Shareholder adviser backs call for Alliance shake-up

Katherine GarrettCox: Strategy is working. Picture: PA

ALLIANCE Trust has suffered a fresh blow in its battle with Elliott Advisors after an influential shareholder group gave its backing to the US hedge fund’s attempt to stage a boardroom shake-up.

Corporate governance outfit Pirc has also advised investors to vote against the Dundee-based wealth manager’s pay plans when they gather for its ­annual meeting later this month.

The call came as Alliance revealed it has accelerated its process of finding a “new, truly independent” director, ­having appointed headhunter Russell Reynolds “to undertake a broad, transparent and rigorous search”.

Alliance, headed by chief executive Katherine Garrett-Cox, said: “This search will be based on an assessment of the needs and challenges of the business and the skills and experience required to complement those of existing Board members. As part of this process any candidates put forward by our shareholders will be considered.”

Alliance claimed last month that ­Elliott’s proposed ­directors – ­Anthony Brooke, Peter Chambers and Rory Macnamara – “cannot be considered to be independent”, prompting a scathing ­response from the activist investor, which controls 12.2 per cent of the trust.

Elliott, which describes itself as a long-term shareholder in Alliance, said the Tayside institution had failed to ­engage with it on “matters of ­substance” and resorted to “personal ­attacks in a manner unbecoming of directors of a public company”.

Wading into the debate, Pirc insisted that the three non-executives nominated by Elliott after being identified by search firm Spencer Stuart were ­independent and it recommended that shareholders vote in favour of their ­appointment.

It added: “It is considered that increased independent representation is a valuable safeguard against ‘group-think’ and that sufficient assurance has been provided on the independence and calibre of the candidates to merit their election.”

Pirc also advised investors to vote against Alliance’s remuneration report, due to concerns over the level of ­Garrett-Cox’s total rewards in relation to her salary, and oppose its annual ­report at the meeting in Dundee on

29 April because there is no vote on the trust’s dividend policy.

But Alliance mounted a robust defence of its performance in a trading update today, highlighting that its share price had risen above 500p for the first time last month and recently hit an all-time high of 523p. Total shareholder returns of 6.9 per cent in the past three months outperformed the Morningstar Global Sector Index, which returned 6.6 per cent, though they lagged behind over one, three and five years.

Third-party assets under management at its Alliance Trust Investments arm stood at more than £2 billion as of the end of March, while Alliance Trust Savings’ assets under administration grew 9.2 per cent compared with the first quarter to £7bn.

Garrett-Cox said: “We are pleased with the strong performance of Alliance Trust during the period which we believe shows that our strategy is working. The trust has outperformed the Global Sector over the first three months of the year, a continuation of the work Peter Michaelis and Simon Clements have done since they were appointed in September of last year.”

She added: “Both of our subsidiaries have also shown very encouraging progress and continue to grow, with Alliance Trust Investments seeing the strongest ever quarterly net inflows in its bond funds and Alliance Trust Savings exceeding £7bn in assets under ­administration for the first time.”