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Manhattan penthouse at centre of Argo row

Taking issue: the building in Manhattan where Argo Group has a corporate penthouse apartment (Photograph by Google Maps)

Argo Group International Holding’s denial that it has an executive penthouse apartment above its New York City offices has stirred up more anger from activist shareholders.

Because, while the company was correct when it batted away the claim, it did not mention the corporate penthouse six blocks away in Manhattan’s Chelsea neighbourhood.

“Argo should be ashamed for attempting to mislead shareholders by omitting this material from its response,” said Voce Capital Management LLC, the San Francisco-based hedge fund that is the beneficial owner of about 5.6 per cent of the shares of Argo.

According to Voce, Argo’s Manhattan apartment on Ninth Avenue was purchased for $5.79 million, three years ago. It described it as: “Open views and beaming light from the continuous walls of glass pull you from the entry through to the large living room and dining room and out onto the 41-foot-long terrace.”

It claimed to have confirmed that Mark Watson, Argo’s chief executive officer, lives there. However, this has been disputed.

A source close to Argo told The Royal Gazette that the apartment is not used exclusively by any single executive, but is used when needed if an executive is in town, or as accommodation during a relocation.

Meanwhile, in a 68-page presentation document released last night, Argo said: “Yes, we do have a corporate apartment in New York used by many employees, but it is not the fancy place described by Voce.”

Argo has previously described Voce’s claims directed at the company as spurious allegations that are part of a “misleading” media campaign.

The dispute was turned up a notch on Wednesday, when Voce said Argo “desperately needs a culture of respect, not disdain, for shareholders” and that its handling of Voce’s questions about the “potential penthouse apartment” where the CEO lives while in New York “demonstrates the company’s disregard for shareholders and lack of respect for honesty when engaging with investors”.

Voce issued a 66-page presentation, titled “Righting the Ship”, outlining its plan for how Argo can “unlock substantial shareholder value” by reducing expenses, undergoing compensation reforms, capital allocation improvements, portfolio rationalisation and enhancing corporate governance.

According to Voce, its ideas could increase the company’s return on equity to 13.5 per cent and reduce expenses by $100 million. It claims an additional $20 million of savings could be achievable by “reigning in corporate expenses, including corporate aircraft and housing, vanity sponsorships and CEO compensation”.

Voce has previously highlighted its concerns about the company’s use of corporate jets and its corporate housing programme. It is seeking the removal and replacement of five directors.

In reply, Argo published an updated presentation titled “Argo Group: driving growth and value for shareholders”, in which it said: “Voce has deliberately avoided the truth in order to engage in a campaign of misinformation and outright falsehoods with the hopes of creating an overwhelming appearance of impropriety as a means to gain board seats.”

It also hit back at what it claimed was Voce’s “sensationalist claims about corporate aircraft programme based on fundamentally wrong analysis”, and claimed Voce has “a track record of destroying shareholder value at the companies it targets”.

Argo said its board was committed to ensuring strong corporate governance practices. It said: “The truth is that our oversight and governance of the company is strong and serves investors well. Argo has the right board and management team to continue our best-in-class performance and stewardship.”