Bravo gets a £4m early bonus to stay at Burberry

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The Independent Online

Burberry, the fashion retailer, has extended the employment contract of its chief executive Rose Marie Bravo by a year to July 2006.

Burberry, the fashion retailer, has extended the employment contract of its chief executive Rose Marie Bravo by a year to July 2006.

In entering into the extension, Ms Bravo will receive 1 million shares, worth £4m, one year early. In addition, 2.5 million shares due to be received in July 2005 will now be held back until July 2006 at the earliest. After July 2006, Ms Bravo will be on a one-year rolling contract.

Ms Bravo, 53, joined the company in 1997 from Saks Fifth Avenue, where she was chief executive. She was recently declared the ninth most powerful woman in Britain, one place behind Cherie Booth. She has overseen a period in the company's history where the brand has been revitalised. She received £2.1m in remuneration last year and more significantly has £24m in shares and long-term options.

John Peace, the chairman of Burberry, said: "The board is delighted that Rose Marie has extended her contract. Under her leadership, Burberry has been transformed into an international luxury brand and the business has achieved great success."

Analysts were pleased with the news. Merrill Lynch said the announcement "should help the stock in coming months, if anything because it demonstrates the future growth potential of the company". Some analysts believe the shares are trading at a discount to the group's rivals.

Burberry reported a 14 per cent increase in underlying sales, although total sales revenue increased by only 6 per cent due to the strength of the dollar. Underlying retail sales, which account for 54 per cent of sales, were up 15 per cent. Continental Europe showed the strongest growth. In South-east Asia, business was boosted by the performance of new stores.

Commenting on the results, Ms Bravo said: "The financial year is off to a good start. In this quarter, which marks Burberry's seasonal transition from spring to autumn, we achieved strong sell through of remaining spring/summer merchandise and experienced an encouraging initial consumer response to our autumn/winter collections. This performance is consistent with expectations for the full financial year."

The company is on schedule to open seven stores and concessions before the end of the financial year. The management team was strengthened in May with the recruitment of Brian Blake from Gucci as chief operating officer.

Not everyone is happy, though. At today's annual shareholders' meeting, the National Association of Pension Funds (NAPF) will raise the issue of Mr Peace's continued chairmanship of Burberry, which it deems to be in contravention of best corporate governance practice. Mr Peace is chief executive of Burberry's majority shareholder GUS, which owns more than 60 per cent of the group, and also sits on Burberry's remuneration committee.

The NAPF is encouraging shareholders to vote the chairman off the board, preferring a chairman independent of the majority shareholder. Given Burberry's success, a shareholders' revolt seems a little unlikely to be successful.

Burberry said yesterday: "John Peace is a first class chairman. As chairman, he has presided over the company when we have seen an increase in sales and profits as well as the share price from 230p to 400p."