London—At a general meeting of its shareholders today, Burberry investors fired what has been called “a warning shot.”
About 53% of shareholders voted their displeasure with the nearly 23 million pound compensation for new CEO Christopher Bailey. Though the vote is nonbinding, the Institute of Directors said the onus in on Burberry to more closely answer investors’ concerns.
“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.
‘A Rare Talent’
The vote surprised Burberry executives who expected anything but controversy at the annual meeting. But taking top executives to task has become popular in the United Kingdom, encouraged by politicians.
New regulations came into force last 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 joined Burberry in 2001 and rose through the ranks to become creative director under former CEO Angela Ahrendts, who left in May for Apple.
Under Bailey’s compensation package, he stands to be paid up to 10.3 million pounds ($17.6 million) a year in cash and shares, depending on his performance. He also holder shares in Burberry worth about 27 million pound, and was 500,000 shares when his appointment was announced in October, in addition to 1.35 million shares awarded in his previous role as chief creative officer.
Chairman Sir John Peace emphatically defended Bailey as a “rare talent” who could amass even greater rewards outside of Britain.
“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.”