Katherine Garrett-Cox, is to step down as chief executive of Alliance Trust Investments (ATI), a subsidiary of Alliance Trust (ATST), following mutual agreement with its board. It follows her demotion as chief executive and board member of Alliance Trust in October, and a series of changes including cost cuts, a new benchmark and a single discount target following pressure from activist shareholder Elliott Associates.
The chief executive responsibilities will be reassigned with head of investment Peter Michaelis and his team leading this area and continuing to manage Alliance Trust Investments' £5bn assets under management. Dr Michaelis joined ATI in 2012.
Ramsay Urquhart will assume operational responsibilities.
Last year US hedge fund Elliott Advisers came to an agreement with Alliance Trust to appoint two of its suggested candidates to the board - Anthony Brooke and Rory Macnamara – as well as a third new candidate. Since then there have been several changes to the board including the departure of chair Karin Forseke in January. She has been replaced by Lord Smith of Kelvin, and non executive director Gregor Stewart became deputy chairman.
Elliott had a number of concerns including the investment trust's underperformance against sector peers and relevant benchmarks, internal management costs and losses in subsidiaries ATI and Alliance Trust Savings.
Elliott still holds 15 per cent of Alliance Trust's shares, both via direct holdings and around 5 per cent through contracts for difference (CFDs).
Alliance Trust reported in December that the changes designed to enhance shareholder value, due to be completed by 1 March this year, were well under way. This included outperformance of the new benchmark, MSCI All Country World Index, since Dr Michaelis and Simon Clements starting managing the trust's equity portfolio in September 2014 including socially responsible investing considerations.
Broker Numis, meanwhile, says between September 2014 and the present Alliance Trust's net asset value (NAV) total return has been 1.2 per cent against a 1.6 per cent fall for MSCI AC World Index.
The trust had also increased its equity exposure from 99.6 per cent at the end of September to 102.1 per cent at the end of November, as part of its goal to focus on global equities and dispose of non-core investments. Fixed income exposure was reduced by nearly half to £74m, and its sole remaining commercial property was sold for £5.6m, a profit of 15.6 per cent on the holding value.
Ms Garrett-Cox joined Alliance Trust as chief investment officer in 2007 and became chief executive in 2008. She will leave on 11 March 2016, after earning £1.4m in 2015 as well as receiving compensation for loss of office.
Since the announced changes in October the trust's discount to NAV has trended inwards from low double digit figures to its current level of just under 10 per cent.
