Trian makes State Street action plan public
17 October 2011 New York
Image: Shutterstock
A large shareholder of State Street has made proposals made to the custodian earlier this year public in a bid to increase shareholder value.
Trian Fund Management, which owns some 3.3 per cent of State Street's outstanding shares, claims that it had been communicating privately with the custodian's management for over a year and provided its action plan to management in June this year, to which there has been no commitment to the actions that Trian views as necessary to enhance long-term shareholder value.
"Trian believes State Street is an exceptional franchise. The platform that has been assembled
over many years has leadership positions in attractive sectors and geographies.Despite these leadership positions, Trian believes State Street’s shareholders have lost money subsidising growth in revenue, compensation and assets at the expense of profitability, return on invested capital and total shareholder returns," wrote the fund manager, noting that State Street has delivered negative shareholder returns during each of the most recent ten, five, four, three, two and one?year periods.
In response, State Street issued a statement affirming that members of its senior management met with representatives of Trian on a number of occasions and have engaged in constructive discussions.
"Despite the challenging operating environment over the past several years, our business has remained resilient. State Street has continued our track record of profitable growth and has maintained the strongest capital position among our closest peers. With the approval of the Federal Reserve and within the context of growing our business, we intend to continue to return capital to our shareholders," State Street wrote.
Trian Fund Management, which owns some 3.3 per cent of State Street's outstanding shares, claims that it had been communicating privately with the custodian's management for over a year and provided its action plan to management in June this year, to which there has been no commitment to the actions that Trian views as necessary to enhance long-term shareholder value.
"Trian believes State Street is an exceptional franchise. The platform that has been assembled
over many years has leadership positions in attractive sectors and geographies.Despite these leadership positions, Trian believes State Street’s shareholders have lost money subsidising growth in revenue, compensation and assets at the expense of profitability, return on invested capital and total shareholder returns," wrote the fund manager, noting that State Street has delivered negative shareholder returns during each of the most recent ten, five, four, three, two and one?year periods.
In response, State Street issued a statement affirming that members of its senior management met with representatives of Trian on a number of occasions and have engaged in constructive discussions.
"Despite the challenging operating environment over the past several years, our business has remained resilient. State Street has continued our track record of profitable growth and has maintained the strongest capital position among our closest peers. With the approval of the Federal Reserve and within the context of growing our business, we intend to continue to return capital to our shareholders," State Street wrote.
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