Trinity Mirror CEO quits after pay row

Sly Bailey, chief executive of Trinity Mirror arrives at the Leveson Inquiry at the High Court in London January 16, 2012.

LONDON (Reuters) - Sly Bailey is to step down as chief executive of British newspaper group Trinity Mirror (TNI.L), the company said on Thursday, after shareholders took issue with her large pay package in the midst of falling profits and sales.

Bailey received almost 1.8 million pounds ($2.9 million) in cash and share awards last year, while the company's operating profit fell 15 percent to 104 million pounds despite cost cuts that included axing jobs and freezing salaries.

In addition to its flagship national Daily Mirror tabloid, Trinity Mirror owns a host of other titles including over 100 regional newspapers, which have been devastated by a sharp drop in classified advertising during a prolonged economic downturn.

Like its rivals, the company has tried to compensate with new digital publications as more readers turn to the Internet for news but has not been able to move fast enough to make up the shortfall.

Bailey will step down at the end of the year, by which time she will have been CEO for almost a decade.

"I feel the time has come to hand over to someone else to take up the challenge and for me to seek new challenges and opportunities elsewhere," said Bailey, 50, one of Europe's top female businesswomen.

Non-executive Chairman Ian Gibson said in a statement: "The company and the board are grateful to Sly for her immense contribution and leadership over an extended period and wish her well for the future."

The announcement came after the market close on Thursday. Trinity Mirror shares had ended the day down 0.8 percent at 32.25 pounds.

(Reporting by Georgina Prodhan)