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| Burberry shareholders vote against remuneration report | |
| (35 minutes later) | |
| Investors have delivered a blow to fashion house Burberry, by voting against the boss's pay package at the annual general meeting in London. | Investors have delivered a blow to fashion house Burberry, by voting against the boss's pay package at the annual general meeting in London. |
| 52% of shareholders voted not to support the remuneration report, in a rare stand against large salaries. | |
| Christopher Bailey, who took over as chief executive in May, has a package worth up to £10m a year. | Christopher Bailey, who took over as chief executive in May, has a package worth up to £10m a year. |
| The company admitted it was "a lot of money", but said the amount was justified, to keep him in the business. | The company admitted it was "a lot of money", but said the amount was justified, to keep him in the business. |
| Not binding | Not binding |
| Burberry said the vote was "disappointing". | |
| However, it is not binding, so the company will not be forced to change its policy. | However, it is not binding, so the company will not be forced to change its policy. |
| Mr Bailey, who was appointed chief executive in May, has an annual allowance of £440,000 on top of his £1.1m salary. | Mr Bailey, who was appointed chief executive in May, has an annual allowance of £440,000 on top of his £1.1m salary. |
| On his appointment, he was also given 500,000 shares in the company, currently worth more than £7m. | On his appointment, he was also given 500,000 shares in the company, currently worth more than £7m. |
| While shareholders voted down the remuneration report, rejecting the above pay package given to Mr Bailey, there was some better news for Burberry. | While shareholders voted down the remuneration report, rejecting the above pay package given to Mr Bailey, there was some better news for Burberry. |
| The binding vote on its new overall pay policy was passed with the backing of 84% of shareholder votes, and Mr Bailey's appointment was approved by 99%. | The binding vote on its new overall pay policy was passed with the backing of 84% of shareholder votes, and Mr Bailey's appointment was approved by 99%. |
| Targets | Targets |
| Investors had also expressed concerns about 1.35m shares he was allocated before becoming chief executive, which had no performance criteria attached to them. | Investors had also expressed concerns about 1.35m shares he was allocated before becoming chief executive, which had no performance criteria attached to them. |
| At today's valuation, these shares would be worth £19.5m when he is eventually allowed to sell them in several years' time. | At today's valuation, these shares would be worth £19.5m when he is eventually allowed to sell them in several years' time. |
| In the meantime, the company said he could earn more than £10m a year over the next five years, if the retailer hits its performance targets. | In the meantime, the company said he could earn more than £10m a year over the next five years, if the retailer hits its performance targets. |
| Mr Bailey retained his position as chief creative officer, when he took over from Angela Ahrendts as chief executive. | Mr Bailey retained his position as chief creative officer, when he took over from Angela Ahrendts as chief executive. |
| 'A lot of money' | 'A lot of money' |
| The Investment Management Association (IMA), had issued an "amber top" warning about Burberry's pay policy. | The Investment Management Association (IMA), had issued an "amber top" warning about Burberry's pay policy. |
| This is the second most serious censure the IMA, which represents the investment management industry, can give. | This is the second most serious censure the IMA, which represents the investment management industry, can give. |
| In addition PIRC -Pensions and Investment Research Consultants- advised its members to vote against the company's remuneration report. | In addition PIRC -Pensions and Investment Research Consultants- advised its members to vote against the company's remuneration report. |
| But the company defended Bailey's pay package, saying that last year he was offered a higher salary elsewhere. | But the company defended Bailey's pay package, saying that last year he was offered a higher salary elsewhere. |
| The board took the view that "it was essential that we retain Christopher in the business", said the chairman, Sir John Peace. | The board took the view that "it was essential that we retain Christopher in the business", said the chairman, Sir John Peace. |
| He said Bailey would only benefit from his share award if he stayed at Burberry for five years. | He said Bailey would only benefit from his share award if he stayed at Burberry for five years. |
| He also pointed out that apart from the extra half million performance-related shares, Bailey had received no salary increase when he became CEO. | He also pointed out that apart from the extra half million performance-related shares, Bailey had received no salary increase when he became CEO. |
| "We know that 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. | "We know that 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. |
| This will of course also benefit shareholders," said Sir John. | This will of course also benefit shareholders," said Sir John. |
| "And we are acutely aware that he could command a much higher package outside of the UK," he added. | "And we are acutely aware that he could command a much higher package outside of the UK," he added. |
| It is rare that protesting shareholders are in a majority, having happened just six times since 2000. | It is rare that protesting shareholders are in a majority, having happened just six times since 2000. |
| Amongst the most recent examples was that of the insurance giant, Aviva. In 2012 investors voted against the pay package of the then chief executive, Andrew Moss. | Amongst the most recent examples was that of the insurance giant, Aviva. In 2012 investors voted against the pay package of the then chief executive, Andrew Moss. |
| He resigned shortly afterwards. | He resigned shortly afterwards. |
| Earlier this week Burberry announced healthy sales growth, particularly in China. | Earlier this week Burberry announced healthy sales growth, particularly in China. |
| Retail revenues for the three months to the end of June were £370m, up almost 10% from a year earlier, while like-for-like sales increased by 12%. | Retail revenues for the three months to the end of June were £370m, up almost 10% from a year earlier, while like-for-like sales increased by 12%. |