Burberry has justified the £8m pay package for chief executive Christopher Bailey in its annual report, after last year’s revolt from shareholders.
More than half of investors voted against his package following the directors’ remuneration report in July 2014.
In the annual report released yesterday (June 8) Burberry said: “We acknowledge that we released information regarding Christopher Bailey’s remuneration package through a number of different mediums and therefore may not have been sufficiently clear on the context for the package and these exceptional share awards.”
It said: “In 2013, and as the chairman explained at the 2014 AGM, Christopher Bailey was approached for a role at another brand, rewarding him at much higher levels than his then existing Burberry package. Put simply, the market value for his creative talents was far in excess of what he was earning.
“The committee believed it was essential to take action to retain Christopher Bailey, and while we could not match the offer, we increased his remuneration package accordingly, including an exceptional award of one million shares that would vest in full only if he stayed at Burberry until 2018.”
Bailey has been working with Burberry for 14 years and became chief executive when Angela Ahrendts left for Apple in 2014.
He owns 300,000 shares outright but he could end up with more than 3 million shares in total from free awards and shares with performance criteria attached, reported the Guardian. The shares would be worth almost £50m at current share prices.
Bailey has a salary of £1.1m and a £440,000 cash allowance and in the financial year 2014-15 he received a total of £8m.
Burberry’s sales passed £2.5bn for the first time during the period, amounting to £2.52bn for the full year to March 31, up from £2.33bn in 2014. The company’s adjusted profit before tax was £456m, down slightly on a reported basis from £461m in the previous year.