The stormy annual meeting was shaken further when a senior US investment banker, James Jenkins, managing director of First Boston Corp, publicly denounced the pay levels as 'egregious and appalling'.
Mr Jenkins, who accused the board of ignoring preference shareholders, warned that First Boston and others might band together to force an extraordinary meeting.
Ratners reported pre-tax losses increased from pounds 17.7m last time to pounds 30.6m in the six months to 1 August. Sales fell from pounds 450m to pounds 365m and same-store sales collapsed by 14 per cent.
Shareholder after shareholder attacked the high boardroom pay and were not mollified when Jim McAdam, chairman, disclosed that Mr Ratner's salary in the current year had been cut by one-third from last year's pounds 574,000.
One shareholder referred to Mr Ratner's infamous joke in a speech last year when he publicly disparaged some Ratners products and called a sherry decanter set 'total crap'.
'The customer is constantly being reminded of the speech. The best way to end that would be for Mr Ratner to leave.'
The sentiment was echoed by others. One said: 'The City has lost faith in the Ratner name and in Gerald Ratner himself.' Another said the pay cut was not enough: pounds 380,000 was 'utterly obscene' given the state of the business.
Mr Ratner was silent throughout, remaining impassive when one shareholder beseeched him, 'I only wish you'd say, Gerald, that you'd take much less than that money.'
Mr McAdam defended him: 'Gerald Ratner still has a great deal to contribute to the group. He did apologise. The issue of his resignation is not on the table.'
He defended the pay levels, which were cut by a third on average for all directors. Directors waived their pay for January, when they realised how poor Christmas sales had been. The new contracts were for three years rather than five.
The luxury Balfour Mews house in London's Mayfair, which Ratners had purchased for the use of Mr Ratner, was now for sale and Mr Ratner had vacated it.
Investors have seen their Ratners shares, which were worth as much as 400p in 1987, fall to 9 1/2p.
In a barrage of brickbats lasting 90 minutes, shareholders also attacked the board's ignorance of the jewellery trade, the aggressive expansion into the US and the decision to retain the Ratners name as one of the facias.
Mr McAdam said the group had tried converting some Ratners stores into James Walker outlets, but there had been no improvement in sales.
However, he said action taken across the group was already beginning to show good results. Margins were above plan and above the level of last year. Costs in the first half were cut by pounds 19m. 'The margin improvements and cost reductions should result in even greater benefits in the second half.'
After the meeting Mr Jenkins, who had flown from the United States especially to register his views, said he feared some of his clients were planning to sue First Boston, which with Goldman Sachs was a joint issuer of some of the Ratners preference shares.
Ratners has suspended dividend payments on about dollars 500m of outstanding preference shares. Goldman Sachs is already facing legal action from disgruntled clients who bought the securities. Mr Jenkins said: 'We are in touch with Goldman's on the subject.'
Mr Jenkins said US preference shareholders should have had a say in the temporary restructuring of Ratners, which was completed in August.
He also wants more non-executive directors on the Ratners board.
Because preference shareholders have not received a dividend for more than six months they have acquired voting rights. Together they account for 29 per cent of the enlarged voting rights, more than enough to force an extraordinary meeting.
Goldman said last night: 'We share the concerns of our clients and the many other investors who may have lost money on the Ratners securities, as have we.'
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