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Alliance Trust makes Garrett-Cox redundant

Katherine Garrett-Cox, one of a small band of women to make it to the top of fund management, is axed as Alliance Trust seeks to cut costs.  

Alliance Trust makes Garrett-Cox redundant

(Update) Katherine Garrett-Cox’s links to Alliance Trust (ATST ), the investment trust she ran until last October, have been severed after her position as chief executive of its fund management business was abolished.

In a statement the Dundee-based investment company said that Garrett-Cox would step down as chief executive of its Alliance Trust Investments subsidiary next month with her job split between two men.

Operational responsibilities for ATI, which reported a £3.2 million loss before tax in 2014, will pass to Ramsay Urquhart, a director who will step up into a new role of managing director, while oversight of investments will go to Peter Michaelis, head of equities.

Garrett-Cox’s departure comes four months after she was forced to step down as chief executive of Alliance Trust after the board made sweeping changes to improve shareholder returns and to cut costs following a clash with the company's largest shareholder, Elliott Advisors.

Garrett-Cox earned £1.4 million in pay last year and under the terms of her contract could receive as much again for loss of office, although the precise payout will depend on the valuation of her long-term share incentive scheme. Her comparatively high total remuneration was controversial with shareholders, although she claimed it received undue attention because she was a woman. 

Charles Cade, investment trust analyst at Numis Securities, said her position had looked vulnerable following the board room changes in the autumn. ‘We assumed that her pay structure would have needed to change to reflect the different responsibilities, but a highly paid CEO still appeared to be a luxury for a loss-making asset management business,’ he said

Lord Smith, Alliance Trust’s new chairman, said: ‘Alliance Trust is now moving swiftly to implement the changes announced last year which are designed to enhance shareholder returns. This process is well underway and it is clear to us all that the role of chief executive of Alliance Trust Investments has changed significantly.

‘I and the rest of the board wish Katherine every success in the future,’ he added.

Garrett-Cox said it had been an honour to work for Alliance Trust shareholders. ‘I leave Alliance Trust Investments with a strong team who are already delivering improved investment returns and driving down costs.’

The axing of her job ends a nine-year stint at Alliance Trust for Garrett-Cox, who, as the former chief executive of FTSE 250 investment company, was one of a small band of women to achieve a senior position in fund management.

Garrett-Cox joined Alliance Trust in 2007 as chief investment officer, having performed similar roles at Morley Fund Management, the investment arm of Aviva, the insurer, and before that at Aberdeen Asset Management.

She became chief executive of the £2.4 billion investment trust the following year but despite several shake-ups of the investment team failed to improve the global fund’s performance.

The beginning of the end came a year ago when Elliott Advisors, an aggressive US hedge fund which had built up a 13% stake in the shares, called for the appointment of two new non-executive directors to strengthen the board and improve its oversight of Garrett-Cox and her executive team.

Alliance initially opposed Elliott but, after a fierce exchange of words the board was forced into a humiliating U-turn before last year’s annual general meeting, when it became clear shareholders backed the appointments.

The arrival of the new directors ushered in a complete overhaul of the main board, culminating in last October’s shake-up when the executive directors, including Garrett-Cox were removed.

ATI was this month re-confirmed as Alliance Trust’s investment manager but its position is insecure as it can be replaced on six months’ notice.

Michaelis and Simon Clements, the portfolio manager, had improved returns since taking on Alliance in September 2014 and moving it towards their style of socially responsible and sustainable investment. However, the shares have suffered in the recent stock market rout, down nearly 12% this year, which is worse than the 9% decline in the FTSE All Share.

Meanwhile the discount – or gap – between the share price and the fund’s net asset value has widened to over 10%, despite concerted share buy-backs by the trust in the past four months.

In the background Elliott has tightened its grip by raising its stake to 15% in Alliance Trust. Analysts think it will push Alliance to make a tender offer to shareholders this year so it can sell its holding at a profit.

If ATI were to lose the Alliance Trust mandate it would be left with just £2 billion of third party assets under its management, mostly in its Sustainable Future fund range. According to Numis Securities it earns an average annual fee from this business of 0.46%, which is higher than the 0.35% imposed on it by Alliance Trust in October.

At the time Alliance Trust said it would cut £6 million costs from ATI so the subsidiary could reach monthly profitability by the end of this year. Annual results on 4 March will provide investors with an update on this with the shareholder annual general meeting following on 6 May.

In a rising market Alliance Trust shares rose 1.8% or 8.5p to just over 465p.

