Marks & Spencer chairman Sir Stuart Rose may be forced to take a pay cut after angry shareholders demand a reduction in his £1.13m basic salary. The retailer’s remuneration committee could reduce Rose’s salary within two months following consultations with shareholders. But retail analysts suggest Rose could leave M&S earlier than his stated departure deadline of July 2011 if the row escalates.

Some shareholders at blue-chip institutions believe that after the recent, expensive recruitment of Marc Bolland as the high street giant’s new chief executive on a £15m package, Rose’s remuneration should now fall substantially. He will hand day-to-day control to Bolland in May. The shareholder revolt over Rose’s pay threatens to overshadow the arrival at M&S in May of Bolland, a respected retail executive who has joined the company from the supermarket firm WM Morrison.

Relations between shareholders and M&S have deteriorated markedly in recent years. M&S is thought to be frustrated at its shareholders’ decision to go public on the pay issue. The remuneration committee is understood to have already begun a consultation with shareholders on Rose’s pay. However, the company is being criticised for not acting sooner to neutralise the issue. Two members of the five-strong committee – Sir David Michels and Martha Lane Fox – have historically enjoyed close relations with Rose.

“We have paid for a very expensive chief executive. It would therefore seem appropriate for an executive chairman taking a back seat to be paid less,” one institutional shareholder said this evening.

Rose himself has not had good relations with shareholders since his decision to assume the roles of chairman and chief executive in 2008. Combining the two most powerful positions in a company contravenes corporate governance guidelines. Rose took on both jobs in order to conduct a better search for an internal replacement to him as chief executive. However, no suitable candidate emerged, and the former chairman, Lord Burns, received a controversial pay-off.

“Given Rose has only a year to go, and the chairman of a FTSE 100 company is always going to be paid a lot of money, and that this will cause damage, it could be a pyrrhic victory,” said a leading retail analyst. “But he made a mistake taking on the dual roles. It would not be a shock if he departed early.”

Meanwhile, M&S is attempting to improve its ethical and environmental credentials with a welter of new commitments under its Plan A programme. M&S says it is increasing its fair trade product lines, improving sustainable sourcing of palm oil and other key commodities, and taking steps to ensure garment workers in Bangladesh, India and Sri Lanka receive a “living wage”.

The move has won support from Jonathon Porritt, founder director of the sustainable development charity Forum for the Future, who said: “Three years on, Plan A has become an undisputed ‘market leader’ in terms of corporate sustainability initiatives. Through it, M&S is addressing the right things, in the right way, to secure critically important outcomes.”

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