Burberry investors vote against chief’s pay, but he gets it anyway
Of the votes cast, 52% did not support the directors' remuneration report in humiliating revolt
Friday 11 July 2014
Christopher Bailey’s multimillion-pound pay and perks package on becoming chief executive was enough to anger more than half of Burberry’s shareholders at its annual meeting.
Investors staged a revolt over Mr Bailey’s package – worth up to £27m – and failed to back the luxury group’s remuneration report. As a result, Burberry became only the sixth FTSE 100 business to have had its pay package voted down by shareholders in the last decade.
The results of the non-binding vote showed that 52.68 per cent of investors expressed their opposition to the report, with just 47.32 per cent in favour. Only 0.5 per cent of votes were withheld.
Mr Bailey, who is in his 14th year at the fashion brand, took on the chief executive role in May, alongside his position as chief creative officer job, when Angela Ahrendts stepped down to leave for Apple. He is receiving a £1.1m salary and a £440,000 spending allowance, as well as a one-off, performance-based grant of 500,000 shares worth around £7m. That’s on top of existing share options – handed to Mr Bailey before he was on the board – worth a potential £19m.
Shareholders were particularly unhappy with the latest 500,000 of performance-related shares. Although the report was not passed, the binding vote on the company’s overall pay policy did secure approval, with the support of 83.92 per cent of the shareholders. Mr Bailey’s appointment was approved by a massive 99 per cent.
The Burberry chairman Sir John Peace told investors that Mr Bailey’s pay was a “lot of money” but necessary to fend off interest from rival luxury brands across the globe.
He stressed that Mr Bailey and Ms Ahrendts had added £4.5bn to the value of the company and told shareholders: “We were faced with competing job offers for Christopher which were much higher than his existing package. The board took the view it was vital we retain Christopher.
“We know the amount paid to Christopher is a lot of money, but much of it is performance-related – which he will only receive if Burberry performs strongly. And we are acutely aware that he could command a much higher package outside of the UK.”
Sir John also said he was glad that Burberry had decided to pay Mr Bailey so well in the past in order to keep him at the group. “What a great decision that was. If we had lost Christopher, then Stacey Cartwright [former finance director] and then Angela, shareholders would not have been happy.”
Sir John added: “Shareholders have been hugely supportive in the past 10 years or so, and that is why we are so disappointed with the vote on the report. We will reflect and we need to talk to shareholders.”
Mr Bailey admitted he had been nervous before the annual meeting – his first – due to it being “an unfamiliar forum”. He acknowledged that his “compensation is significant” but argued that it was decided by the board and he felt no extra pressure. Mr Bailey said his dual role will not detract from his ability to focus and added: “It was never about sitting with a pencil and drawing clothes. It was about my vision.”
He also spoke of his pride in “leading this business into its next chapter” and remarked that Burberry “reaches back into my childhood as I grew up in Yorkshire just 20 miles from where our trenchcoats are still made.”
The shareholder displeasure came a day after Burberry reported that underlying first-quarter sales were up 12 per cent, ahead of analysts’ estimates, although it was still cautious about the potential impact of the strong pound this year.
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