Burberry has avoided another embarrassing confrontation with shareholders over the multimillion-pound pay package of its chief executive, Christopher Bailey, after investors overwhelmingly backed his remuneration.
Last year, the size and structure of his package was rejected by a majority of votes cast at the company’s annual general meeting, promptingBurberry to mount a campaign explaining its pay structure to investors.
Bailey is among the highest-paid bosses of companies listed on the FTSE 100 share index and his remuneration has highlighted investor disquiet about chief executives’ high pay.
Last month, it emerged that the fashion designer, who was put in charge of the luxury label last year, could be given shares worth up to £50m from free handouts and stock awarded for bonuses over the coming years.
For the 2014-15 financial year he received £7.9m, comprising a salary of £1m, an allowance of £424,000, £303,000 in pension payments, an annual bonus of £1.8m and £4.4m from a long-term incentive plan.
The rejection of his pay package last year by 53% of the voters - which was awarded anyway as the vote was non-binding – left the company “extremely disappointed”, according to Sir John Peace, Burberry’s chairman.
Since the public rebuke from shareholders, the company has sought to be more explicit about the details of the pay package. “Through extensive engagement, we have sought to better explain the details behind his package,” Peace said at the AGM on Thursday. Following last year’s AGM, Burberry has discussed executive remuneration with the majority of its 50 largest investors.
In a letter to shareholders last month, non-executive director Ian Carter, who chairs Burberry’s remuneration committee, described Bailey’s importance to the company in the 14 years before he was installed as chief executive. Bailey rose to prominence as Burberry’s chief creative officer, a role he now combines with chief executive.
“Over that period, he led the creative side, overseeing everything the customer sees and touches including brand imagery, product design and development, creative marketing and architecture,” said Carter.
Bailey is credited as being instrumental in the company’s success and was promoted to chief executive last year, succeeding Angela Ahrendts after she quit to join Apple.
Of the votes cast at the AGM in London, 92.3% supported the firm’s remuneration report, with 7.7% against.
The company said its executives were subject to strict performance and value creation targets over time, and meeting them would benefit all shareholders, while share schemes rarely pay out in full.
The endorsement from shareholders took the sting out of what was anticipated to be a contentious meeting. In the end, just a handful of shareholders asked questions, two of which were complaints that the 10am start time meant some attendees had difficulty getting to the meeting on time from outside London.
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%. Hong Kong makes up about 10% of Burberry’s revenues and the group estimates that Chinese customers, including those travelling abroad, account for up to 40% of sales.
Hong Kong sales had been hit by a drop in visitors from the Chinese mainland because of tensions over reforming how the China-controlled territory will elect its next leader. At the AGM, Peace said that since protests there last year, the area had become a difficult market for selling luxury goods.
This article was written by Shane Hickey, for theguardian.com on Thursday 16th July 2015 17.04 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010