Katherine Garrett-Cox dethroned as Alliance Trust activists finally get their way

Garrett-Cox to move aside at Alliance Trust – with potential £500,000 payout

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The Independent Online

Katherine Garrett-Cox’s exit as chief executive from Alliance Trust, in the wake of the investment trust’s long-running battle for control with a US hedge fund, could trigger a £500,000 payment for her. 

Ms Garrett-Cox, who was just one of just nine female chief executives among FTSE 250 bosses, will leave Alliance Trust’s main board but remain chief executive of its fund management arm, Alliance Trust Investments (ATI), it was announced. 

The chief financial officer Alan Trotter will also leave the company as part of the overhaul. Both executives signed potentially lucrative contracts when they joined the group that compensate them for loss of office. 

According to the annual report, as Alliance Trust’s chief executive, Ms Garrett-Cox, 47, was entitled to a one-off payment equivalent to a year’s salary, worth £567,093, if she left. 

However, any payout would be complicated by the fact she remains as chief executive at an arm of the company, while Alliance Trust’s new main board will consist entirely of non-executive directors.

An Alliance Trust spokesman said: “The company will be reviewing remuneration in light of today’s changes.”

Mr Trotter is set to exit with a year’s salary, worth £296,886 in 2014, according to annual accounts. 

Ms Garrett-Cox, who has been chief executive since 2008, has been one of the most high-profile chief executives in the UK.

The change is part of a series of measures unveiled by the 127-year old group following pressure from US activist investor Elliott Advisors over Alliance Trust’s performance and corporate governance standards. 

The American group, which was founded by hedge-fund guru Paul Singer and has a substantial UK presence, waged a six-week battle in March to win three seats on the trust’s board. It settled  for two seats in a compromise  deal on the eve of the annual meeting. 

As part of the overhaul,  Alliance Trust Investment will have separate board with Ms Garrett-Cox as chief executive and former Alliance Trust board member Susan Noble as the chairman.

It will also ditch much of its fixed-income interests and focus solely on managing global equities. It runs about £4.5bn of cash, about £2bn of which is from third party investors. 

Alliance Trust Savings, the investment trust’s investment platform, will also be run by a new board. 

Alliance Trust, which was founded in Dundee in 1888, will meanwhile set up a new committee, led by Deutsche Bank man Karl Sternberg, to review whether to continue to retain the services of its fund management division, ATI, based on performance.

Other technical changes announced include a promise by the trust to narrow the discount – the difference between what Alliance shares trade at and the net asset value per share of the company’s portfolio of investments – into single figures and make £6m of savings. 

Charges by the group, measured on an ongoing charges ratio, will also fall to 45bps from 60bps, and its fund managers will start measuring themselves against a common benchmark used by other investors.