Alliance Trust chair Lord Smith invests virtually whole annual fee

Alliance Trust chairman Lord Smith of Kelvin ploughed all but £480 of his £120,000 wage back into the Dundee-based investor last year, according to new research.

Financial services firm Canaccord Genuity has revealed that Lord Smith’s investment in the trust stands at £119,520 since his appointment last year.

The news emerges as the trust’s other shareholders prepare to vote on his board’s proposals to buyback activist investor Elliot Advisor’s near 20 per cent stake in the business and overhaul its corporate structure.

The plans involve moving the trust to a multi-manager approach overseen by investment firm Willis Towers Watson in addition to buying back the entire shareholding of activist investor Elliott Advisors.

Proposed corporate governance changes also include a shift to a multi-manager approach and the sale of Alliance Trust Investments (ATI) to Liontrust Asset Management.

The actions will result in remaining shareholders paying higher fees.

However, earlier this week, shareholder group ShareSoc urged investors to back all of the proposals at Tuesday’s AGM or risk creating “major problems” and now Canaccord Genuity’s findings could provide the support needed for the board’s proposals to get the green light.

Canaccord Genuity’s director Alan Brierley said that while not all investment trust managers or directors invest in their own products, those that do “send a strong message out they are aligning their interests with those of their investors”.

“They are eating what they are cooking,” he added. “We spend our lives trying to get investors to put money into vehicles and I’ve never met a client who disagrees . To get that 100 per cent support shows it is very important.”

‘‘If you have been on a board for several years and you do not have an investment then it raises questions.

The Canacccord Genuity’s findings also revealed that the chairs of other Scottish trusts are putting their money where their month is.

By far the biggest contributor to their own firm is chairman of Independent Investment Trust, Douglas McDougal, who has pumped in £35.3m. - 641 times greater than his annual fee of £55,000 and equates to about £2m for each of the 17 years he has been on the trust’s board.

However, there remains reticence among the boards of other major Scottish investment houses.

“Some boards and managers have significant investments and others leave room for improvement,” Mr Brierley added. “Some are looking a little bit anaemic.

“If you have been on a board for several years and you do not have an investment then it raises questions.”

Among those cited by Canacccord Genuity, were chairmen of some Aberdeen Asset Management trusts such as Howard Myles, of Aberdeen Private Equity, who has been on the board for eight years and receives an annual fee of £40,000 but invests nothing.

Nigel Cayzer of Aberdeen Asian Smaller Companies, who receives a fee of £30,000 a year, does not invest in the trust even after 22 years on the board.

Lord Smith was the only chairman of a Scottish trust to make it on to Canacccord Genuity’s highest paid list, which was topped by RIT Capital chairman Lord Rothschild.