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Alliance Trust: we need more women!

Chairman of global investment trust that last month sacked former chief executive Katherine Garrett-Cox says board is male dominated.

Alliance Trust: we need more women!

Alliance Trust (ATST ), the global investment trust that last month sacked its former chief executive Katherine Garrett-Cox, is looking for new women directors.

After a turbulent year for the Dundee-based company, an overhaul of its board has left it with an entirely independent but all-male line-up of directors, quite a change for a company that until recently boasted a female chief executive and chairman.

Lord Robert Smith of Kelvin, the trust’s new chairman (pictured above), who replaced Karin Forseke (pictured below) last autumn, said ‘I am acutely aware of the lack of gender diversity on the current board as a result of the recent changes.

‘Alliance Trust has long been a leader in the area of board diversity, and this is an issue which I am determined to address at the earliest opportunity,’ Smith said.

Four new non execs, all men, have joined Alliance Trust’s board in the past year – Anthony Brooke, Rory Macnamara, Chris Samuel and Karl Sternberg. This followed pressure from Elliott Advisers, the US hedge fund that owns15% of the shares, which has pushed for improvements in shareholder returns and a simplification of the business.

The apparent male takeover of the board was completed when non-exec Susan Noble recently moved across to chair its fund management subsidiary, Alliance Trust Investments (ATI).

This is embarrassing for the 128–year old business which in recent years has attempted to project a progressive image and whose £2.8 billion portfolio is run on an environmentally friendly sustainable investment basis.

Garrett-Cox (pictured), who is due to receive a pay-off of around £1 million after she formally leaves next week, was named business woman of the year by Veuve-Cliquot and was awarded a CBE in the 2014 New Year’s Honours List for services to asset management.

Her services to Alliance Trust shareholders after eight years in charge are still a matter of dispute, however.

Results for 2015 show the company achieved a good investment performance last year and may be on track to improve longer-term returns. A 10.7% total shareholder return beat the 3.8% return from its benchmark, the MSCI All Country World index, and was generated by a 5.4% rise in the net asset value (NAV) of its portfolio and a narrowing in the discount – or gap – to which the shares trade below NAV, helped by a £135 million splurge on buying back its shares in the fourth quarter.

Costs reduced slightly from 0.6% to 0.59% of assets although Alliance Trust did claw back some of the expenses from last year’s febrile annual general meeting, which enraged some shareholders. The cost of holding the meeting came in at £2.4 million rather than the £3 million it initially estimated.

However, the wisdom of the trust owning ATI and its fund supermarket, Alliance Trust Savings, remains open to question.

ATI suffered a 19% fall in its valuation to £19.8 million, despite reducing losses to £2.1 million from £3.2 million on the back of slightly higher revenues and reduced costs. Third party funds under management rose 9% to £2.1 billion.

Alliance Trust said it had been appropriate to reduce the value of ATI during a ‘transitional period’ for the business, which had seen Garrett-Cox step down from the main board to focus on leading the fund management company before her removal last month.

There was mixed news from Alliance Trust Savings too. An external review hiked ATS’ value 71% to £54 million although the company did invest £37.1 million in the business to fund the acquisition of Stocktrade from Brewin Dolphin and to boost regulatory capital.

Losses rose to £5.2 million from £3.9 million as a result of expenditure on new technology and the costs of restructuring the board. Revenues improved less than expected to £13.7 million from £12.8 million although assets under administration jumped 32% to £8.5 billion and customer account numbers lifted 18% to 84,746.

The company declared its 49th year of consecutive dividend rises with a fourth dividend of 3.3725p taking the total for the year to 12.43p per share, up 0.4% on 2014. This includes the special dividend of 1.46326p paid in December.

9 comments so far. Why not have your say?


Mar 04, 2016 at 11:19

It seems to me it does not matter whether the Directors are male or female or a mixture of both what matters is how well the company is run and are they achieving good results

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richard tomkin

Mar 04, 2016 at 11:22

As a shareholder,I mind not a toss whether investment returns are delivered by a man or a woman,nor whether they are "environmentally friendly sustainable",whatever that means.I do mind very much about the investment performance,and,after having our patience tested to distraction these past few years,shareholders rightly look to management to get a grip.

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John N Coles

Mar 04, 2016 at 16:00

Lord Robert Smith of Kelvin has only gone part way. We need strong wimmin, and lesbians and gays and bisexuals and transexuals. Not to mention racial diversity - how can we rest until the Board has its share of Eskimos and Hottentots?

Forget performance - let's be completely and utterly PC.

