Burberry has attempted to clarify why it has awarded a £440,000 allowance to newly appointed boss, Christopher Bailey.
The luxury fashion retailer issued a supplementary note to shareholders as it braced itself for a protest vote at its annual meeting on Friday.
Three influential advisory bodies have raised concerns over a one-off share award for Bailey. The Institutional Voting Information Service has issued an “amber” top warning on Burberry’s executive pay arrangements.
ISS, the US corporate governance adviser, and the Pensions & Investment Research Consultants are also understood to have questioned elements of Bailey’s remuneration.
There is also particular concern about a one-off award of 500,000 shares as part of Bailey’s promotion to chief executive, which is worth £7.3m at current prices and will vest between 2017 and 2019, according to the Telegraph. Bailey still also holds the title of chief creative officer.
Bailey earns a £1.1m basic salary and pension top-ups worth 30% of salary. The £440,000 allowance is in addition to this.
Bailey’s predecessor Angela Ahrendts, also received a controversial £387,000 annual cash allowance to cover costs such as her car, driver and Burberry wardrobe.
In Burberry’s “additional disclosure” note, published ahead of Friday’s shareholder meeting, the group said the unusually high award was offered “as a means of providing [Bailey] with an increase to his fixed remuneration without increasing other elements of his remuneration”.
The note adds: “For example, if the allowance had been provided as an increase to his salary, this would have substantially increased the value of his annual bonus share awards and pension allowance.”