31 comments so far. Why not have your say?

John N Coles

Feb 15, 2016 at 12:52

At last. God save us all from "strong wimmin".

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Feb 15, 2016 at 14:24

every woman sinkes to their own level of incompetence - be interesting to see how this damages the case for the hypocrisy of "socially responsible investment" and the employment of people simply because they are a minority.

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Feb 15, 2016 at 14:55

Her performance has set back the cause of women into senior management by several years... it makes the case that promotion must be rational and not based on sex, skin colour, nepotism, etc.

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Feb 15, 2016 at 15:11

Not to worry, she can apply to be a front line soldier soon.

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Anthony Tinslay

Feb 15, 2016 at 15:23

Oh dear the poor lady - her failure to truly represent the real owners of the business has led to her departure. Hopefully she will manage to get by on another £1.4m or so until some other company believes the myth that they must have a female on board to be politically respectable and correct

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John N Coles

Feb 15, 2016 at 16:29

If you're going to censor comments, CityWire, you might at least explain your reasons.

Anyway, as I said before I was rudely deleted, "God save us from strong wimmin!"

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Rickie Tivy

Feb 15, 2016 at 18:29

Whilst no fan of Garrett-Cox, I believe it is entirely inappropriate to criticise her on the basis of her gender. She may well be criticised on her inability to perform, but she is clearly highly competent in many ways, and comments based on sexism only reflect badly on those making them.

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Feb 15, 2016 at 18:50


yes whatever gender she is, she is incompetent at making money, do you know in which ways she is espeically competent enough to be paid a million pound salary to NOT screw up? I think she would appreciate your tips on future employment.

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John N Coles

Feb 15, 2016 at 20:15


I think that you're wonderfully open-minded and an example to us all. Sincerely.

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Frank Frank

Feb 15, 2016 at 21:15

The hyenas have seen a wounded animal fighting for its life and are closing in to tear her to pieces. Garret Jones' performance was no worse than that of 50% of funds in existence.

Are people so blind that they cannot see the disgusting vulture fund in the background which planned the whole thing for its own profit?

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Old dribbly

Feb 15, 2016 at 22:14

Alliance was poorly managed before she came .Continuing performance problems rested with her and the board to get better results . I look forward to the board now taking more effective action in achieving better performance , although the times may be against them they still need to demonstrate they are taking action for the sake of investors .

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Feb 15, 2016 at 22:28

frank frank

perhaps the vulture fund is a knight in shining armour, coming to the rescue of the damsel investors in distress - more of the same might see the poorly performing managers weeded out of the industry with their failures to delvier for fat fees a 5 star lifestyle instead of passive investing.

a 3% underperformance on a few billion is just the odd 60 million pounds - not many jobs would pay a million pounds for that crap, unless you are in the government.

you should pay for quality - the owner should have written a clawback clause in theemployment contract for underperformance. the vulture fund certainly will.

in this case, the "wounded animal", as you call her, is a multi-millionaire(ss) who chose to compete in the results oriented jungle along with others. we should all be so wounded.

or do you take the view that all men and women should be subsidized each time they make a promises they don't deliver, along the lines that banks should be subsidized by taxpayers.

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Feb 16, 2016 at 03:17

Katherine Garrett-Cox, She sold 305,683 shares in the company through her spouse Jeremy, netting a total of £1.5m for her and her husband not bad for many years of bad returns for AT shareholders plus of course she was also paid over £1.3 million as a CEO of a trust,Woman was a legend in her own mind and arrogant with it,So enjoy your wealth kath for doing such a very bad job

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Feb 16, 2016 at 06:19

One overpaid CE0 with poor judgment is much like another however long their hair is. I would be simply amazed if commentators based their investment decisions on management gender. I surely don't.

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richard tomkin

Feb 16, 2016 at 09:52

Pride,greed,incompetence : the lady had them all

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The Old Man

Feb 16, 2016 at 10:49

Poor Alliance IT, the management of the trust has been only modestly competent over 25 years but originally what attracted me was its integrity. Lets hope this can be re-instated together with capable management. I remain enormously grateful for the ATS platform which with its able and friendly staff has served me well for so many years.

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Feb 16, 2016 at 19:01

hey do you know she's got "long hair" ?

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Feb 19, 2016 at 17:08

So much for shareholder democracy!

It is a pity that in the FCA, with it's regime of micro-regulations, we have such a spineless and useless financial services regulator!

