The battle for the soul of Alliance Trust continues – or so their Chairman would have it. But even institutional proxy advisors ISS and PIRC have now come out in support of Elliott Advisors and their resolutions to appoint three new directors at the AGM on the 29th April. Alliance have said they are looking for a new truly independent non-executive director, but will they be anyone who is likely to disagree with the existing board or take a contrary view? I doubt it. Perhaps it is more a move to cram the board so as to outvote any new directors appointed by the wish of shareholders.
Alliance also issued a quarterly trading statement which was generally positive, and are also sending another letter to all their shareholders – there is no expense being spared on this battle by either side but it is shareholders who will be in essence footing the bill on the company’s side of course. The letter does not say much new but simply appeals to investors with the headline question “who do you trust to run your company?”. This of course suggests that Elliott are trying to take over the company and wish to run it, which is far from the truth.
It was interesting to speak to a couple of Alliance Trust shareholders over lunch at the Baronsmead VCT 3 AGM yesterday, one a former shareholder. He had sold his shares some time ago due to poor performance. The other was still holding but was intending to vote for Elliott’s resolutions. Perhaps not a large sample but indicative that the matter could be a close run contest.
The Baronsmead VCT 3 is another investment trust where corporate governance issues are of concern, although one can certainly not question the historic investment performance of the company in this case. Two directors have served on the board since 2001, and one (Gillian Nott) also serves on the boards of two other of the Baronsmead VCTs. In addition the Chairman, Anthony Townsend, has 6 other directorships of public companies, including 5 chairmanships, and other directors also have multiple roles that exceed the guidelines published by ShareSoc for the number of jobs non-executive directors should have.
Do you think that directors of investment trusts should serve for more than 9 years (the limit recommended by the UK Corporate Governance Code)? Can they be considered independent if they have other directorships with the same fund manager? This writer suggests the answer should be no to both those questions based on my past experience, but let me know your views.
I made these points at the AGM and there is a full write-up here. A number of shareholders clearly agreed with me. It is unfortunate that the Chairman and other directors seem reluctant to tackle these issues.
Across town on the same day the investors in the Core VCTs were meeting to approve a wind-up of the companies (Core VCTs 1, 4 and 5, as 2 and 3 had previously been merged into 1). These VCTs have had a complex and chequered history, and investors might prefer to see the back of them. They didn’t really have much choice than to vote for the wind-up because the companies cash holdings might have breached VCT regulations, but one investor said to me that the “whole thing stinks”.