Burberry share price: Group faces investor revolt over CEO pay

on Jul 7, 2014
Updated: Apr 9, 2020

iNVEZZ.com, Monday, July 7: Burberry (LON:BRBY) is facing a shareholder revolt over a controversial £20 million pay deal for its newly-appointed CEO Christopher Bailey, ahead of the fashion retailer’s annual meeting on Friday.

Three influential advisory bodies have raised concerns over a one-off share award for Bailey, who was promoted to the top role in October, when Angela Ahrendts quit to join Apple (Apple’s share price rises on hiring of Burberry’s Ahrendts).

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The Institutional Voting Information Service (IVIS), now part of the Investment Management Association, has issued an ‘amber’ top warning on Burberry’s executive pay arrangements. It has urged members – who control around 15 percent of the stock market – to scrutinise Bailey’s remuneration before casting their votes.
ISS, the US corporate governance adviser, and the Pensions & Investment Research Consultants (Pirc) are also understood to have questioned elements of Bailey’s payout.

Of particular concern is a one-off award of 500,000 shares as part of Bailey’s promotion, which is worth £7.3 million at current prices and will vest between 2017 and 2019. Questions have also been raised over the new CEO’s £440,000 ‘annual allowance’, on top of his £1.1 million basic salary and pension top-ups worth 30 percent of salary.

**Company defends pay plans**

Burberry has made an attempt to clarify and defend its remuneration decision. In an ‘additional disclosure’ note, published on the group’s corporate website on June 25, Burberry said that the unusually high award was offered “as a means of providing [Bailey] with an increase to his fixed remuneration without increasing other elements of his remuneration”.

The note added: “For example, if the allowance had been provided as an increase to his salary, this would have substantially increased the value of his annual bonus share awards and pension allowance.”
**Burberry share price falls**
Burberry’s share price has been trading in negative territory so far today. By 12:36 BST, the stock had lost 1.71 percent of its value, and was changing hands at 1,433.00p.
Of the 19 analysts projecting 12 month price targets for the FTSE 100-listed fashion retailer for the Financial Times, the median target is 1,560.00p, with a high estimate of 2,147.00p and a low estimate of 900.00p.
**As of 12:33 BST, buy Burberry shares at 1433.00p.**
**As of 12:33 BST, sell Burberry shares at 1432.00p.**


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