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[July 12, 2014]
Shareholder vote: Rebellion won't alter pay policy
(Guardian (UK) Via Acquire Media NewsEdge) Burberry has suffered one of the biggest revolts over executive pay ever seen in the City with investors punishing the company for handing its new boss, Christopher Bailey, shares worth nearly pounds 20m in the past four years.
At the shareholder meeting in London 52.7% of investor votes opposed the company's pay report containing details of the two share awards with no performance targets attached.
Despite the scale of opposition the firm is not required to act as the vote is only advisory. Speaking afterwards, Burberry chairman Sir John Peace said the vote was very disappointing. "What we have to do is reflect on that and talk to shareholders." Peace said the award was made after a rival luxury goods firm tried to poach Bailey with an offer much higher than his existing package. "We know the amount paid to Christopher is a lot of money but much of it is performance-related and he will only receive it if Burberry performs strongly." Bailey, who succeeded long-serving chief executive Angela Ahrendts in May, was handed 350,000 shares as chief creative officer in 2010 and 1m last summer - together worth pounds 20m at the current price.
In one of his first outings as chief executive, Bailey said the discussion over his pay last year "was not a ransom situation". "I've been in a relatively high profile job within the design world for a while . . .the conversation was not about the offer on the table." Asked whether he would return some of the offending shares, he said: "It's not about giving something up." The Yorkshireman is unusual in the fashion industry in that he has risen to the top from the design side of the business, leading some analysts to question his credentials to lead a FTSE 100 company. Bailey said his expanded role was not that different: "I was never sitting there with a pencil drawing clothes. It's about having a vision and leading the team and ensuring consistency around the globe." The company has a history of rewarding its executives handsomely. Bailey's predecessor, who left to join Apple in May, was one of the highest paid chief executives in the FTSE 100. Indeed, the American smashed through the glass ceiling to become the first woman to top Britain's executive pay league after she earned pounds 16.9m in 2012.
Burberry argues that Bailey's pay is in line with other luxury-goods companies. Prada's Miuccia Prada reportedly earned pounds 11.7m in 2013.
(c) 2014 Guardian Newspapers Limited.
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