Alliance Trust, one of the UK’s oldest investment firms, has reached an 11th-hour compromise with its rebel investor Elliott Advisors, which had been pushing for change at the company.
In a reversal of its previous position, the 127-year old institution said it was appointing to the board two of the three independent directors nominated by the US hedge fund, its largest shareholder.
In brings to an end a brief but bitter battle between the parties, which will now avoid a showdown at Alliance’s annual general meeting on Wednesday.
In return for Alliance’s appointment of the former investment bankers Anthony Brooke and Rory Macnamara to the board, Elliott agreed to drop its nomination of a third director of its choice – Peter Chambers – and said it would support the board on all other resolutions at the AGM.
Having previously told shareholders – including at least 50,000 retail investors – that Elliott’s intervention “threatens the very existence of the company”, there was a notable change in Alliance’s tone in Tuesday’s statement. Karin Forseke, the chairman, said: “On behalf of the whole board, I would like to express my gratitude to our shareholders for engaging with us on this important issue.
“Having considered this feedback we have worked with Elliott to find a compromise which we believe is in the best interests of all our shareholders. I would also like to welcome Anthony and Rory to the board where their significant experience will be a considerable asset.”
Elliott has a 12% stake in Alliance Trust and had argued that a new approach was required by the company, which it said had persistently performed worse than other investment trusts. The hedge fund also criticised the pay of Alliance’s chief executive, Katherine Garrett-Cox, one of the most high-profile women in the City. She earned £1.34m last year.
In a statement on Tuesday, Elliott indicated that it would keep up the pressure despite reaching agreement over the two independent directors. It said: “We are pleased to have reached an understanding with Alliance Trust and look forward to following the enlarged board’s progress on strategic and business matters over the next year and beyond.
“Elliott acknowledges and appreciates the widespread engagement and support from fellow shareholders of the company and others in recent weeks. We believe that this solution is in the best interests of all shareholders.”
However, as part of the agreement announced on Tuesday the hedge fund agreed that it would not call a general meeting “or seek to agitate against the company, its board or management publicly until after the company’s 2016 AGM at the earliest”.
Shares in Alliance rose 1.2% to 525p in early trading.
This article was written by Angela Monaghan, for theguardian.com on Tuesday 28th April 2015 08.33 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010