Over half of Burberry’s shareholders have chosen not to support the company’s remuneration report after hearing the newly appointed CEO Christopher Bailey is to be awarded a pay package worth approximately £30m.
Just shy of 53 percent of the votes were cast against the report, which held a £1.1m basic salary for Bailey, alongside an optional performance bonus of anything up to 200 percent his of base pay, a £440,000 annual allowance, and a one-time award of 500,000 shares on his appointment in May. Investors were further riled by an additional million shares awarded in 2013, on top of another 350,000 awarded in 2010, scheduled to vest in 2015 and 2018 respectively, and currently worth somewhere in the region of £20m.
The shares are of particular note for Burberry shareholders, who believe financial awards detached from performance to be grossly unjust in a time when the gap between executive and worker pay is growing. However, Burberry is not the first company to suffer at the hands of unsatisfied shareholders. In 2012, Aviva saw 60 percent of its shareholders rally against a golden hello of £2.2m for its incoming UK executive, while a little under 40 percent of Randgold Resources’ shareholders voted against a £2.5m share award for its chief executive last year.
Burberry is not the first company to suffer at the hands of unsatisfied shareholders
The shareholder protest was put forwards as part of a non-binding say on pay vote, meaning the FTSE 100 company will not necessarily be forced into making a change. However, Burberry will be looking to address shareholders’ concerns that Bailey is being rewarded irrespective of performance. Only 16 percent of shareholders decided not to back Burberry’s overall pay policy, and the Chief Executive’s appointment received an impressive 99 percent backing from those with a say.
The complaint comes at the same time as a High Pay Centre report that the ratio of executive pay to that of the average worker has grown from 60-to-one in the 1990s to 180-to-one today. According to the report, average pay for a FTSE 100 company executive came to £4.7m last year, up from £4.1m the year before. The think tank argues extreme action must be taken to close the gap between worker and executive.
“It’s time to get serious about tackling the executive pay racket,” said the High Pay Centre’s Director, Deborah Hargreaves. “The government’s tinkering won’t bring about a proper change in the UK’s pay culture. We need to build an economy where people are paid fair and sensible amounts of money for the work that they do, and the incomes of the super-rich aren’t racing away from everybody else.”
