As I See It
Alliance shake up is triumph for rebel investor
It’s never nice for a company boss to suffer a personal setback and then see the share price rise. Alliance Trust announced this morning that chief executive Katherine Garrett-Cox is stepping down from the board and by lunchtime the shares were up 3%.
Her change of role – she will remain chief executive and director of Alliance Trust Investments – comes just months after a boardroom battle that threatened to tear the whole board apart.
The board is already populated with new faces and today’s restructure will see CFO Alan Trotter leave the company.
Ms Garrett-Cox is the most high profile figure in the shake-up and the announcement comes just four months after she was named Veuve Clicquot businesswoman of the year, thus confirming that particular award’s reputation as a something of a curse. Last year’s winner Harriet Green subsequently stepped down from running Thomas Cook.
The changes to the £2.5 billion trust’s plc board will see it become “fully independent, comprising solely non-executive directors”.
A separate board, including independent non-executive directors, will be established for ATI, with Susan Noble becoming chairman.
The restructure will be seen as further concessions to activist investor Elliott Advisors which lobbied shareholders in the early part of this year to appoint more independent directors.
Two were installed in a face-saving move just ahead of the annual general meeting when it looked like there could have been a bloodbath. Last month, the board made two more non-exec appointments, including former chief executive of Ignis Asset Management Chris Samuel..
Aside from the management changes the board has announced plans to target a reduction in its ongoing charges from 60bps in 2014 to 45bps by the end of next year and is bringing forward the timetable for ATI to reach profitability. All this will save £6 million a year.
However, it is sticking to the same investment team, expressing its confidence in their ability to deliver the returns expected by shareholders.
Karin Forseke (left), chairman of Alliance Trust, who herself teetered on the brink of survival at the AGM, acknowledged in this morning’s statement that “the first half of 2015 had been a particularly challenging period for Alliance Trust” and the changes announced are designed to reflect the feedback the board has received.
She called these latest developments “the biggest changes” in the trust’s history – and they certainly took Alliance watchers in the City by surprise.
Numis said they were “more radical” than it had expected and welcomed the enhanced timetable to move into profitability.
New York based Elliott seems to have triumphed in revamping the boardroom, although there is no certainty that it will be fully satisfied even with this level of change.
Without wanting to deliver a further blow to Ms Garrett-Cox it remains to be seen whether she will stick around in her significantly reduced role – and whether her remuneration will reflect this lower status.