Alliance Trust has prepared its defences against a move by New York hedge fund Elliott Associates, which is poised to use its 12 per cent stake to try to place directors on the board.
The £2.6billion trust signalled yesterday that in the event of a proposal for new non-executives nominated by Elliott, it will launch a strong counter-attack aimed at its 70per cent retail shareholders.
It also revealed that while the trust's management had two meetings with Elliott representatives in the wake of this month's final results, the shareholder had made no mention of any director proposals, which appeared in a London newspaper yesterday.
Elliott is understood to have hired recruitment firms including headhunter Spencer Stewart to line up three candidates for the Alliance Trust board, which currently has five non-executives.
According to the report Elliott wants the three candidates to join as additions to the board, as "independent" directors.
Alliance is likely to argue that non-executives recruited by Elliott cannot be independent, and that extra board salaries totalling around £150,000 are inconsistent with Elliott's past concern about costs. The company will also point to the 20per cent cut in the trust's ongoing charge last year.
In response to complaints about performance, Alliance will maintain that total shareholder return since Elliott joined the register almost exactly four years ago has been 54per cent, ahead of relevant benchmarks.
A spokesperson for Alliance said: "We remain entirely focused on running the business, delivering investment performance and acting in the best interests of all of our shareholders with a focus on the long-term.
"Alliance Trust have strong corporate governance controls in place and an effective and committed board of directors."
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