Burberry Dodges Shareholder Defeat in Vote on Executive PayBy
31.5% of votes at annual meeting cast against pay report
Luxury house overcomes objections from advisory groups
Burberry Group Plc fended off a shareholder revolt over executive pay at Marco Gobbetti’s first annual meeting as chief executive officer, overcoming objections from some investors and advisory groups.
After the trenchcoat maker took steps to placate shareholders ahead of the Thursday meeting, 31.5 percent of votes were cast against the company’s pay report, the company said in a provisional result. Institutional Shareholder Services had urged investors to reject the package and the U.K.’s Investment Association, an industry body, voiced worries.
Chief Financial Officer Julie Brown waived as much as 2.4 million pounds ($3.1 million) of previously agreed stock awards in June following investor pressure. Former CEO Christopher Bailey, who yielded that role to Gobbetti this month but remains chief creative officer, had already said he would not take a bonus, though he’s still eligible for about 11 million pounds worth of stock awards from previous years’ packages.
Brown gave up the shares because “she felt, given the circumstances, it was the right thing to do,” Chairman John Peace said after the meeting. About 9 percent of shares were voted against the reappointment of Peace, whom Burberry has said it expects to replace by the end of 2018.
The votes came amid growing concern about income inequality in the U.K., with Prime Minister Theresa May describing the gap as “unhealthy” and promising a fairer society. Companies ranging from consumer-products giant Reckitt Benckiser Group Plc to miner Anglo American Plc to cigarette maker Imperial Brands Plc have taken steps to rein in executive compensation.
ISS had criticized one of Bailey’s earlier awards as “murky” and said the company’s remuneration practices were “not in line with market standards.” Shareholder Royal London Asset Management, which has a 0.5 percent stake, said Burberry’s response to questions over pay had been “chaotic” and raised concerns about corporate governance, saying it would vote against the remuneration report.
“I think that Burberry likes to see itself as a law unto itself,” said Stefan Stern, director of the High Pay Centre, a group that monitors executive awards. “It likes to be seen as elite and expensive and might even think that’s part of its brand, but shareholders have to do their job and won’t be tolerant if they think companies are overpaying.”
The meeting caps an eventful first few days in his new role for Gobbetti, previously CEO at LVMH-owned French fashion house Celine. The U.K. luxury company posted strong quarterly results Wednesday.
Burberry has faced shareholder ire over its pay plans before. In 2014, investors rejected its awards to executives, although the vote was only advisory. Energy giant BP Plc, which received a similar rebuke in 2016, trimmed its chief’s pay ahead of this year’s meeting in May. Also in that month, 61 percent of shareholders at education company Pearson Plc voted against CEO John Fallon’s pay.
— With assistance by David Hellier