Shareholder Spring at Burberry as 53% of investors vote against Christopher Bailey's pay package

The vote is non-binding but it doesn't look good for the fashion house, which has awarded Christopher Bailey almost £27m worth of shares to stop him jumping ship.

by Rachel Savage
Last Updated: 14 Oct 2014

Shareholders have been getting mighty restive over pay lately: a third of Barclays’ voted against its bonus plans this year, while 60% of Aviva’s protested in 2012, bringing down the insurer’s chief exec. Now it is Burberry’s turn to face the wrath of investors, who very much disapproved of new chief exec Christopher Bailey’s mega first pay package and past share awards.

The luxury fashion house is striking its best contrite pose, after 52.7% of shareholders voted against its remuneration report at the AGM today. The vote is non-binding - only 16% actually went against Bailey’s pay in the binding vote that took place before the meeting - but shows the depth of discontent.

Chairman Sir John Peace said the result was ‘very disappointing’, adding ‘What we have to do is reflect on that and talk to shareholders’.

He claimed Burberry had ‘no choice’ but to award Bailey 1 million shares last year, after rivals tried to poach him with more lucrative offers, on top of 350,000 already given to him as a ‘retention tool’ in 2010. Investors pointedly noted at the meeting those awards, now worth around £19.6m, have no performance criteria attached to them.

‘We are acutely aware that he [Bailey] could command a much higher package outside the UK,’ Peace said. Bailey, who took over from Angela Ahrendts as chief executive in May while keeping his role as chief creative officer, is getting a £1.1m salary and a £440,000 ‘allowance’ this year, as well another 500,000 shares (this time performance-related), which brings the total value of his share awards to almost £27m.

Peace has a fair point: Miuccia Prada reportedly earned £11.7m last year. But Bailey’s claim after the meeting that he hadn’t held Burberry to ‘ransom’ will still raise more than a few eyebrows. After warning profits will be hit by a strong pound just yesterday, Bailey will have to get selling those trenchcoats he’s so good at designing if he’s going to convince investors he’s worth those millions.

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