Lord Wolfson, the chief executive of Next, saw his pay fall 15 per cent last year, despite the retailer posting record profits and returns for shareholders.
The Conservative Party peer was, however, boosted by the vesting of two long-term share awards worth £2.5m, although Lord Wolfson agreed with Next's remuneration committee to cap the total payout at this amount.
Next posted a 5 per cent leap in pre-tax profits to £570.3m for the year to 28 January, driven by a strong performance from its Directory catalogue and internet business.
The retailer's shares, which closed at 2,954p yesterday, have also powered ahead by 35 per cent over the last year.
Lord Wolfson took home £1.49m last year, including a salary of £697,000, benefits of £36,000 and a performance-related bonus of £753,000, in addition to a £861,000 increase in the value of his accrued annual pension to £3.91m.
But his bonus was down on his £1.03m in 2010-11, as Next missed targets on earnings per share. This was despite Next growing its underlying EPS by 15.1 per cent to 255.4p over its last financial year.