Alliance Trust has warned its auditors to be more vigilant after a mistake was discovered in its bonus payments.
Long-term incentive plans for Katherine Garrett-Cox, the former chief executive, and Alan Trotter, the departed finance director, were overstated by about 10 per cent. It is believed that the cumulative effect was to inflate their remuneration by around £100,000. The amended figures will be published in the annual report for 2016 and the correct amount will be paid.
Shareholders at the annual meeting questioned whether Deloitte, the auditor, was doing its job properly. Calum Thomson, lead audit partner from the firm, told the meeting the mistake should not have happened. Lord Smith of Kelvin, chairman of Alliance Trust, said that the issue was being investigated internally.
Shareholders said that a similar incident had taken place three years ago. That related to a 2010 long-term incentive that vested over three years and initially was stated at being worth 53.1 per cent of the total. It was later corrected to 51.7 per cent, with the awards reduced as a result.
Speaking after the meeting, Lord Smith, 71, said: “It is not life-threatening to the company, but it shouldn’t happen. The auditors know that three strikes and they are out. Absolutely, it is being dealt with. To think there is something of an overpayment of £100,000 is not something that investors want to here. We take it very seriously.”
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Lord Smith, who took up his post three months ago, moved to reassure shareholders that he was convinced the trust now had the right structure and strategy to improve its performance.
At its 2015 annual meeting, rebel investors, led by Elliott Advisors, the hedge fund, secured enough backing for change, eventually leading to the departure of Ms Garrett-Cox and a revamp of the management structure.
A non-executive board now sits with oversight of two subsidiaries, Alliance Trust Investments (ATI) and Alliance Trust Savings (ATS). ATI is the present manager of the trust and Lord Smith confirmed that its performance would be reviewed every six months.
He said: “If they produce, then you don’t change a winning team. If performance fell off, then we would have to look at it, but the team knows that.”
Both subsidiaries have been loss-making, which shareholders have criticised. Lord Smith expects ATS to make a profit during 2016, while ATI should be making money from the autumn.
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Lord Smith said he was hoping to address the fact that the board had no women on it for the first time since the turn of the century. He said that an all-female shortlist has been compiled and he hoped to make an announcement on a new non-executive director soon.
The annual meeting in Dundee was attended by more than 200 shareholders, who questioned the board on issues ranging from remuneration to complaints about customer service. There was disquiet when one shareholder suggested the AGM could be moved to London. Standard Life is to alternate between London and Edinburgh, but Lord Smith said that Alliance Trust was unlikely to follow suit.