Burberry Shareholders Vote Against Chief Executive Christopher Bailey's £30 Million Pay Package

Shareholders have rejected a £30 million pay packet for Christopher Bailey to become chief executive at Burberry.

Almost 53% of investors voted against Burberry's remuneration report at the company's annual meeting.

Bailey took on the role of chief executive and chief creative officer in May, taking over from Angela Ahrendts, who was also the focus of controversy over pay.

Burberry regards Bailey as its biggest asset, describing the Yorkshire man as "a rare talent" and maintains that his pay is in line with other global luxury-goods companies.

Sir John Peace, chairman of Burberry, said he was "very disappointed" with the vote and pledged to hold talks with shareholders following the "protest vote."

He defended Mr Bailey's remuneration, saying there had been "competing job offers" for Burberry's creative leader and that the company had "no choice" but to offer him an enhanced package.

Sir John said: "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. We are acutely aware that he could command a much higher package outside of the UK where the size and nature of remuneration can be very different and quite often not publicly disclosed."

Mr Bailey insisted that he had not held Burberry to "ransom" with the threat of defecting to rival companies, but conceded that his pay package is "significant".

"It was never about I'm leaving or I'm staying. It was a discussion with the chairman. It was not a ransom situation," he said.

The proposed pay package comprises a basic salary of £1.1 million; a further £440,000 allowance; a one-off, performance-based grant of 500,000 shares, worth £7 million at today's share price.

It also includes an 80 per cent discount on Burberry products; share awards of 350,000 shares in 2010 and one million shares in 2013. At today's share price, these are worth £19 million. These shares – worth £19.8m - have no performance conditions other than Mr Bailey remaining at the company for five years after their award.

Mr Bailey said he intends to give 10% of his annual package to charity, and dismissed suggestions that he might forfeit some of his pay to placate the disgruntled shareholders.

"It's not about giving something up," he said. "It is not something I made the decision on, it is the remuneration committee and the chairman and the board."

An investor explained the objections saying: "Shareholders generally don't mind executives getting paid well for exceptional performance." But, he added, Bailey's executive experience is "unproven."

Roger Barker, director of corporate governance at the Institute of Directors, said Burberry shareholders have "fired a warning shot".

"They are clearly not convinced that executive pay at the company has been transparently linked to tough performance targets. The onus in now on the board to urgently engage with shareholders to convince them they are responding to their understandable concerns.

"As undoubtedly successful as Christopher Bailey has been as the creative force behind Burberry's recent success, he is unproven as a CEO. And yet, his pay will put him amongst the highest paid FTSE chiefs."

Burberry is the sixth FTSE 100 business to have its pay package voted down by shareholders in the last decade.

The 42-year-old style icon received the ultimate promotion gift when he was inducted into the fashion Hall of Fame at the fourth annual WGSN Global Fashion Awards.

The Royal College of Art graduate worked at Donna Karan and Gucci before joining Burberry as creative director in 2001. He was promoted to chief creative officer in 2009.