The previous board were supported by a huge number of shareholder votes, and it is from the votes of shareholders that the Board members derive their authority. So how come we now have a substantially unelected Board in office? Where was the EGM to endorse the new Board?

While being no admirer of KGC, it is, never-the-less, very difficult to understand how the Board membership could become completely transformed with no recourse to shareholders. This cavalier disregard for shareholder authority makes one wonder just how much care Board members can have about the shareholders to whom they are answerable!

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Feb 20, 2016 at 00:33

@ Pilgrim

What on earth has this got to do with the FCA ?

Surely it's just a case of deciding whether ~KGF is worth keeping!

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richard tomkin

Feb 20, 2016 at 09:29

I agree .This is surely a matter of company law

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David 111

Feb 20, 2016 at 12:38

CUEBALL - perhaps Micawber just looked at the photo at the top of this article.

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Feb 20, 2016 at 17:25


That's the point.

The FCA intervene all over the place with micro regulations, that dis-empower much of the financial service industry, often increasing costs without improving performance. But they ignore the real stuff almost completely.

My SIPP pension providers, for example, provide me with piles of redundant paperwork including generally vacuous and misleading illustrations because this is what they have to do to satisfy a box ticking exercise specified by the FCA (the financial CONDUCT authority).

On the other hand, there are real instances of misconduct.

For example, this case, a Board disregarding the evident need for shareholder endorsement. The Board has 7 directors, five of whom are unelected, and who have essentially hijacked the Company. All aboard for the gravy train, but who put them there, and who do they represent?

In other instances, blatant corporate frauds progress to completion undisturbed by the FCA (FSA) even when they are presented with timely evidence.

The FCA under FSMA has the authority to watch a much broader range of financial conduct, but signally fails to do so.

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Feb 20, 2016 at 20:25

@ Pilgrim,

I am very comfortable having a regulator setting the minimum requirements in this murky financial industry. Without one we would be at the mercy of many small sharks. But I don't share your view that the FCA is generally too restrictive. At worst I would agree that its predecessor behaved rather stupidly during the past crisis times.

I also don't recognise the requirement for excessive correspondence with Sipp providers. In my case I received one letter when I opened my Sipp many years ago and I sent one letter later when I requested drawdown to start. Other than that I get a regular online statement every year and I am sure this must meet the regulators requirement.

If you are looking for performance in a company it is management that makes the difference not regulation.

For Alliance Trust my personal belief is that the current directors are attempting to dismantle a gravy train which has been running for the many years and focus more on improving return for shareholders. No doubt if they are successful then they will benefit in the same proportion as other shareholders. History tells us that Alliance Trust has been mediocre or worse in investment terms for many years. I jumped ship a few years ago after several signs of poor management. My wife decided to stick with them so I still hold an indirect interest. I can only say that I feel that these recent developments will be beneficial to ALL shareholders. Time will tell.

I'll buy you a pint if I'm wrong!

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Feb 22, 2016 at 15:59

Thanks for the offer of a pint. Where can I collect?

While sharing your doubts about the merits of the old Board, and your hopes for the new one, the fact is that they have taken control of the Company without the acquiescence of the ownership. If you can justify this, please explain it to me. To whom exactly are they accountable, and from where exactly does their new undoubted power over the Company derive?

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Feb 22, 2016 at 17:33


Their power comes from their Shareholder backing.

Not you and I but much bigger ones.

My own amateur view is that this restructure follows a common pattern.

1. An outside body recognises an underperforming entity and plots to turn it around To make money they need to first buy into the company.

2. They invest to become a major shareholder and seek help from other big shareholders. Once they have sufficient size and backing they are able to appoint one or more shareholders to the board.

3. Having obtained board seats they will propose changes to the way the company operates - often very credible changes. Other board members will either agree or oppose. The new board members will obviously learn which of the existing board are ''worth'' keeping and those that are not in respect to implementing their restructure and proceed accordingly.

In AT's case they came out with a 5 point plan of action which was announced by the chairperson last November - aimed at reducing costs and impoving returns to shareholders. It appears the board agreed but in the ongoing purges they lost the Chairperson, CEO and Finance director. Presumably the incumbents couldn't muster enough support for the status quo.

Remember the new appointments still need the approval of a shareholder majority to carry on.

My pint is safe for a while yet.

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Feb 22, 2016 at 20:09


Thanks for your thoughts.

I agree with much that you say. But that does not make it an acceptable process, nor one necessarily standing to the benefit of shareholders in general.

