Marks & Spencer chairman Luc Vandevelde has accepted an unusual all-share pay deal as he steps down into what he calls "a more traditional role of a chairman".

From September, Mr Vandevelde will receive 13,500 shares per month but no longer be eligible for a bonus or pension contributions.

At the shares' current price of 322.5p, his share deal will mean payments of more than �520,000 a year. But the chairman is in effect gambling his pay on the performance of the company's shares - believed to be the first such deal in a leading British company.

The changes will coincide with Mr Vandevelde reducing his duties further at the high street retailer, relinquishing his role as chairman of M&S financial services and no longer working on a fixed timetable.

Test of faith

It is a vote of confidence in the team and in the plans for the company, that in future my remuneration is closely tied to the value which we create for our shareholders Luc Vandevelde

Mr Vandevelde, largely credited with turning around the retailer's fortunes in the past three years, passed over his chief executive role to Roger Holmes in September.

"It is testimony to Roger's leadership and to the team in place at Marks & Spencer," said Mr Vandevelde of his decision to take a back seat in the group.

"It is also a vote of confidence in the team and in the plans for the company, that in future my remuneration is closely tied to the value which we create for our shareholders and is reflected in the share price."

The chairman, a Belgian national who still lives in Belgium, already owns 880,000 M&S shares with a value of about �2.5m based on their current share price.

Sign of the times

Although Mr Vandevelde is the first high-profile British chairman to opt for a share package, other directors in the US have already chosen to align their pay with the company's performance.

Last year, Ford Motor Company's chief executive Bill Ford asked to be paid in share options only as the company struggled with dwindling sales and heavy job cuts.

"If the company succeeds, I will do well," he said of his decision.