WH SMITH faces a tough week after it emerged that the new chief executive could get a £2.6 million "golden hello".

Shareholders of the struggling retailer, which has its head office in Swindon, say they will use the company's annual meeting on Thursday to vent their anger over the pay deal.

The National Association of Pension Funds has advised all its members to vote against it, claiming the deal is "insufficiently tied to performance criteria".

Kate Swann, who quit as managing director of catalogue retailer Argos earlier this month to take over the helm at WH Smith from predecessor Beverley Hodson, is due to receive a basic salary of £475,000.

This comes as the axe continues to hang over hundreds of jobs at the two offices in Greenbridge and Pipers Way.

It employs about 1,500 at the two sites.

They have been told that an announcement will be made in April.

Share prices in the company dropped by almost 20 per cent in the three months running up to Christ-mas.

And last year the company suffered a profits slump and flat sales, caused partly by the trend for supermarkets to sell cheap CDs.

The downturn in air travel also had a devastating effect on its American travel retail division.

A taskforce led by chief executive Ms Swann is currently looking at ways to get the company back on track.

The team recently announced an internal freeze on new spending and outside consultants have been told their services are no longer required.

Now it is feared staff jobs could be next in line.

WH Smith spokeswoman Louise Evans said: "An announcement will be made in April concerning possible job losses at Swindon and Lon-don."

According to WH Smith's annual report directors have agreed to a minimum bonus for Ms Swann of £220,000 that could increase to £475,000 after she completes three years with the company.

In addition she is to receive share options worth three times her annual salary netting her £1.43 million.

The board also agreed to pay £500,000 compensation over two years for the loss of benefits when she resigned from her former post.

Kevin Shoesmith