Sir Angus stands down as SIT chairman

Sir Angus Grossart, one of Scotland's business grandees, bowed to pressure yesterday and announced plans to stand down as the chairman of Scottish Investment Trust after 27 years at the helm.

Sir Angus said he would still stand for re-election at SIT's annual general meeting next month but would then step aside after the trust, which controls £496m of assets, had found a replacement.

The move follows a campaign by Hermes, which owns a 9 per cent stake in SIT, to highlight ways in which it believes Sir Angus has broken commonly accepted rules of good governance. Hermes warned last month it would not vote for Sir Angus's re-election at the annual meeting on 28 February, saying he had chaired for the company for far more years than the nine-year tenure many institutional investors think is an appropriate term as chairman.

Hermes also highlighted the fact that the merchant bank Sir Angus founded and owns, Noble Grossart, has in the past earned fees from advising SIT. Being on the board of a company and having a connection with one of its advisers was criticised by Derek Higgs' review of corporate governance published two weeks ago.

SIT denied that Hermes' criticism of Sir Angus had prompted his announcement to resign. SIT said: "Sir Angus' decision comes after serving the trust as chairman for 27 years. The other directors confirm they support his re-election and express their gratitude for the outstanding service that he has given to the Company and its shareholders over these many years."

The trust asserted that 67-year-old Sir Angus's decision to announce his retirement had not been influenced by Hermes' criticism. A spokesperson said: "He is confident he would have been re-elected even if he had not announced his plan to retire. But since succession was on the agenda, it seemed sensible to say it."

Sir Angus was paid £28,500 to chair SIT in 2002 and is not expected to get a pay off. He will be paid for the months he does work before a new chairman is found.

Hermes said it was pleased Sir Angus had decided to retire. "We believe SIT should now appoint a fully independent chairman from outside the current board."