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Roger Lawson

Mar 05, 2016 at 10:02

Ho ho. Yes the media seem to have concentrated on Lord Smith's mention of board diversity and ignored everything else that he said. A more balanced analysis is given here:

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Mar 05, 2016 at 14:23

Of more concern than the diversity issue, is the fact that the Board and the strategic direction of the Company has been entirely transformed from that supported by 97% of shareholder's votes in the 2015 AGM.

At the last AGM we were given to understand that Elliot's were allowing the Company 12 months to demonstrate its existing strategies. But this is not what has happened. The Board has been replaced, and the strategy has been changed.

It may be hoped that the new Board will prove more effective than the last in promoting the interest of the shareholders, and it is encouraging to see that steps are being taken to limit the conflicts of interest with the loss making subsidiaries.

However, of the seven directors now on the Board only two have been endorsed by the shareholders. The authority of the Board derives from the shareholders alone, but there has been an extreme transformation of the Company and its strategic direction from that presented at the last AGM.

How it is possible that the Board and the strategy could be so completely transformed without an EGM to provide a fresh endorsement from shareholders?

What is the moral and legal authority of a Board that is not supported by shareholder's votes? Where is the transparency and accountability of shareholder democracy?

Is this sound Financial Conduct? Where is the FCA?

Or is this just another instance of self-selecting and largely unaccountable cliques sharing out remunerative sinecures?

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Roger Lawson

Mar 05, 2016 at 16:50

There is nothing underhand here. A board of directors is elected to manage the company, and that includes the power to co-opt new directors under the Companies Act. In addition if other directors step down for any reason, they can be replaced. Plus the board has the power to make substantial decisions about the future activities of the company which is all they have done. They have not decided to change the nature of the company (as an investment trust). Neither has the investment policy changed - indeed one might more criticise the previous board for changing the investment policy to "sustainability light" without consulting shareholders. The new directors will have to be elected at the forthcoming AGM which is only weeks away.

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Mar 05, 2016 at 18:52

I seem to be the only lady commenter on this board so far. I agree that it matters not a whit what the gender of those in charge is. Results matter, not gender. I get a slightly uncomfortable feeling that maybe Alliance's "gender-concern" has led it to recruit unsuitable people because they happen to be female, rather than on merit. I can speak from experience here. Successful women want to know that they get top jobs are thebecause they're good at what they do, not because they're women. The latter does women no favours.

Also worth observing that there are some highly successful female leaders out there who keep a lower profile than Garrettt-Cox and just get on with doing a good job. She did not do a good job.

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Frank Frank

Mar 06, 2016 at 13:29

|I suppose lord Smith of somewhere is planning to have a beauty competition and select the woman who looks best in a bikini.

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Mar 07, 2016 at 00:13

In total disagreement with Roger Lawson.

There is a world of difference between rules designed to permit co-opting a number of additional directors to replace retiring members of the Board, or to provide additional expertise where this strengthens the Board, and the full hijacking of the Board and the replacement of the principal executive officers.

The new Board has gone a long way towards tidying up the wholly unsatisfactory arrangement in which the Board was still to be found at the last AGM. That Board was in an untenable position in which it was hopelessly conflicted by the interests of four different groups of stakeholders, that is the shareholders in the parent, the numerous staff of the subsidiaries, the vested interest of the management team, and the clients of subsidiaries who represented a large political constituency with funds more than three times greater than the shareholder's.

But none of the changes that have taken place were trailed in the last AGM, and in fact the message from that meeting was that the Board was given licence to continue for one more year, by Elliot Advisers, to prove the potential of its strategy and demonstrate the value of its subsidiaries.

The fact is that a bunch of good chaps have subsequently appointed each other and made a start on sorting out the Company without any recognition of the need to explain to shareholders what they were doing and why they were doing it .

A year ago KCG and K Forseke were busy telling shareholders that the sky would fall in if the evil Elliot Advisers had their way and added three nominee directors to the Board. Well the sky hasn't fallen in yet, but many shareholders may be very concerned to understand just what is going on with five of the pre-existing seven directors now replaced by unelected incomers.

While the hijacked Board may have instigated many of the right things to clean out the stable, they have decided to do so without producing a policy statement for endorsement by the shareholders. It is hard to believe that a Board of such dubious legitimacy, unendorsed by the ownership, appreciates its accountability to the shareholders in general.

In this case the interests of a few major shareholders, and those of the broader base of retail shareholders may largely coincide. But they will not always do so, and it is not acceptable, that a few major shareholders should gain undue influence over the Company, and especially so as a very high proportion of the shares are held by smaller retail investors.

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