Underperforming the index

6 January 2015 By Antony Currie Follow @AntonyMCurrie

The data company’s rejection of 8.3 pct investor Jeff Ubben’s request for a board seat looks cack-handed. MSCI could use a shareholder-focused director. Yet Ubben’s ValueAct, with success at Microsoft under its belt, also seems tactically challenged now that the fight is public.

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Jeffrey Ubben, chief executive of ValueAct, sent a letter to MSCI’s directors on Jan. 5 to complain about how the investment firm’s request to be considered for a board seat was handled and rejected.

Ubben, whose fund owns 8.3 percent of index and data provider MSCI’s stock, wrote that the handling of the board request “leaves us with serious concerns about the board’s independence from management and alignment with shareholders.”

ValueAct first asked for board representation last August and has concerns about the company’s strategy. In the letter, the firm said it “cannot understand where all the money is going” since the growth and high margins in MSCI’s index business do not appear to flow to the bottom line.

MSCI is investing in a number of products, including risk analytics. Executives told investors last October that they were hoping to bring expense growth in line with revenue growth by 2016. Costs increased more than 17 percent in the first nine months of 2014 from a year earlier while revenue rose 10 percent.

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