When Alliance Trust’s shareholders gather in Dundee to vote at the company’s 127th annual general meeting on April 29, most of the questions put to them will be uncontroversial.
There is a resolution to reappoint Deloitte as the firm’s auditor and another permitting the trust to continue with its programme of share buybacks, for example.
But the meeting is set to reach an exciting climax later on, when three resolutions that were requisitioned by shareholder Elliott Advisors are brought to shareholders.
The ordinary resolutions – numbers 14, 15 and 16 – are for Anthony Brooke, Peter Chambers and Rory Macnamara to be appointed independent non-executive directors on the Alliance Trust board.
The trio were found by headhunter Spencer Stuart, having been appointed by Elliott.
Keen to preserve the status quo, Alliance Trust has published a blizzard of information arguing against the resolutions.
The shareholder circular relating to the three requisitioned resolutions began with a page featuring capitalised red letters recommending shareholders vote against the plans.
It continued by stating that “this is not just about nominating directors, we believe Elliott has plans for disruptive actions – this is the thin end of the wedge”.
“Elliott’s interests are at odds with other shareholders – we believe they are looking to exit their shareholding quickly,” it said.
“Your board considers that the proposed directors are not independent.
“Our company already has a clear and differentiated strategy which consistently delivers strong shareholder returns – this should not be jeopardised.”
The document goes as far as to include a graphic indicating where investors should tick on their voting forms to shut down the resolutions.
A seven-page letter from Alliance Trust board chairman Karin Forseke then stretches to several thousand words.
Having waded through 11 pages of the circular, shareholders are finally given Elliott’s letter proposing the appointments, for which it was permitted a maximum of 1,000 words.
The top of the Elliott Advisors letter appears with capitalised red letters from Alliance Trust emblazoned across the top, stating: “This does not represent the views of your board.”
In its editorial leader column this week, Investment Adviser states that the three nominees should be considered on their own merits.
Company governance rules forbid them from acting in the interests of Elliott or any other party once in an independent non-executive director role.
THE THREE PROSPECTIVE INDEPENDENT NON-EXECUTIVE DIRECTORS
Peter Chambers
Peter Chambers began his career in asset management as a fund manager at Lazard Brothers in 1981. He then moved to Citibank Investment Management in February 1986 where he was head of international equities for more than seven years.
Following stints in senior management at James Capel as chief investment strategist and at Gartmore as chief investment officer in the 1990s and early 2000s, Mr Chambers became chief executive at Framlington in 2003.
In just 18 months at Framlington, its assets under management rose from £2.5bn to £4.3bn, while its share price rose 80 per cent, although a management buyout attempt led by Mr Chambers collapsed.
He then spent five years as chief executive of Legal and General Investment Management, guiding the firm through the financial crisis.
He has since taken on a plethora of advisory and director roles, including as a board member on the International Financial Reporting Standards Advisory Council and a senior advisor to management consultancy Casey, Quirk & Associates.
He has also been a board member of the Investment Association since 2007 and is chairman of the audit committee.
Rory Macnamara
Corporate finance expert Rory Macnamara spent most of his career at investment bank Morgan Grenfell, rising through the ranks in the 1980s. Following the bank’s takeover by Deutsche Bank, he ended the 1990s as director of corporate finance, head of mergers and acquisitions and vice-chairman.
Mr Macnamara, a chartered accountant trained by PricewaterhouseCoopers, finished his career at Lehman Brothers as managing director of UK investment banking coverage, and has since taken up numerous board positions.
He was previously involved in a dispute between activist investor Laxey Partners and the Private Equity Investor investment trust, which saw Laxey successfully replace several board members, installing Mr Macnamara, among others, in a shake-up.
Since 2012 he has been chairman of the Dunedin Income Growth investment trust, a UK equity trust managed by Aberdeen Asset Management.
He was chairman of publisher Mecom until its acquisition and is still chairman of tenpin bowling firm Essenden. He holds directorships in housing and social care provider Mears Group and waste management firm Augean.
Anthony Brooke
Anthony Brooke came to prominence during a 23-year career at SG Warburg & Co, which began after joining in 1973.
He became a director in 1981 and then vice-chairman in 1994, staying in that role until Swiss Bank Corporation bought the firm in 1995.
Through his experience both at Warburg and with its partners, Paribas in France and AG Becker in the US, Mr Brooke built up extensive knowledge of capital markets throughout the world.
After leaving Warburg, Mr Brooke took on the role of managing director at Barclays de Zoete Wedd and then Credit Suisse First Boston.
He then became a partner and a director of fund of hedge funds company Fauchier Partners in 1999, overseeing significant growth in its assets before leaving the firm in 2008.
Mr Brooke is a director of hedge fund firm Bourne Park Capital and luxury lifestyle management company Quintessentially.
He also sits on the investment committee for Christ’s College, Cambridge and for the National Portrait Gallery.
ALLIANCE TRUST: THE CHAIRMAN’S REPLY…
Karin Forseke, Alliance Trust chairman, said:
“The board of Alliance Trust has unanimously recommended that shareholders vote against all of the resolutions being proposed by Elliott.
“On the candidates proposed, while we make no judgement on the character of the individuals, our fundamental concern is that having been selected and nominated through a process sponsored by Elliott, in which our company had no involvement, they cannot be judged to be independent. We do not believe that Elliott’s interests are aligned with our other shareholders, the majority of whom are long-term holders looking for consistent, sustainable returns and a secure dividend, which is in stark contrast to Elliott.
“Based on our regular interaction with Elliott since it disclosed its position in March 2011, we believe its intention is to pursue a short-term agenda aimed at facilitating an exit from its shareholding. Given the size of its position, this would potentially threaten the very existence of the company, and rides roughshod over our long-term shareholders, our customers and our employees.
“We have a strong board, which adheres to the highest standards of corporate governance. We are proud of its diversity, on the basis of its skills, experience and gender. Since Katherine Garrett-Cox was appointed chief executive in August 2008, Alliance Trust has delivered consistent investment performance and a total shareholder return of 92.2 per cent (as of March 24 2015) and we have continued to grow our dividend for the last 48 years.
“Alliance Trust is a company with a rich history and for which the future prospects are bright. We are asking our investors to stand behind us, as they have before, to protect their company so we can continue to deploy our differentiated strategy and deliver strong returns for all shareholders for generations to come.”
