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Chief executive of trust 'overpaid'

Former Alliance director backs move to install new blood

Katherine Garrett CoxA former director of Alliance Trust says he will be supporting a move to install three nominees on the board after writing to shareholders about the Dundee company’s “dismal performance”

Tim Ingram, who served as a non-executive between 2010 and 2012, and chaired the remuneration committee, says £1.4 million a year chief executive Katherine Garrett-Cox is overpaid.

He said in a letter to shareholders that if she outsourced the management, and is prepared to sell businesses that constantly lose money, “then there’s no need for her to go.”

He adds: “But if a chief executive is not prepared to do what the majority of the board wants, then they should go.”

His intervention, reported in a Sunday paper, will turn up the pressure on Ms Garrett-Cox and chairman Karin Forseke who are locked in a war of words with 12% shareholder Elliott Advisers.

It is part of a New York hedge fund which has tabled a motion to elect three nominees to the seven-strong board at next month’s annual general meeting.

Mr Ingram says: “I will be voting my shares in favour of the three new directors joining the board.”

Elliott hired headhunters Spencer Stuart to find the directors: Peter Chambers, a former chief executive of Legal & General Investment Management, former SG Warburg man Anthony Brooke and financier Rory Macnamara, chairman of the Dunedin Income and Growth trust.

It bases its attack on “poor performance”. Alliance’s shares now trade at 13% less than the value of the trust’s underlying assets and Elliott wants to narrow this gap.

It is the latest attack the board has faced in recent years. Alliance was targeted by hedge fund Laxey Partners in 2011 and by Aberdeen Asset Management.

However, Ms Garrett-Cox and Ms Forseke are not taking the criticism without a fight and insist performance is better than their critics claim. They have urged shareholders to vote against Elliott’s motion.

Ms Garrett-Cox says that since Alliance Trust became aware of Elliott’s shareholding four years ago, it has delivered a 62% total shareholder return, ahead of the Global sector’s 53%.

The dispute has descended into an exchange of accusative statements from both sides and is likely to intensify in the run up to the vote on 29 April when 50,000 small shareholders will determine who wins.

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