Alliance: come to the AGM and see shareholder capitalism in action
Shareholders should seize the chance to vote for a better Alliance Trust at the AGM at the end of the month, says Merryn Somerset Webb.
We wrote about the battle for Alliance Trust, one of the UK's oldest investment trusts in the magazine's investment briefing a couple of weeks ago,and I also looked at the war of words between the trust and its New York hedge fund enemies, Elliott. But things are hotting up.
Yesterday, Pirc, the group that advises shareholders on the best way to vote on these matters, released its recommendations for the AGM on 29 April. There are several key issues in the row.
One is that Elliott believes that Katherine Garrett-Cox, who runs the company, is obscenely overpaid. On this it is(to my mind) quite right, and it seems that Pirc agrees. Garrett-Cox's incentives are considered to be excessive given that her total rewards come to nearly 300% of her base salary, rather than the 200% that is "considered best practice".
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Another is that the board isnot independent enough ie, it isnot acting in the interests of the shareholders. On this Pirc also agrees it is recommending that shareholders vote for all three of Elliott's candidates on the basis that independence is a "safeguard against groupthink".
Interestingly, however, it looks like the board of Alliance Trust is also coming around to theview that it isnot independent: it has appointed itsown headhunter to find a "truly independent non-executive director in the summer", something that rather suggests itknows it doesn'thave enough of them already.
However you feel about Elliott (and I have been pretty impressed by itso far), I think that it is clear at this point that it hasalready been a force for good in this case: we haven't even got to the AGM and already Alliance has been forced into accepting change.
I'll be at the AGM in Dundee on 29 April if you are a shareholder I rather think you should come too. It's going to be a fine chance to vote for a better Alliance Trust and to see shareholder capitalism in action.
PS Many things worry me about Alliance Trust, but I'm finding the top ten holdings at the moment a particular concern: run your eye down this list and you will see that some 14% of the trusts assets are invested in funds run by the Alliance Trust funds business. If they were the best funds out there, maybe that would be OK, but can they all have passed such independent scrutiny?
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Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).
After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times
Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast - but still writes for Moneyweek monthly.
Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.
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