Alliance Trust chief executive Katherine Garrett-Cox has suffered another big blow as global corporate governance adviser ISS backed a shake-up of the trust’s board.
The body has issued a damning report ahead of the trust’s upcoming annual general meeting, at which shareholders will vote on proposals to appoint three new independent non-executive directors to the trust’s board.
The resolutions have been requisitioned by activist shareholder Elliott Advisors and aggressively rejected by the Alliance Trust board including Ms Garrett-Cox.
“The issues mentioned are the same that were raised during the activist campaign in 2011-12. Either the board has failed to challenge the status quo, or failed to adequately explain why the status quo is preferable. In either event, it seems clear that change is warranted at Alliance,” the report said.
“The addition of three candidates like 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.”
ISS also criticised Ms Garrett-Cox’s high base salary in the report.
It comes after a similar major corporate governance advisor, PIRC, also backed the nominees earlier this week. ShareSoc, an independent firm supporting private investors, has also backed the nominees.
Investment Adviser is backing the three appointments to shake-up the investment trust, which has delivered lacklustre performance for a number of years.
ISS is a proxy adviser firm that operates in 10 countries, making corporate governance decisions on 39,000 companies.
An Alliance Trust spokesperson said: “We’re disappointed that the ISS report doesn’t represent many of the facts that we provided to them when compiling their research and in particular does not reflect our concerns over Elliott’s motives for proposing these candidates.
“There seems to be a lack of consistency in the report, which makes it hard to see which timeframes or comparator groups are being referred to. There also appears to be a lack of understanding of the investment trust sector, including the industry guidelines on reporting of costs. ISS is entitled to a view, but we hope that shareholders will reach their own informed decision taking full account of the reasons why our board has made its recommendation to vote against the proposed candidates.”
