Shareholders representing 31.5% of Burberry’s shares voted against the company’s remuneration report at its AGM yesterday.
The revolt had been expected as shareholders including Royal London Asset Management (RLAM) and corporate governance bodies including Institutional Shareholder Services, the Investment Association and Pirc had already expressed their disquiet at what they saw as over-generous share awards to former chief executive Christopher Bailey and incoming chief financial officer Julie Brown.
Bailey, who last week took up the new position of president and chief creative officer after handing the CEO reins to Marco Gobbetti, had been awarded £5.4m in shares. Brown had received a £4.5m “golden hello” when she joined from Smith & Nephew in January consisting of £4m in shares and £550,000 in cash, however following complaints from shareholder advisory groups, she handed £1.6m back.
Burberry had sought to prevent a wider shareholder revolt by issuing explanations for Bailey’s award and Brown’s payout, which was compensation for forfeiting awards she would have been due at Smith & Nephew, ahead of the AGM. At the meeting chairman Sir John Peace defended the pay awards saying Burberry had to compete on a global field for talent.
“My job as chairman is to get the best people to join and Julie Brown is an absolute star. We could not force her to do anything but she felt it [waiving the shares] was the right thing to do as she was being socially responsible,” said Peace, who recently announced his intention to stand down and is expected to be replaced by the end of next year.
This is the second time the British luxury house has been forced to defend executive pay in the face of a shareholder revolt. In 2014 more than half of its shareholders had objected to its remuneration policy.
Attention will now turn to the relationship between Bailey and Gobbetti, who joined the business from French luxury house Céline at the start of the year and took up the CEO role last week. Gobbetti was brought in as shareholders had objected to Bailey holding the dual role of chief executive and chief creative officer. He has since transitioned into the new dual role of president and chief creative officer and both men report directly to chairman Peace.
“We each have our own responsibilities and the dialogue between us is constant. He is the reason I came to this company and we meet when we need to . . . we fell in quite naturally in our ways of working,” Gobbetti told The Times.