Ambac Financial Group, Inc. (NASDAQ:AMBC) today said its current President and CEO Nader Tavakoli will now also be a chief of a subsidiary division of the bond insurer. Currently, shareholder Canyon Capital is criticizing Tavakoli’s pay package and the performance of the company.
The insurance company said that Tavakoli will be CEO and president of Ambac Assurance Corp (AAC), the organization’s principal subsidiary. Ambac’s chairman of the board Jeffrey Stein said Nader is a great leader with the suitable expertise and experience to helm Ambac as well as AAC. The organization says it looks forward to his guidance at both the operating company and group levels.
David Trick, Ambac Financial Chief Financial Officer, has been serving as the Ambac Assurance CEO on an interim basis.
Canyon Capital is Ambac’s fourth biggest shareholder with a 4.5% stake. It said that Tavakoli’s pay package was exorbitant taking into account the organization’s stock performance. It also said that his capital investment plan was bereft of transparency.
As per Canyon, Tavakoli’s compensation was over three times the 2014 target pay package of his predecessor Diana Adams. Incidentally, the latter was CEO of the holding company as well as the operating company.
Ambac declared that it had appointed Jeffrey Stein as Ambac Assurance’s chairman. Ambac called Canyon’s criticism baseless and reckless. It attributed the attack to Canyon’s desire to monetize a short term trade on Ambac.
Shares of Ambac have dived around 34% since the end of 2014. The hedge fund said the price drop was keeping with the market’s unhappiness and worry regarding Tavakoli’s selection. He was paid $225,000 in 2014 and was given a stock award of $250,011. Tavakoli’s remuneration plan could let him earn over $40 million by 2018.
As per Canyon, this is an exorbitant sum for a company with a market capitalization of $630 million when Mr. Tavakoli’s present pay package was approved.
Ambac said that Tavakoli’s remuneration was as per market norms and that Canyon’s raising of compensation issues is an effort to divert investor focus from the contradictory nature of their position.