* More than half votes cast at AGM oppose remuneration
* Chairman says he will talk to shareholders
* Investors back binding vote on remuneration policy
(Writes through, adds detail, reaction, shares)
By James Davey and Paul Sandle
LONDON, July 11 Burberry investors
showed their displeasure at the multimillion-pound pay package
of the luxury brand's boss Christopher Bailey on Friday, joining
wider disquiet surfacing at some of Britain's leading
In a still-rare rebuke for a FTSE 100 company, 52.7 percent
of the votes cast in a ballot at Burberry's annual shareholder
meeting in London opposed the board's remuneration report.
Though the vote was non-binding, business lobby group the
Institute of Directors said that Burberry investors had "fired a
warning shot" at the meeting.
"If the board does not react in a constructive way to
investor concerns, there is a real risk that shareholders will
feel compelled to use their new binding powers at next year's
annual general meeting," it said.
Encouraged by politicians, shareholders across all
industries are starting to flex their muscles
New regulations came into force last October in relation to
the reporting on directors' remuneration, which require the
policy to be subject to a binding vote. In a first for a
London-listed company, investors voted down the remuneration
policy of engineering firm Kentz in May.
Bailey, as chief creative and chief executive officer at the
company famous for its camel, black and red-checked designs, is
among the highest-paid FTSE 100 bosses.
He receives a salary of 1.1 million pounds ($1.9 million),
plus a 440,000 pound annual allowance and pension contributions
equivalent to 30 percent of salary. He is also eligible for a
performance-based bonus of up to 200 percent of salary and
participation in executive share plans, awards from which will
vest from 2017.
In addition, Bailey was granted a one-off performance-based
award of 500,000 shares, which will vest from 2017 to 2019,
worth 7.3 million pounds at Thursday's prices.
Burberry Chairman John Peace told reporters he was
disappointed with the result of the vote.
"I need to talk to some shareholders," he said. "I want to
understand why they felt so strongly to vote like that."
Peace said he felt that the main issue was the award of the
500,000 shares, but he also pointed out that the company had
received the support of 83.9 percent of the vote in the separate
binding ballot on its forward-looking remuneration policy.
The chairman had defended Bailey's pay during the formal
meeting, describing him as "a rare talent" who could command a
much higher package outside of the UK.
"We know 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," Peace said. "This will,
of course, also benefit shareholders."
Bailey officially took over at the 158-year-old business on
May 1 after Angela Ahrendts left the company to join U.S.
technology giant Apple. Ahrendts took home 6.8 million
pounds in Burberry's 2012-13 financial year.
Since Bailey joined Burberry in 2001 its market value has
increased from 1.1 billion pounds to 6.5 billion pounds.
At Friday's meeting Andrew Whiley, of investor advisory body
Pensions and Investment Research Consultants (PIRC), questioned
the one-off award of 500,000 shares.
Peace said it was made so that Bailey's package on his
promotion mirrored that granted to Ahrendts.
Bailey had already received multimillion-pound share
bonuses, including 350,000 shares in 2010 and one million shares
in 2013. These will vest between 2015 and 2018 and are worth
19.8 million pounds at Thursday's closing share price.
Peace said the latter was granted to keep Bailey at the
company after he was offered better-paying jobs by competitors.
"My goodness what a good decision that was," he said in
reference to the subsequent departure of Ahrendts.
Bailey told reporters that his pay was a matter for the
chairman and the board's remuneration committee and denied
holding the company to ransom.
And in the formal meeting he was not without support -
"worth every single penny", one private shareholder said.
On Thursday Burberry reported better than expected sales
growth in its financial first quarter but warned that a strong
pound would hit profit this year.
Burberry shares closed 0.8 percent down at 14.53 pounds.
($1 = 0.5877 British Pounds)
(Editing by David Goodman)