After months of bitter quarrelling it seems investment firm Alliance Trust has finally reached a truce with its belligerent activist investor, the American hedge fund Elliott Partners - even if it is just temporary.
The Americans had been pressing shareholders to vote for three new non-executive directors to join the board at Alliance’s AGM tomorrow morning and for its CEO Katherine Garret-Cox to improve the trust’s performance. According to the Telegraph, Alliance has been outperformed by its peer group for eight of the past 10 years, and Elliott has also taken exception to Garret-Cox's £1.34m pay package.
This morning Alliance announced it had agreed to appoint two of the proposed NEDs, Anthony Brooke and Rory MacNamara, and would begin its own search for a third. Spare a thought for Peter Chambers, Elliott’s other proposed candidate, who walks away empty-handed.
Alliance’s announcement was very measured, avoiding the SHOUTY CAPITAL LETTERS deployed against Elliott a in previous statement. ‘On behalf of the whole board, I would like to express my gratitude to our shareholders for engaging with us on this important issue,’ said its chair, Karen Forseke. ‘Having considered this feedback we have worked with Elliott to find a compromise which we believe is in the best interests of all our shareholders.’
The truce has been described as a win for Elliott, but at least means Alliance’s board will be spared the embarrassment of being defeated in a vote by shareholders. Elliot has also agreed not to call a general meeting or ‘seek to agitate’ publicly against Alliance’s management until its 2016 AGM at the earliest. That gives Garret-Cox a decent amount of breathing space, but she will need to deliver a blisteringly-good 12 months of performance to persuade Elliott not to come knocking on the door again this time next year.
After all this to-ing and fro-ing, MT would love to be a fly on the wall in Brooke and MacNamara’s super-awkward first board meeting...