Burberry shareholders have staged a major revolt in protest at a multi-million pound pay package for the luxury brand’s new chief executive.
Results of voting at the group’s annual general meeting in London showed 52.7% against a resolution which included a £7.2 million “golden hello” for Christopher Bailey, who was previously chief creative officer.
Including this performance-based shares package, split over five years, the 43-year-old Yorkshireman is in line to receive up to £10.3 million a year in salary, pension, variable bonuses and long-term awards each year.
He is also due to receive shares worth £19.5 million by 2018 under previous “golden handcuffs” arrangements with the group in his previous role to prevent him from joining rivals.
Afterwards, Mr Bailey appeared to brush off the suggestion that he might hand back pay, saying: “It’s not about giving something up. It is not something I made the decision on, it is the remuneration committee and the chairman and the board.”
Today’s vote is non-binding and related to awards over the last financial year but chairman Sir John Peace said he was “disappointed” and would talk to shareholders to try to allay their concerns.
It was being seen as a protest vote by the company as a binding remuneration policy resolution was backed by more than four-fifths of investors – though a significant 16.1% still voted against.
Sir John said: “It really is an expression to us of concern over some aspects of our remuneration and I think it specifically relates to Christopher.
“I want to understand why they felt so strongly to vote against. When I understand it, I’ll know what to do.”
Sir John defended the decision to give both Mr Bailey and previous boss Angela Ahrendts - who he succeeded earlier this year - share awards in 2010 to keep the ``world-class executives'' at the company.
Mr Bailey was granted a further share award last year as he was offered jobs by rivals for “much higher than his existing package”.
Sir John said: “The board took the view that it was essential we retain Christopher in the business, mindful of the huge value he has created for the business and would continue to create in the future as one of the world’s leading fashion designers.”
Defending Mr Bailey’s pay as chief executive, he said: “We know that the amount paid to Christopher is a lot of money but a lot of it is performance related which he will only receive if Burberry performs strongly, and this of course will also benefit shareholders.
“He could command a much higher package outside the UK where the size and the nature of remuneration can be different and quite often not publicly disclosed.”
He pointed to the departure of Ms Ahrendts for a senior role at Apple for a package worth 60 million US dollars (£35.1 million).
Sir John said Mr Bailey had been “nervous” ahead of his first AGM as chief executive.
But he was applauded by investors and there was little resistance to his pay arrangements among the 80-100 gathered for the meeting in central London, where one even said the new boss was “worth every single penny”.
Votes taken before the event showed the high level of disquiet on pay among wider investors.
There was one note of discord at the AGM, voiced by shareholder Dr Alan Diamond, who expressed irritation at no longer being able to buy the Piccadilly coat – as sported by the Duke of Edinburgh – which “made this company world famous”.
He said coats that were available were not suitable for “people like myself who don’t want to look like a pale David Beckham impression”.
Burberry, which dates back to 1856, has traditionally been known for its classic trench coats but has widened its appeal as a luxury brand using celebrity models such as Cara Delevingne and Emma Watson in its advertising campaigns.
But Dr Diamond told the board: “I don’t think you cater for anybody over the age of 40.”
Yesterday, Burberry published first quarter figures showing same store sales up 12%, helped by double digit growth in China and growing online traffic.
However, it warned that the strength of the pound, which is at near-six year highs, could have a deepening impact on its bottom line.