Burberry justifies Bailey’s 8 million pound pay package and potential 50 million pound share handout

British heritage label Burberry has defended its 8 million pound pay
package for chief executive Christopher Bailey in its annual report,
following strong opposition from shareholders . He could also be handed shares worth
up to 50 million pounds from free handouts and shares from bonuses over the
next coming years.

Details of his potential rewards came to light as the fashion house tried
to appease shareholders by publishing a detail explanation of the 8 million
pound in shares and cash paid out to Bailey last year in its report. “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,” read the explanation.

“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 with the luxury label for 14 years and was previously
appointed chief executive in conjunction with his role as chief creative
director last May when Angela Ahrendts left the role to join computer giant
Apple. Details regarding his pay package and shareholding had previously
been unclear prior to the annual report. According to the Guardian,
Bailey owns 300,000 shares outright, but he could eventually ended up with
over 3 million shares in total, worth almost 50 million pounds at current
share price from free awards and shares linked to internal performance
criteria.

In a letter to shareholders, Ian Carter, non-executive director who chairs
Burberry’s remuneration committee said “the quantum and structure” of
Bailey’s pay package was different in a UK context. Bailey has a salary of
1.1 million pounds as well as a 440,000 pounds “cash allowance,” and for
the financial year 2014-2015, Bailey received a total of 8 million pounds,
which included 4.4 million pounds for a long term incentive scheme, his
pay, allowance and an annual bonus of 1.7 million pounds.

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