In the latest round of shareholder revolts, various factions of Burberry’s ownership have decided they’re unhappy Bailey will get a pay packet including shares worth about £20m. That’s on top of his £1.1m base salary, plus a £440,000 allowance.
The brand is due to hold its annual general meeting on Friday, and as has become tradition with these things, many of its shareholders are said to be angling for a fight. It doesn’t help that the Investment Management Association, whose members comprise about 15% of the stock market, has advised its members to ‘closely review’ Bailey’s pay packet before they vote to approve it.
The allowance in particular has caused consternation among shareholders. You can understand their ire: it’s higher than the £387,000 Angela Ahrendts received – which itself was originally supposed to be a one-off payment to help her settle in the UK when she joined Burberry in 2006. Although Burberry argues it’s an easy way of topping up Bailey’s salary without affecting any other parts of his remuneration.
'Christopher Bailey’s allowance was agreed by the remuneration committee as part of his remuneration for his prior role as Chief Creative Officer. It was agreed as a means of providing [him] with an increase to his fixed remuneration without increasing other elements of his remuneration. For example if the allowance had been provided as an increase to his salary, this would have substantially increased the value of his annual bonus, share awards, and pension allowance.'
Bailey is an unusual example of a FTSE 100 chief executive. Not only has he been promoted from within (so he has the admiration of both employees and shareholders), but you can easily quantify his role in turning the company around. Here’s how shares have fared between 2009, when Bailey was made chief creative officer, and now:
Source: Yahoo Finance
Admittedly, the chances of Bailey ever being offered a similarly juicy bonus again in future are slim considering the posturing coming from shareholders at the moment. But there’s no point punishing him for being good at his previous job. Learning the language of the chief executive is going to be tough enough…