FILOFAX directors angered shareholders yesterday when the British company proposed a sharp increase in non-executive director fees and two new share option schemes just two days after it issued a dramatic profits warning.

The company's shares collapsed by 40 per cent on the warning which claimed de stocking by WH Smith and slower growth in the US and Japan would hit this years profits.

One shareholder said the proposals represented "rewards for failure". Another questioned whether it was appropriate to recommend increasing non executive director's pay from £20,000 sterling to £50,000 a year given the company's recent announcement. Though some shareholders voted against the schemes both were waived through.

The criticisms came at Filofax's annual meeting, which was attended by only a handful of shareholders in the basement of a Filofax shop in central London.

Mr Ron Corbett, who sold his business to Filofax in return for shares instead of cash two years ago, said he was "shattered" by the profits warning.

Chief executive, Mr Richard Field was also asked what words of comfort he could offer about the company's future. He replied that the market for ring hinders was still rising and that Filofax remained the best known brand. "In the short term we have some issues to address but in the long term we've got a sound business."