2015 was a disappointing year for the capital markets and for GMP,
particularly from an earnings and share price performance
perspective. We faced significant operating challenges — many of
which were beyond our control. This included a precipitous decline in
business activity in the mining and oil and gas sectors resulting from
the prolonged imbalance in global supply and demand dynamics and
heightened risk aversion. At the same time, competition across our
core businesses has intensified.
2015 was also an important year for the firm. It marked GMP’s
20th Anniversary, and, while certainly not without challenges,
GMP continued to evolve its franchise by undertaking fundamental
organizational change in response to permanent structural and
regulatory changes in the industry.
For two decades, GMP has proven itself resilient. Our differentiating
strength is having the conviction to take a leading role in reshaping
the competitive landscape. Together, with management, we made
considerable progress toward reshaping and streamlining the firm
for the future, maintaining a strong balance sheet, prudently
managing capital and enhancing the Board’s independent risk
The pace of technological upheaval in the trading business and
breadth of regulatory change facing the financial services industry
has been astounding. When combined with a shrinking pool of deals,
it became clear that bold steps were needed. The capital markets
landscape turned decidedly “Darwinian” — you either adapt or cease
to be viable. Adapting with an eye to the future is precisely what
As a Board, we spent considerable time working closely with
management on strategic initiatives designed not only to reshape
the firm, but to reshape the competitive landscape in the
independent brokerage space. These actions included a sharpened
focus on our larger North American operations, exiting non-core or
underperforming businesses affected by the ongoing challenging
operating environment and optimizing operations by substantially
reducing both fixed costs and headcount across the entire franchise.
This decisive response positions us well to succeed in the “new
The single most important factor underlying GMP’s success has
always been the exceptional people that go up and down the
elevators each day. As such, one of the Board’s primary
responsibilities is overseeing an effective and transparent succession
planning process. 2015 emphasized the importance of leadership
succession, extending beyond just the CEO. Succession is more than
just a one-year commitment. It is an ongoing process where we
assess and constructively debate the breadth and depth of the
firm’s talent pool. Under Harris’ leadership, I am confident we have
the right management team in place as we move forward.
Over the past several years, the Board directed considerable focus
toward ensuring Directors’ interests are better aligned with those
of shareholders. These efforts include the introduction of a Director
Deferred Share Unit Plan, last year. In early 2016, the Board approved
a 10% reduction to annual Directors’ fees effective January 1, 2016.
This decision was prudent in the context of GMP’s restructuring and
is consistent with the 10% salary reduction implemented for certain
senior management in late 2015. I believe these decisions are an
integral component in maintaining shareholder trust and ensuring
that Directors’ interests remain aligned with those of shareholders.
The Board is committed to maintaining a conservative approach
to capital across all business cycles. The firm’s capital position is
actively discussed at each Board meeting. The Board prides itself
on prudent capital management. In total, we returned $18 million
in capital to shareholders in 2015 through a combination of share
repurchases and dividends. In connection with the broader
restructuring of the firm’s Capital Markets business and following
extensive discussions, the Board decided to suspend the firm’s
quarterly common share cash dividend. The decision was prudent
in the context of the magnitude of the restructuring. We remain
The competitive playing field has been reshaped, and GMP has taken
a leading role. GMP is a much stronger, leaner and more focused
franchise. We have the right business model, a highly motivated and
entrepreneurial workforce and a strong balance sheet. We remain on
the right course.
I would like to thank my fellow Board members for their insight,
sound judgment and commitment during these challenging times.
On behalf of the Board, I would also like to thank our shareholders
for their support.
We remain committed to working on your behalf.
DONALD A. WRIGHT
Chair of the Board of Directors of GMP Capital Inc.