* 58 pct of shareholders vote against remuneration report
* Darty targeting cost savings of about 20 million euros annually
* Begins search for new CEO
* Q1 like-for-like sales flat
By Alessandra Prentice and Karen Rebelo
Sept 13 (Reuters) - Shareholders in Darty Plc, Europe's third-largest retailer, voted against executive pay awards on Thursday, deeming them too generous at a time of sharp falls in the company's sales and share price.
The 58 percent vote against Darty's pay report at its annual meeting came after the company sought to placate disgruntled investors with the announcement of the departure of Chief Executive Thierry Falque-Pierrotin.
Darty came under fire for Falque-Pierrotin's remuneration after it admitted last month that stock options awarded to him in 2009 were not linked to performance targets as opposed to what it had stated earlier.
Votes on executive pay are non-binding, but they can alert management to investor dissatisfaction.
"The remuneration report vote today reflects two factors - unhappiness with the disclosure error from a governance perspective and concerns over executive remuneration," Darty Chairman Alan Parker said in a statement.
"The board will ensure the remuneration for (the new chief executive) and the wider executive team...is commensurate with the evolving shape and focus of the group."
Falque-Pierrotin was at the helm when the company re-branded itself and sold its loss-making UK business Comet. Darty's shares have fallen 58 percent in the past one year as the company battles aggressive competition from supermarket chains and online retailers.
Eric Knight of Knight Vinke, the company's top shareholder, said Darty needed to create a more meritocratic environment.
"How would you feel if you discovered that your CEO basically had a separate deal which meant that he got paid and you don't? It's very bad for motivation," Knight said on the sidelines of the annual meeting.
The company, formerly known as Kesa, said it had begun a search for a successor to Falque-Pierrotin, who joined the group in 2009 from French retailer PPR Group and will leave his post in December.
Darty, under new chairman Alan Parker, said it would press ahead with its strategy review that targeted cost savings of at least 20 million euros annually and cutting losses at some of its developing businesses.
In a conference call, Parker did not rule out selling the company's struggling businesses in Italy and Spain but gave no additional details.
"We continue to believe they should exit Italy which is responsible for a 20 percent drag on EPS and where conditions appear to be especially acute," said Singer Capital Markets analyst Matthew McEachran in a research note.
"The change of CEO today could allow changes to strategy such as this," McEachran said.
Analysts are also concerned about French President Francois Hollande's plans to introduce tax hikes and labour market reforms.
"With the outlook in Darty's core French market deteriorating, we expect to see further pressure on profits," Panmure Gordon analyst Philip Dorgan said.
Darty, which also announced first-quarter sales on Thursday, said like-for-like sales during the May-July period were flat and conditions across all its markets remained challenging.
Darty's shares were down 4.05 percent at 53.25 pence at 1528 GMT on the London Stock Exchange on Thursday.