£800,000 pay packet goes to M&S financial services chief

Laurel Powers-Freeling, the new head of Marks & Spencer's financial services division, could earn £840,000 in her first year at the group, according to the details of her contract.

Ms Powers-Freeling, who joined M&S last month from Lloyds TSB's wealth management division, is guaranteed a minimum of £520,000 in her first year. This will be made up of her base salary of £320,000 plus £200,000 to compensate her for the loss of bonuses due to her from Lloyds.

Under the terms of M&S's senior bonus scheme she could receive an additional bonus of 100 per cent of salary if she exceeds a range of financial business and personal targets. M&S has declined to disclose the targets.

Ms Powers-Freeling will also receive share options worth four times base salary plus further annual awards of up to three times base salary.

The 44-year-old American, who will have a seat on the M&S board, joins the retailer just as it has started to show signs of recovery. The company has also indicated it plans to put extra firepower behind its financial services business to expand the division aggressively.

At the company's half-year results presentation earlier this month Luc Vandevelde, M&S's chairman and chief executive, said the board had considered a wide range of options for financial services including spinning the division off or seeking a joint-venture partner. He said M&S had decided to retain full control of the unit, which makes profits of almost £100m a year.

At a briefing last Friday, UK Retail managing director Roger Holmes repeated that financial services represents an opportunity for Marks & Spencer. He said the boom in consumer spending on things like home ownership, personal possessions and travel had left people "under-funded" in areas like pensions and healthcare.

It is possible M&S may seek to expand by acquisition in order to build its presence.

Ms Powers-Freeling quit as head of Lloyds TSB's wealth management division just a week after it was re-launched under the name Create.