Lesley Knox, the former chairwoman of Alliance Trust, has said she plans to vote against attempts by US hedge fund Elliott Advisors to have three new directors installed on the wealth manager’s board.
Knox – now a non-executive at Scottish Gas owner Centrica and chairwoman of the investment advisory board of Scots law firm Turcan Connell – said she would want assurances the trio are “wholly independent” of any major investor “to even consider voting them on to the board”.
I want a performance that is sustainable over long periodsLesley Knox
Dundee-based Alliance claimed last month that Elliott’s proposed directors – Anthony Brooke, Peter Chambers and Rory Macnamara – “cannot be considered to be independent”, prompting a scathing response from the activist investor, which controls 12.2 per cent of the trust.
Elliott said the institution, headed by chief executive Katherine Garrett-Cox, had failed to engage on “matters of substance” and resorted to “personal attacks in a manner unbecoming of directors of a public company”.
It recently emerged that former Alliance non-executive Tim Ingram will be voting in favour of Elliott’s bid to shake up the boardroom at the Tayside institution’s annual meeting on 29 April.
Ingram, who served as a director from 2010 to 2012, chairs the Wealth Management Association and in an open letter to shareholders said: “The overall performance of Alliance Trust in the medium term has been dismal.”
Analysts at JP Morgan Cazenove, Alliance’s corporate broker, said the interventions from Ingram and Elliott had landed “heavy blows” on Alliance, which the hedge fund said has underperformed its peers “over all relevant return periods”.
However, in a letter to a Sunday newspaper, Knox said: “Of course I care about performance and want the board to be rigorous in pursuing its continued improvement. I also care about the risks taken to achieve that performance and I want it to be sustainable over long periods. If I want to have high investment risk and volatile performance, I do it through other means.”
She added: “I very much doubt that Elliott’s time horizon is a long one and do not believe it is aligned with why I am a shareholder in Alliance Trust. Its suggestion of a huge buyback at a narrow discount would only benefit those who wish to leave and would be detrimental to those who wish to continue as shareholders.”
Setting out its opposition to Elliott, Alliance said the investor had proposed “in previous meetings with us, and as recently as last year” that the institution launch a tender offer for 40 per cent of its shares.
Alliance chairwoman Karin Forseke said: “Such a tender may well engineer an exit for Elliott, but would require a significant liquidation of our company’s assets, jeopardising the company’s future and long-term value for shareholders.”
However, Elliott – which describes itself as a long-term shareholder in Alliance – insisted the only formal proposal it has made to the firm is the nomination of three independent non-executive directors, a move “intended to strengthen the board for the benefit of all shareholders”.
The hedge fund said: “It is clear that Anthony Brooke, Peter Chambers and Rory Macnamara … are individuals with the credentials to prove a history of independent thought.
“They had never met Elliott prior to agreeing to let their names be put forward for shareholders’ consideration. Should they be elected, they would not countenance being unduly influenced by any particular shareholder.”