Marks & Spencer chief executive Sir Stuart Rose yesterday sought to rebuild his reputation with shareholders by announcing he is selling his £100,000 stake in a company owned by one of the non-executives who is meant to supervise him.

Rose's strengths in investor relations have been in doubt since the retailer announced in March that he is to be promoted to executive chairman, prompting complaints that he will become too dominant in the boardroom.

This concern was heightened after it was revealed he owned 1% of karaoke chain Lucky Voice set up by M&S director Martha Lane-Fox, the founder of travel website lastminute.com, prompting accusations she was no longer independent.

But he told the annual conference of the Investor Relations Society yesterday: "Martha is a very independent woman. She is not the sort of character who could be easily swung by a £100,000 investment in her business.

"I do think we have more important issues to deal with. But I have in fact unwound my investment in Lucky Voice."

A Marks & Spencer spokeswoman later confirmed that he had not yet sold the stake but will do so.

She added: "He doesn't want the small issues to distract from the main issues for Marks & Spencer.

"It was a very small investment and he decided to make it before the decision was made to appoint him as executive chairman."

Rose, who was clearly irked by the criticism he had received, complained yesterday that "the City is one world, business is another".

But he admitted M&S could have handled its announcement of his promotion better. Several large institutions complained of being given barely a few hours' notice let alone being fully consulted about the change.

"It is fair to say we could probably have done a better job of explaining," Rose said. "We underestimated the extent of the public row."

Rose said the company handled the announcements in the way it had because the restructuring affected around 50 people at different levels of the organisation and saw several leave the company.

The rejig enhanced the roles of several potential successors to Rose, adding several operational responsibilities to finance director Ian Dyson. It also brought two others, Kate Bostock and Steven Esom, on to the board.

"That is a consequence of me taking on the role of executive chairman for a defined period of time," Rose said.

Rose is now to be subject to re-election to the M&S every year between now and his retirement in 2011. But he acknowledged the company could have done more to explain why it was bucking the corporate governance norms that separate the chairman and chief executive positions.

He said: "Probably if we had done it again we would have spent a bit more time consulting more widely."

But at least one fund manager present at the conference is not convinced about Rose's dual role. Helena Morrissey, chief executive of Newton Investment Management, said: "We are not particularly happy or comfortable with it."

David Grigson, finance director of Thomson Reuters added: "M&S may pull it off but it is a very hard challenge. It is very hard to run a board as chairman and chief executive."

Rose's pessimism about the retail sector gave investors little cheer. "I believe this slowdown will last until the back end of 2009 and perhaps into 2010 and all of us in business have to cut our cloth, particularly those of us on consumer facing businesses."

However, he indicated he would continue with M&S's expansion plans in the UK and overseas.

M&S is due to report financial results for its 2007 to 2008 financial year on May 20.