Katherine Garrett-Cox prepares for Dundee showdown

Katherine Garrett-Cox has been here before.

Almost three years ago to the day, the feisty chief executive of Alliance Trust, the UK's largest investment trust, saw off a challenge from a disgruntled hedge fund that wanted to make significant changes to the way the 127-year-old Scottish company was run.

Fast forward to 2015 and the 47-year-old has another fight on her hands, with another disgruntled hedge fund. Only this time the demands appear less onerous.

Unlike Laxey Partners, who in 2012 forced a shareholder vote on a motion that effectively would have put Ms Garrett-Cox out of a job, US hedge fund Elliott Advisors wants to appoint three non-executive directors to Alliance Trust's board at an annual general meeting on Wednesday.

On the face of it the proposals by Elliott, which owns a 12 per cent stake in Alliance Trust, look much less threatening. Both attacks, however, originate from the same place: poor performance and high pay.

Alliance Trust has delivered a below-average return of 52 per cent over a five-year period, while other trusts investing in global equities have produced returns of more than 100 per cent. Ms Garrett-Cox, meanwhile, has doubled her pay to £1.34m.

"Performance numbers can always be better, but show me a business that is perfect," says Ms Garrett-Cox. "I object very strongly to this idea [that] we have sat here doing nothing for three years. That is rubbish. We have replaced people, we have upgraded infrastructure, and we have bought back shares. We have not sat here and twiddled our thumbs, and if that is what you are claiming, you are factually well off the pace."

But those are the claims, and a number of influential figures back Elliott's motions.

In an open letter sent to Alliance Trust's shareholders last month, Tim Ingram, who sat on the board of the FTSE 250 company for two years until 2012, urged investors to vote for Elliott's three new non-executive directors. Alliance Trust is demanding the opposite, believing the new directors would "pursue a short-term agenda aimed at facilitating an exit [by Elliott] from its shareholding".

Mr Ingram wrote: "I will be voting my shares in favour of the three new directors joining the board, and would suggest any other shareholder seeking better returns does likewise. It is an uncomfortable fact that the latest annual accounts show the remuneration of the Alliance Trust chief executive over five years of such dismal underperformance has totalled over £6m."

Ms Garrett-Cox is visibly irritated by Mr Ingram's comments. "It is incredibly disappointing that a past director has chosen three years after the event to come out and make some statements," says the mother of four. "He has not been part of the board for three years. He has no insight into our conversations, our debates, our challenges, and I find it extraordinary that he's got so much airtime."

But what of his criticisms, and that of many others, about her pay? Ms Garrett-Cox's £567,000 fixed salary is more than 50 per cent above the FTSE 250 financial services average.

"Tell me a public company where people do not get criticised for their pay," says the Durham history graduate, who has reinvested her entire bonus for the past two years, a total of almost £1m, in the company. "All I would say is that I can decide many things in the business in terms of strategy, development and what we do and don't do - but I have no input or influence over my pay. That is a remuneration committee issue."

But it is precisely Ms Garrett-Cox's hold over the board that concerns critics, and why Elliott wants to parachute in Peter Chambers, the former chief executive of Legal & General Investment Management, Anthony Brooke, a former executive of SG Warburg, and Rory Macnamara, a former director of Morgan Grenfell.

In a recent tit-for-tat exchange with Alliance Trust, Elliott wrote: "Since Katherine Garrett-Cox became chief executive in August 2008, she has presided over persistent underperformance. Pay for underperformance is a sign of a board that is not demanding enough of the executive and one which fails to hold it to account. The board's failure to challenge the status quo falls well short of governance standards."

Ms Garrett-Cox bats this away. "It is just bizarre that people from the outside, speaking with very little knowledge, assume there is not enough of a challenge and a debate around the boardroom table. I can tell you that having sat around that table for nearly eight years it does not feel like that. It is not a cosy club as has been suggested. We are constantly soul searching."

So what does Ms Garrett-Cox think she has done right? She points to the delivery of 48 years of straight dividend increases, to the fact that Alliance Trust's share price is trading at an all-time high, and to a short-term improvement in performance, which means the £3.6bn fund has beaten its benchmark over the past three, six and 12-month periods.

She says: "I feel incredibly confident that we will win on Wednesday, but we are not complacent and we will not stand still. We are doing things every day that we believe will add value for our shareholders. We always look back at what we may have done wrong and learn from it."

Ms Garrett-Cox adds: "I am a historian, and I really love that Winston Churchill quote that says the further back you look, the further forward you see. I find that inspirational."

Many are less inspired and their eyes will be firmly fixed on the outcome of the annual general meeting in Dundee in two days' time.

. . .

Born1967

Total pay£1.34m

Education1999 BA (Hons) in history, Durham University Member, UK Society of Investment Professionals; CFA Institute

Career1993-2000 Investment director, head of American equities, Hill Samuel Asset Management

2000-03 Chief investment officer and executive director, Aberdeen Asset Management

2004-07 Chief investment officer and executive director, Morley Fund Management (Aviva Investors)

2007 - present Chief executive, Alliance Trust

Founded 1888

Assets under management £3.6bn

Employees 270

Headquarters Dundee

Ownership UK listed company

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