Second independent body backs activist’s Alliance boardroom shake-up bid

Alliance_Trust_NewAdvisory group Institutional Shareholder Services (ISS) has joined corporate governance watchdog Pirc in advising investors to vote in favour of a proposal from US hedge fund and 12 per cent stake holder Elliott Investors to install a trio of new directors at Dundee-based Alliance Trust.

The news is the latest in what is becoming an almost daily serial saga prompted by US-based activist Elliott in the run up to the Trust’s AGM, which is due to be held in Dundee on April 29.

In what is undoubtedly another blow for the current regime, ISS said yesterday that “it seems clear that change is warranted at Alliance”.

The advisory group said Alliance had underperformed most of its peers over “long periods of time” and its complex structure had contributed to high costs and executive pay.

Katherine Garret-Cox

Katherine Garrett-Cox, chief executive of Alliance, has seen her total remuneration double to more than £1.3 million in the past five years, a period that has seen the trust’s total shareholder returns lag behind the Morningstar Global Sector Index.

Responding to the ISS intervention, Ms Garrant Cox this morning penned a letter direct to shareholders reiterating her message not to trust the proposals put forward by Elliott.

In her appeal that took the tone of a final address prior to the crunch AGM, she said: “I do not intend to repeat all the arguments – they have already been set out at great length – but after all the claims and counterclaims have been made, it comes down to a simple question: Who do you trust to run your company?”

Alliance claimed last month that Elliott’s proposed directors “cannot be considered to be independent”, prompting a scathing response from the hedge fund, which controls 12.2 per cent of the firm.

In today’s letter she adds: “We have previously described Elliott and their affiliates as a business that seeks to influence companies to change their strategic direction through public and disruptive campaigns. As a hedge fund manager they do this to create value for their own investors and we believe they have very different perspectives from other shareholders of Alliance Trust.

“That is why I believe the issue is not just about the three candidates Elliott have proposed – instead it is about Elliott’s plans for the future of the Company which you own. To date, neither Elliott nor the candidates they have proposed join your Board have shared their plans.”

However, Pirc this week backed Elliott’s position and said the three were independent and recommended shareholders vote for their appointment.

Outlining its position on the issue of the proposed director’s independence, ISS said: “The addition of Peter Chambers, with extensive asset management experience, Rory Macnamara, with extensive public board and investment banking experience, and Anthony Brooke, with asset management and investment banking experience, would be beneficial for Alliance. We recommend support for the three candidates.”

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