Burberry’s remuneration issues should have been prevented


Ashley Hamilton Claxton, Corporate Governance Manager

10 July 2017

While the board has made some improvements since the last shareholder rebellion three years ago, the chaotic response to several remuneration issues this year has heightened our concerns about poor corporate governance at Burberry.
The slim reduction in CEO Christopher Bailey’s bonus seems lacklustre against a backdrop of reduced targets and poor financial performance at the firm. The incoming Finance Director was offered a substantial buyout award, much of which she later decided to return. While shareholders may appreciate these gestures, strong and effective governance should have prevented these issues in the first place.
Poor oversight has led to the board publishing additional clarifications and evidence to supplement the disclosure in the annual report, which does little to instil confidence in the board. Therefore, we are voting against the firm’s pay report for this year, and the re-election of the remuneration committee chair.
In addition, the flip-flop over Christopher Bailey’s role as CEO and the new reporting structure, which sees both Mr Bailey and incoming CEO Marco Gobbetti reporting into the firm’s Chairman creates further uncertainty and governance risks for investors. For this reason, we’ll also be voting against the re-election of Burberry’s chairman this year.

While the board has made some improvements since the last shareholder rebellion three years ago, the chaotic response to several remuneration issues this year has heightened our concerns about poor corporate governance at Burberry.

The slim reduction in CEO Christopher Bailey’s bonus seems lacklustre against a backdrop of reduced targets and poor financial performance at the firm. The incoming Finance Director was offered a substantial buyout award, much of which she later decided to return. While shareholders may appreciate these gestures, strong and effective governance should have prevented these issues in the first place.

Poor oversight has led to the board publishing additional clarifications and evidence to supplement the disclosure in the annual report, which does little to instil confidence in the board. Therefore, we are voting against the firm’s pay report for this year, and the re-election of the remuneration committee chair.

In addition, the flip-flop over Christopher Bailey’s role as CEO and the new reporting structure, which sees both Mr Bailey and incoming CEO Marco Gobbetti reporting into the firm’s Chairman, creates further uncertainty and governance risks for investors. For this reason, we’ll also be voting against the re-election of Burberry’s chairman this year.

The value of investments and the income from them is not guaranteed and may go down as well as up and investors may not get back the amount originally invested. The views expressed are the author’s own and do not constitute investment advice.