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[July 06, 2014]
Fashion Burberry defends its payments to boss
(Guardian (UK) Via Acquire Media NewsEdge) Burberry has made an eleventh-hour attempt to clarify why it has awarded a pounds 440,000 allowance to chief executive, Christopher Bailey, issuing a supplementary note to shareholders.
The move came as the fashion house braced itself for a protest vote from shareholders unhappy at pay arrangements for Bailey, who was promoted to chief executive in May. As well as his cash allowance, investors are concerned about pounds 22.5m of "golden handcuff" and other share awards in the last year.
The Investment Management Association (IMA) has given Burberry an "amber top" rating for its executive pay arrangements, suggesting its members, who speak for about 15% of the stock market, should closely review Bailey's awards before casting votes. The IMA voting advice was offered despite Bailey being promoted to chief executive after the end of the group's financial year.
In Burberry's "additional disclosure" note, published ahead of Friday's shareholder meeting, the group said the unusually high award was "a means of providing [Bailey] with an increase to his fixed remuneration without increasing other elements of his remuneration".
The note adds: "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." In May the Guardian revealed details of Bailey's contract, including the pounds 440,000 cash allowance. Other elements of his remuneration include a salary of pounds 1.1m, an annual cash bonus of up to twice his salary (pounds 2.2m), share awards of up to four times his salary (pounds 4.4m), and pension contributions of a third of his salary (pounds 330,000).
The additional disclosure did not explain why an additional remuneration sum should not be linked to performance targets. Simon Bowers (c) 2014 Guardian Newspapers Limited.
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