the future.
“The decision to remove Peter effectively came as a surprise – it surprised not just myself but the markets in general,” Thind said. “I thought Peter was doing a great job; he had taken the company from what appeared to be a downward spiral post crisis and transformed it into a pretty solid global player.”
AllianceBernstein had $497.9 billion in assets under management at the end of March 31, an increase of 4 percent from the same period last year, and up 3.7 percent since the end of December, despite net outflows of $200 million, according to its first-quarter earnings report on April 27. The gain in assets was a result of positive investment performance, with Kraus pointing in the earnings statement to “a strong start” in global equity markets this year along with continued momentum in fixed-income.
His replacement, Bernstein, was most recently global head of managed solutions and strategy at JPMorgan Asset Management, responsible for discretionary assets within the firm’s private banking client business.
The leadership shake-up at AllianceBernstein comes as many asset managers have struggled to beat industry benchmarks, such as the Standard & Poor’s 500, and increasing investor preference for lower-cost passive investment funds.
“They were showing some pretty good innovative ways to tackle some of the industry headwinds like the shift from active to passive,” Thind said. “They were doing a good job; I had not heard any complaints from a performance perspective.”
