Burberry set for showdown with shareholders over executive pay

Burberry is on course for a showdown with its shareholders over "excessive" executive pay when it stages its AGM on Thursday.

The British luxury house should have prevented issues that arose earlier this year over the remuneration of president and chief creative officer Christopher Bailey and new chief financial officer Julie Brown, according to Royal London Asset Management (RLAM), which owns a £33.2m stake.

Speaking the The Times corporate governance manager of RLAM Ashley Hamilton Claxton said that while Burberry had made some improvements since a shareholder rebellion on executive pay three years ago, it had not done enough and could have prevented the latest row. "[...] the slim reduction in [former] chief executive Christopher Bailey’s bonus seems lacklustre against a backdrop of reduced targets and poor financial performance at the firm," Claxton told the newspaper.

Clayton adds his voice to those of corporate governance bodies including Institutional Shareholder Services, the Investment Association and Pirc in expressing concerns about the level of pay in relation to the performance of the company.

Bailey, who last week handed over the CEO reins of Burberry to Marco Gobbetti formerly of Céline, was awarded £5.4m of shares, which Pirc said was unacceptable given the performance of the company under his stewardship. Julie Brown was given a significant share award on her arrival from global medical technology business Smith and Nephew at the start of the year, much of which she later returned. Bailey has also waived his bonus for the past two years.

Claxton said the clarifications issued by Burberry after the share awards were made were evidence of "poor oversight" and said as a result RLAM would be voting "against firm’s pay report for this year".

Burberry reported an adjusted profit before tax up £42m to £462m in the year to the end of March 2017, which was down 21% on an underlying basis, and is currently in the midst of a major cost-cutting initiative.