Alliance boss has problem worthy of Cathy and Claire

Katherine Garrett-Cox, chief executive of the £2.9bn Alliance Trust, is of an age to have poured out her problems to Cathy and Claire when younger. The agony aunts specialised in healing teenage heartbreak in the pages of Jackie, a magazine published by DC Thomson. The Dundee publisher backed Ms Garrett-Cox in her battle with activist Elliott Advisors. But the trust boss's other mates, the City institutions, turned against her in the knee-grazing playground of corporate life.

Elliott's UK boss Mark Levine is the new coolest kid in school. Alliance Trust's board capitulated on Tuesday morning, ahead of Wednesday's vote, agreeing to the appointment of two independent directors put up by Elliott, Anthony Brooke and Rory Macnamara. The seat sought by a third Elliott candidate, Peter Chambers, will be filled by an appointee approved by all big investors, of which Elliott is the largest.

This looks like a face-saving move. Alliance, whose shares have persistently lagged behind net assets, had fought tooth and nail to repel the New York-based activist. Proxy votes must have shown it was close to losing. Many of the small shareholders who dominate Alliance's register must have been in sympathy with Elliott's call for better performance and lower charges.

Mr Levine has achieved the biggest victory by a US activist in the UK since Edward Bramson unseated key members of the board of Foreign & Colonial in 2011. He has wisely given chairman Karin Forseke the chance to retreat with some shreds of pride. Elliott has agreed not to agitate against the board for a year. This means it cannot pursue a destructive pet project for Alliance to sell 40 per cent of its investments.

The board is, however, honour-bound to examine whether Alliance should put management of its funds out to tender and spin off lossmaking diversifications in areas such as savings administration. As for Ms Garrett-Cox, she has an unhurried opportunity to consider whether, after seven years, she is still the right person to lead the historic trust. Cathy and Claire, she may recall, were great advocates of "moving on" and "letting go".

[email protected]

© The Financial Times Limited 2015. All rights reserved.
FT and Financial Times are trademarks of the Financial Times Ltd.
Not to be redistributed, copied or modified in any way.
Euro2day.gr is solely responsible for providing this translation and the Financial Times Limited does not accept any liability for the accuracy or quality of the translation