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| Burberry shareholders vote down pay policy at AGM | |
| (about 1 hour later) | |
| Investors have delivered a blow to fashion house Burberry, by voting against the company's pay policy at the annual general meeting in London. | |
| 52% of shareholders did not support the pay report, including a controversial package for its chief executive. | |
| Christopher Bailey, who took over as chief executive in May, has a package worth up to £10m a year. | |
| The company admitted it was "a lot of money", but said the amount was justified, to keep him in the business. | |
| The vote is not binding, so the company will not be forced to change its policy. | |
| Mr Bailey, who was appointed chief executive in May, has an annual allowance of £440,000 on top of his £1.1m salary. | |
| On his appointment, he was also given 500,000 shares in the company, currently worth more than £7m. | |
| Investors also expressed concerns about 1.35m shares he was allocated before becoming chief executive, which had no performance criteria attached to them. | |
| At today's valuation, these shares would be worth £19.5m when he is eventually allowed to sell them in several years' time. | At today's valuation, these shares would be worth £19.5m when he is eventually allowed to sell them in several years' time. |
| In the meantime, the company said he could earn more than £10m a year over the next five years, if the retailer hits its performance targets. | |
| Mr Bailey retained his position as chief creative officer, when he took over from Angela Ahrendts as chief executive. | |
| Warnings | Warnings |
| The Investment Management Association (IMA), had issued an "amber top" warning about Burberry's pay policy. | |
| This is the second most serious censure the IMA, which represents the investment management industry, can give. | This is the second most serious censure the IMA, which represents the investment management industry, can give. |
| In addition PIRC -Pensions and Investment Research Consultants- advised its members to vote against the company's remuneration report. | |
| But the company defended Bailey's pay package, saying that last year he was offered a higher salary elsewhere. | |
| The board took the view that "it was essential that we retain Christopher in the business", said the chairman, Sir John Peace. | |
| He said Bailey would only benefit from his share award if he stayed at Burberry for five years. | |
| He also pointed out that apart from the extra half million performance-related shares, Bailey had received no salary increase when he became CEO. | |
| "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," said Sir John. | |
| "And we are acutely aware that he could command a much higher package outside of the UK," he added. | |
| Earlier this week Burberry announced healthy sales growth, particularly in China. | Earlier this week Burberry announced healthy sales growth, particularly in China. |
| Retail revenues for the three months to the end of June were £370m, up almost 10% from a year earlier, while like-for-like sales increased by 12%. | Retail revenues for the three months to the end of June were £370m, up almost 10% from a year earlier, while like-for-like sales increased by 12%. |