Alliance Trust has come under renewed attack from former non-executive director Tim Ingram, who has questioned why chief executive Katherine Garrett-Cox's pay has doubled during five years of underperformance.
Mr Ingram, now chairman of the Wealth Management Association and formerly chairman at Collins Stewart and RSM Tenon, senior independent director at Savills, and chief executive at Caledonia Investments, left the Alliance board after only 17 months in April 2012.
Last week Mr Ingram criticised the trust's "dismal" performance, prompting suggestions that he and two other former non-executives - Consuela Brooke who left in 2012 after only nine months and Win Robbins who stood down recently after two years - had not been in full accord with the company's strategy.
Yesterday he re-entered the war of words between Alliance and its 12 per cent shareholder Elliott Advisors, the New York hedge fund offshoot which wants to place three new directors on the board at this month's annual meeting.
Mr Ingram, 67, said that as a long-standing shareholder and former board member he had been following the dispute with great interest. On Alliance's claim that Elliott's proposal was "only the thin end of the wedge", Mr Ingram said: "One does perhaps mischievously wonder - for whom?"
He went on: "The essence of Elliott's argument is that performance has been constantly bad, and that the board is not addressing the reasons for this and the possibilities for marked improvement e.g. potentially outsourcing investment management and disposing of continually loss-making subsidiaries.
"Moreover Elliott argues that the costs of running the trust are too high as exemplified by the increases in the CEO's remuneration."
The activist had therefore proposed the election of three new supposedly independent directors in order to improve corporate governance, Mr Ingram noted. Alliance Trust was arguing that its performance was "actually OK" and Anthony Brooke, Peter Chambers and Rory Macnamara would not be independent because they were proposed by Elliott, and therefore might not act in the best interests of all shareholders.
Mr Ingram said: "The question to put to Elliott is - given that you are proposing these three directors, how can you and/or the directors themselves demonstrate that, if elected, they would be independent and act in the best interest of all shareholders?"
But his more searching questions were reserved for the Alliance board.
Mr Ingram said: "Given that your own fact sheet shows your shareholder returns noticeably underperforming over five years (and indeed over one and three year periods) which has caused the company to be relegated from the FTSE-100, and that your own broker has stated that "performance has been lacklustre", how can you justify the CEO's annual remuneration approximately doubling over those five years from £700,000 to £1.34 million?"
ShareSoc, the small shareholder action group, has also questioned the £120,000 fee for chairman Karin Forseke as well as the total pay-out for chief executive Ms Garrett-Cox. In its full analysis of the dispute published late last week ShareSoc said the levels "seem to be much higher than industry norms for this kind of trust".
Alliance argues that as a self-managed trust with business subsidiaries it has a "unique structure" in the industry. ShareSoc comments: "Although being self-managed can be a low-cost route, the lack of flexibility and lack of separate accountability it imposes means few trusts have taken this approach. It is not unreasonable for anyone to question whether this remains an appropriate structure."
ShareSoc also says the trust's performance, as measured by total share price return (TSR), was below sector average over one, three and five years as measured by the Association of Investment Companies.
Alliance Trust has insisted that its TSR is "in the top half" of the sector over important time periods, and that it "adheres to high standards of corporate governance".
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