* Bellway to review director pay policy
* ABI welcomes move by shareholders and Bellway
* Bellway says housing market still weak despite rate cuts
* Net reservation rates still around 50 percent
* Shares slip 0.6 percent (Adds result of AGM)
LONDON, Jan 16 (Reuters) - Housebuilder Bellway said on Friday it would review its policy on director pay after shareholders voted against the group's remuneration report at its annual meeting.
The company came under fire after investor group ABI published a "redtop alert", which signals serious concerns with a company's behaviour, on Jan. 4 over plans to award directors large bonuses at a time when lack of credit and rising unemployment had resulted in a slumping property market.
The housebuilder repeated on Friday that net reservation rates are still around 50 percent below last year's levels and cancellations continue at historically high levels of around 24 percent.
Its annual report shows chief executive John Watson was paid a total of 825,000 pounds ($1.23 million) for 2008, including a bonus of 275,000 pounds, while two other executive directors, Peter Stoker and Alistair Leitch, each received bonuses of 178,750 pounds.
The ABI welcomed the result on Friday.
"This is a very clear message that there must be a proper link between reward and performance, even in a sharp economic downturn," said Peter Montagnon, director of investment affairs at ABI.
He added: "Shareholders expect all companies to be sensitive to the need for bonuses to be paid only if stretching targets are met".
Bellway on Friday issued a statement immediately after its annual meeting saying that it will review directors' pay in consultation with shareholders in the coming months, without detailing that it had lost the vote.
"The board has noted shareholders' views on the Report of the Board on Directors' Remuneration and believes it was wrong in not consulting with major shareholders earlier," Chairman Howard Dawe said in a statement.
Newcastle-based Bellway added on Friday that the housing market remains weak despite the Bank of England lending rate falling dramatically.
"To date, we have seen no clear evidence of this reduction having halted the negative momentum in consumer confidence, particularly, in relation to the housing market," Dawe said.
Dawe also confirmed that the company is operating within its banking facilities, which were renegotiated last year.
The volumes of homes being sold remains a key issue for housebuilders. New data this week from The Royal Institute of Chartered Surveyors showed the average estate agent sold 10.1 properties from October to December, the lowest figure since the survey began in 1978.
Shares in Bellway were 0.63 percent lower at 554 pence at 15:38 GMT. (Reporting by Lorraine Turner; Editing by Rosalba O'Brien and Rupert Winchester)