Burberry investors showed their displeasure at the multimillion-dollar pay package of the luxury brand’s boss Christopher Bailey on Friday, joining wider disquiet surfacing at some of the UK’s leading businesses.
In a still-rare rebuke for a London FTSE 100 index of leading shares-listed company, 52.7 percent of the votes cast in a ballot at Burberry’s annual shareholders’ meeting in London opposed the board’s remuneration report.
Though the vote was non-binding, business lobby group the Institute of Directors said that Burberry investors had “fired a warning shot” at the meeting.
“If the board does not react in a constructive way to investor concerns, there is a real risk that shareholders will feel compelled to use their new binding powers at next year’s annual general meeting,” it said.
Encouraged by politicians, shareholders across all industries are starting to flex their muscles again.
New regulations came into force in October in relation to the reporting on directors’ remuneration, which require the policy to be subject to a binding vote. In a first for a London-listed company, investors voted down the remuneration policy of engineering firm Kentz in May.
Bailey, as chief creative and chief executive officer at the company famous for its camel, black and red-checked designs, is among the highest-paid FTSE 100 bosses.
He receives a salary of £1.1 million (US$1.9 million), plus a £440,000 annual allowance and pension contributions equivalent to 30 percent of salary. He is also eligible for a performance-based bonus of up to 200 percent of salary and participation in executive share plans, awards from which will vest from 2017.
In addition, Bailey was granted a one-off performance-based award of 500,000 shares, which will vest from 2017 to 2019, worth £7.3 million at Thursday’s prices.
Burberry chairman John Peace told reporters he was disappointed with the result of the vote.
“I need to talk to some shareholders,” he said. “I want to understand why they felt so strongly to vote like that.”
Peace said he felt that the main issue was the award of the 500,000 shares, but he also pointed out that the company had received the support of 83.9 percent of the vote in the separate binding ballot on its forward-looking remuneration policy.
The chairman had defended Bailey’s pay during the formal meeting, describing him as “a rare talent” who could command a much higher package outside of the UK.
“We know the amount paid to Christopher is a lot of money, but much of it is performance-related, which he will only receive if Burberry performs strongly,” Peace said. “This will, of course, also benefit shareholders.”
Bailey officially took the helm at the 158-year-old business on May 1 after Angela Ahrendts left the company to join US technology giant Apple Inc. Ahrendts took home £6.8 million in Burberry’s 2012-2013 financial year.