Blow for Alliance Trust as PIRC backs proposed directors

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Blow for Alliance Trust as PIRC backs proposed directors

Alliance Trust has suffered a blow after a major corporate governance consultancy countered the trust’s vocal opposition to the potential appointment of three new independent non-executive directors.

The trust has been engaged in a public spat with its largest shareholder Elliott Advisors, which has proposed requisitions at this month’s annual general meeting to appoint three non-executive directors.

Investment Adviser has publicly backed the motions to appoint the three individuals and the independent paper by Pensions & Investment Research Consultants, known as PIRC, provides a strong tailwind for the campaign.

PIRC said Alliance Trust’s board had “strongly recommended” shareholders vote in opposition to the proposals because of a view the non-executive directors “cannot be considered independent because Elliott Advisors commissioned the search firm that proposed them.

“The board suggests that the proposed directors will act to further the potentially short-term interests of Elliott Advisors to the detriment of other shareholders,” PIRC said.

“It is considered by PIRC, however, that none of the proposed directors have any material connections with Elliott Advisors that would inhibit their ability to carry out their duties on behalf of all shareholders equally and that their independent insights and contributions would be an asset to the board.

“The new directors will also not have undue influence as, if all three new directors are elected, as proposed by the shareholder resolutions, 70 per cent of the board will still be made up of incumbent directors.”

An Alliance Trust spokesperson said: “Alliance Trust notes the report published by PIRC, which is a body that represents a small minority of our shareholders.

“While PIRC is entitled to a view, the board of Alliance Trust has made its recommendation to shareholders and has clearly explained why it believes shareholders should vote against Elliott’s proposals”.

The trust said in its trading update it had decided to “accelerate” the process of searching for a “new, truly independent non-executive director”, something it had previously planned to do in the summer.

It said it had appointed Russell Reynolds to undertake a “broad, transparent and rigorous search”.

“This search will be based on an assessment of the needs and challenges of the business and the skills and experience required to complement those of existing board members,” the statement said.

“As part of this process any candidates put forward by our shareholders will be considered.”

PIRC claims to be Europe’s largest independent corporate governance and shareholder advisory consultancy with more than 25 years’ experience in providing proxy research services to institutional investors on governance and other environmental, social and governance issues.