Sales are growing strongly

M&S had become the latest firm to come under the spotlight for so-called 'fat cat' pay deals.

Shareholder groups had criticised the company's policy on executive bonuses, saying the payouts could be substantial even if the company only performed modestly.

In a trading update also released on Wednesday, M&S said underlying sales had risen 3.8% over the 15 weeks to 12 July compared with the same period last year.

"We had a satisfactory first quarter in which we saw an improvement in clothing performance, particularly in June, with good food sales throughout the period," said chief executive Roger Holmes.

Pay row

The past few months have seen a string of top companies facing criticism for so-called 'fat cat' pay packages.

On Tuesday, fashion house Burberry became the latest firm to be hit by a shareholder protest, with just under a third of investors voting against the company's remuneration report.

Investor voting group Pirc - Pensions and Investment Research Consultants - said the potential bonuses that could be earned under M&S' pay policy were excessive.

But at the AGM, M&S' remuneration report was passed by more than 90% of proxy votes cast.

A show of hands was also reported to have approved the report by a clear majority.

Growth

Despite announcing a rise in first quarter sales, investors were unimpressed and M&S shares were down nearly 6% to 314.75p by early afternoon - the worst performing share in the FTSE 100.

The retailer said its clothing sales had done well, although childrenswear had continued to underperform.

Food sales had continued to "outperform the market" with like-for-like sales - which ignore new store openings - up 5.1%.

M&S said the figure was helped by a "strong performance" from its Simply Food stores, which are opening at the rate of one a week.