Nearly a third of Burberry shareholders voted against the luxury goods company's executive pay report on Thursday, despite a move by new finance chief Julie Brown to fight opposition by foregoing a share options award worth up to 2.4 million pounds ($3.11 million). Investor groups had raised concerns about pay both for creative director and former chief executive Christopher Bailey and for Brown ahead of the annual general meeting, the first for new chief executive Marco Gobbetti.
The latest clash comes on the heels of a scuffle in 2014, when a majority of shareholders voted against Bailey's pay. Management pay has become a hot topic in Britain in recent years, with many Britons angry at excessive payouts, but investors have had little public success in cutting packages.
Burberry's chairman John Peace said the board's objective was to do what was right for both shareholders and the business. "We are very social minded about public attitudes right now in the UK and we try to be good citizens in that context as well. We strike a balance," he told the meeting. "But if we don't have the best people, the team capable of driving this business forward in the future, I don't think shareholders would want that either."
Bailey received 3.5 million pounds in pay and exceptional awards in the year to end-March, according to the company's annual report, although he waived a bonus. Meanwhile Brown, who took over as chief operating and financial officer in January, received 4.734 million pounds in pay and share awards in the year ended March 31, with more than 4.5 million coming in compensation for missing out on share option awards made by her previous employer Smith & Nephew.
"She took a decision because she felt it was in the interests of Burberry and herself to address those concerns expressed by [Investors' advisory firm] Institutional Shareholder Services," which had recommended shareholders oppose the remuneration report, Peace said after the meeting, during which 68.5 percent of the votes approved Burberry’s executive remuneration report on Thursday.
In addition to the vote, the meeting gave investors a first opportunity to hear from Gobbetti, who joined from French fashion house Celine earlier in the year before taking over as chief executive this month. He said he had established a good working relationship with Bailey, who remains the creative driving force behind the brand.
"Of course we each have our own responsibilities but the dialogue is constant. Christopher is one of the reasons I came to this company," he told reporters. "We have great understanding, we share the same vision and the same values."
Gobbetti has also started with some good news, with the company reporting better than expected sales in the three months ended June 30, helped by a rebound in Chinese demand and another good performance in its home British market.