Garrett-Cox will step down from the board of Alliance Trust but continue as chief executive and a director of its fund management arm Alliance Trust Investments (ATI).
Advertisement
As part of the overhaul Alliance Trust has revealed the board will “become fully independent, consisting exclusively of non-executive directors”.
Garrett-Cox will remain CEO of Alliance Trust Investments, according to a statement Thursday.
Garrett-Cox, paid £1.34m a year ago, has been under mounting pressure from shareholders over the trust’s underperformance.
Alliance Trust has still not accepted Elliott’s demand to outsource more of its fund management, but has agreed to establish a Management Engagement Committee (MEC) headed by veteran fund manager Karl Sternberg to “review investment performance regularly”.
The change means that for the first time in its 127 year history, only non-executive directors will sit on the trust’s board.
The trust, which has come under criticism for meandering from its core focus, will introduce the MSCI All Country World Index as its formal benchmark “setting a clear measure against which to assess the trust’s performance”.
The trust will move to pay income as ordinary dividends, rather than its current practice of supplementing them with “special” payouts.
The board says it considering outsourcing the management of the trust to an external asset manager and is open to this option in the future, with ATI having a six month notice period for its contract. “We have carefully considered the feedback we received and this is reflected in this announcement”. The trust’s relatively small exposure to private equity will also be reinvested into the equity portfolio as these assets mature over the next few years.
“This revised governance structure provides the board with greater clarity and flexibility in managing these two investments”, the company said. But once the changes take effect she will step down from the board of Alliance Trust and as chief executive.
The board hopes the changes will help to narrow the discount, but says it is also committed to using share buybacks to narrow it further.
However, the asset allocation of the trust will change, focusing more on global equity and disposing of its fixed income, property and legacy mineral rights “as soon as practicable”.
‘In our view, Alliance Trust starts to look like it is on an attractive valuation in light of the changes announced today.
‘I would like to thank Katherine for her contribution to the board over the past eight years and I am confident that under her leadership Alliance Trust Investments will create significant value for our shareholders’.
Advertisement
Analysts at Numis said: “These changes are more radical than we had expected and we believe they will be welcomed by shareholders. All of this is underpinned by the board’s commitment to a single figure discount”.
