DISGRUNTLED shareholders of retailer WH Smith failed to block a £2.6m "golden hello" package for incoming chief executive Kate Swann.

Voting at the group's annual meeting in London revealed nearly 34 million shareholders opposed a pay and bonus deal, which they said was not tied closely enough to performance.

But rebel shareholders were outnumbered by the 98 million voters who backed the remuneration package of the 38-year-old former managing director of catalogue retailer Argos.

Chairman Richard Handover told the meeting that the package, which includes a basic salary of £475,000 and compensation of £500,000, was justified to tempt Miss Swann away from her previous post.

Miss Swann had "lost money against what she earned before" and would have to turn around a poor trading performance during the past year and lift the share price in order to earn share options worth £1.43m.

The National Association of Pension Funds (NAPF) had earlier advised its members to vote against the offer, while the Association of British Insurers (ABI) has also voiced concerns.

The company is also looking for a new chairman.

Mr Handover had been due to remain in the post until next January, but indicated yesterday that the search for a successor had begun.