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Canyon Capital Targets Ambac’s CEO and Board Compensation

In a fresh SEC filing, Canyon Capital Advisors LLC, founded by Joshua Friedman and Mitchell Julis, released a compensation analysis of Ambac Financial Group Inc. (NASDAQ:AMBC)’s President and Chief Executive Officer, Nader Tavakoli, and the company’s Board of Directors, based on the work of widely-known compensation expert Brian T. Foley. Canyon Capital has put mounting pressure on the U.S bond insurer to accelerate the settlement of $2 billion in insurance claims, as the credit-focused hedge fund has debt positions in securities issued or insured by Ambac worth roughly $376 million. Simultaneously, the fund’s 2.2 million-share equity position is worth a mere $34.67 million.

Going back to the aforementioned compensation analysis, some of Mr. Foley’s findings conclude that Mr. Tavakoli’s direct compensation of $5.77 million in 2015 “was on the high end of the compensation of highest paid executives at the companies Ambac itself has identified as its peers for compensation purposes”. Moreover, those findings also suggest that Ambac Financial Group Inc. (NASDAQ:AMBC)’s full-year Board members were each paid “more than 2.70 times the median rate, more than double the 75^th percentile rate, and approximately 1.65 times the 90^th percentile rate for board members at Ambac’s Chosen Peers”. Canyon Capital, which has attacked Mr. Tavakoli’s compensation on multiple occasions, seeks the support of shareholders to vote for its director nominee, Frederick Arnold, at the company’s upcoming meeting of shareholders to replace current Chairman Jeffrey Stein.

Ambac shares have advanced by 12% since the beginning of 2016, but are down by 29% over the past 12 months. Andy Redleaf’s Whitebox Advisors trimmed its stake in Ambac Financial Group Inc. (NASDAQ:AMBC) by 61% during the March quarter, ending the three-month period with 242,569 shares.

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