Burberry investors back boss’s pay package

By

Reuters

Published

Jul 16, 2015

Investors in British luxury brand overwhelmingly backed boss ‘s multi-million pound pay package on Thursday, a reversal from last year when they opposed his remuneration.

Bailey is among the highest-paid bosses of companies listed on Britain’s FTSE 100 share index and his remuneration has highlighted investor disquiet about chief executives’ high pay.

Last year the size and structure of his pay package was rejected by 53 percent of votes cast at the company’s AGM, although it went into effect as the vote was non-binding.

The company has since sought to explain its remuneration policy more clearly.

Bailey, a Burberry veteran of 14 years, has been instrumental in its success and was promoted to chief creative and chief executive officer last year, succeeding Angela Ahrendts as CEO after she quit to join Apple.

Some 92.3 percent of votes cast at the AGM in London on Thursday supported the firm’s remuneration report, with just 7.7 percent of votes opposing it.

For the 2014-15 financial year Bailey received 7.9 million pounds ($12.3 million), comprising a salary of 1 million pounds, an allowance of 424,000 pounds, 303,000 pounds in pension, an annual bonus of 1.8 million pounds and 4.4 million pounds from a long-term incentive plan.

The company’s annual report also shows that over the coming years Bailey could theoretically receive shares worth up to about 44 million pounds at Burberry’s current share price through various grants and incentive schemes.

That prompted some shareholder lobby groups to recommend investors vote against the pay report, arguing Bailey’s potential rewards were excessive.

However, since last year’s AGM Burberry has discussed remuneration and Bailey’s worth to the company with the majority of its 50 largest investors.

Also ahead of the meeting Ian Carter, the Burberry non-executive director who chairs its remuneration committee, attempted to defuse any residual investor tension by writing to shareholders to explain the rationale for Bailey’s package.

Burberry says its executives are subject to strict performance and value creation targets over time, and meeting them would benefit all shareholders, while share schemes are rarely, if ever, paid out at 100 percent of possible reward.

On Wednesday Burberry posted a slowdown in first quarter sales growth, partly reflecting a further deceleration in the Hong Kong market, sending its shares down by as much as 4 percent.

The stock is, however, up 11 percent over the last year.