LONDON (Reuters) - Shareholder advisory group Institutional Shareholder Services Inc (ISS) has weighed into the debate about governance at Alliance Trust (L:ATST) by backing a board overhaul plan proposed by activist shareholder Elliott Advisors.
Alliance Trust, one of the oldest investment companies in Britain, is seeking to marshal its large 'mom and pop' investor base to fight off Elliott's plan to elect three new non-executive directors at its annual general meeting on April 29.
In a statement on Thursday, U.S.-based ISS said Alliance Trust had underperformed over long periods of time and that no substantial actions had been taken over the last three years to fix the problem.
The main issue, it said, was the complexity of the firm's structure, which brought with it a high fixed cost base, and elevated management pay - issues which had been raised in a previous activist attack on the firm in 2010-2011.
"Either the board has failed to challenge the status quo, or failed to adequately explain why the status quo is preferable. In either event, it seems clear that change is warranted at Alliance," ISS said in the statement.
On Tuesday, ISS' British peer PIRC, or Pensions & Investment Research Consultants Ltd, issued a similar note to investors, calling increased shareholder representation a "valuable safeguard against group-think" at the company.
Elliott has proposed Anthony Brooke, a former executive in financial services, including at S.G. Warburg; Peter Chambers, former CEO of Legal & General Investment Management; and Rory Macnamara, a former senior corporate finance professional, including at Morgan Grenfell.