To remind you of the facts. All members of the Board were endorsed by massive majorities by the shareholders at the last AGM.

The lowest level of support across the 7 Board Members re-elected or elected was for Mrs Katherine Garret-Cox at 96.82% of votes cast, a massive shareholder endorsement.

Resolutions for the election of three additional directors, Resolutions 14, 15 and 16 were withdrawn by the proponents prior to the meeting, and the results in terms of votes cast were not declared. As a result there is no evidence in the public domain in respect of whatever level of shareholder support was attracted by the three nominees, two of whom are now on the new Board.

Five of the Board members elected with massive shareholder endorsements are no longer on the Board at all. Only two Board members endorsed by the shareholders at the AGM remain. While the old Board looked dangerously like a feminist equal opportunities arrangement with three women members, not a single token woman remains on the new Board.

KGC continued the Company's reckless expansion of the ATS and ATI subsidiaries after the conclusion of the AGM. Then, as a result of private deals conducted out of the sight or scrutiny of ordinary shareholders the whole direction of the Company was transformed.

Shareholder 'democracy' is a pretty ineffective tool, and it is very infrequently that shareholders are confronted with with any real choice or discretion when it come to the appointment of Board Members. This is a fairly general failure of the system.

The most notable achievement of recent Boardroom culture is not the wise and prudent governance of Companies, but rather of ever larger levels of financial reward for the participants (peer reviews being a most helpful aid to ever increasing Boardroom rewards!). Boardrooms are often filled with well meaning and compliant fools who pay only a limited attention to the Companies under their responsibility, and whose indolence, sense of entitlement and hubris exceed both talent and imagination by a large margin. The results are frequently catastrophic. The Equitable, the Co-op, Marconi, HMV, Woolworths and (more controversially) BP providing recent examples of catastrophic failures with roots leading back to the Boardroom.

Now if you are happy with a bunch of self selecting good chaps running the show as they see fit, without the endorsement of the shareholders to whom they are responsible, then so be it, but I am not.

Now where did you say I could get that beer?

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Old dribbly

Feb 22, 2016 at 20:23

The real problem at Alliance and most other investment trusts is shareholder apathy.Most people when confronted with a voting card tick most boxes and think they have done a good job on their own behalf without really understanding the issues . Need more education for the punters --- join Sharesoc or similar . The boardroom needs to be challenged - most IT directors get very well paid for doing very little .Alliance Trust shareholders overwhelmingly allowed the KGC catastrophe to happen unchallenged

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Feb 22, 2016 at 20:46


You say

"Resolutions for the election of three additional directors, Resolutions 14, 15 and 16 were withdrawn by the proponents prior to the meeting, and the results in terms of votes cast were not declared. As a result there is no evidence in the public domain in respect of whatever level of shareholder support was attracted by the three nominees, two of whom are now on the new Board."

If this is correct there has been an election of directors without a vote and this is in direct contravention of stock exchange rules governing the election of directors by shareholders, overseen bu the FCA. Are you sure that the articles of the company say that directors need to be elected? Articles usually do specify how directors can be elected, if the articles are contravened, this is a criminal act.

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Feb 22, 2016 at 21:33


It is correct.

I have not investigated the Articles. I suspect that they enable the Board to invite new membership to replace any individuals who may need to step down during the term between AGMs. I doubt whether any such clauses are intended to allow for the progressive replacement of most of the Board. Is this something that you can look into perhaps?

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Feb 22, 2016 at 22:27

not easily

this does rather smack of a new "old boys network" where you have a board of 7 that gets paid out (with shareholders funds) by a "white knight" and appoints the nominees of the "white knight" after being bribed with the "white knight's" money.


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Feb 24, 2016 at 01:02


You won't find reds under the bed in Dundee and I'll wager the Elliot antics which so disturb you are totally above board. The old board may have got 90% on a show of hands for minor topics but the serious stuff is usually done by poll vote - not one man one vote. Elliot owns well over 10% of AT and that confers rights to Elliot to call for a poll. Don't forget that Elliot would have the support of Laxey ( the last major shareholder to call for a poll) as well as other big institutional voters and also a following of many retail shareholders.

I believe the AT board eventually did a deal with Elliot and allowed them to propose two new independent directors so avoiding the poll which they could well have lost. Two independent directors in - then the witch hunt begins.

I'm actually quite impressed by the speed of events since then. It remains to be seen whether the investment managers will follow the same exit door. I guess right now they will be under a lot of pressure to outperform. Failure to could well mean the investment management is farmed outside.

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