War for Peace as shareholder seeks to unseat Burberry chief

Britain's largest shareholder group is recommending that its members vote Burberry chairman John Peace off the board of the luxury goods company.

Britain's largest shareholder group is recommending that its members vote Burberry chairman John Peace off the board of the luxury goods company.

The National Association of Pension Funds (NAPF), whose members manage assets worth £600m, is angry that Burberry has ignored best corporate governance practice and will deliver the rebuke at the company's shareholder meeting on 20 July.

The association has written to its members saying that Mr Peace, who is also on Burberry's remuneration committee, is not independent as he is also chief executive of GUS, the company that owns Argos. GUS is also the controlling shareholder of Burberry.

"This is not in line with the New Combined Code and, while we understand the company's view, it is not in line with best practice," the association says in a report to its members.

Burberry will also feel the wrath of the NAPF over its remuneration report. The association is recommending that its members vote against approving the report because of a new executive share scheme. Burberry wants to give long-standing executives two shares for every new share they purchase in the company. The association believes that this incentive plan should have been put to a specific shareholder vote. It is also concerned that the plan is not linked to any new performance targets.

A Burberry spokeswoman said that, on both points, the company was acting in the best interests of shareholders. "John is a first-class chairman and under his stewardship the company has shown that it can attract and retain top talent as well as deliver a strong financial performance."

The new share scheme, said the spokeswoman, was also being introduced to "attract and retain high-quality people".

This is the second time that Burberry has had a run-in with the association. At last year's annual general meeting, the shareholder group urged its members to vote against the company's "extraordinary" executive pay arrangements.

In particular, it was concerned about the package for Rose Marie Bravo, Burberry's chief executive. Thanks to the terms of her contract, Ms Bravo, who joined in 1997, could receive a £12m payoff if she lost her job.

Despite the association's recommendations for the latest AGM, Burberry is unlikely to suffer a shareholder revolt.

The company reported impressive financial results in May, with a rise in profits, turnover and margins. This silenced the Burberry detractors who had claimed two years ago that the company was riding high simply on the sudden popularity of goods bearing its iconic check design. But Burberry has managed to expand its range, which now includes the "Burberry Brit" fragrance.