Burberry shareholders vote against remuneration report
Investors have delivered a blow to fashion house Burberry, by voting against the boss's pay package at the annual general meeting in London.
52% of shareholders voted not to support the remuneration report, in a rare stand against large salaries.
Christopher Bailey, who took over as chief executive in May, has a package worth up to £10m a year.
The company admitted it was "a lot of money", but said the amount was justified, to keep him in the business.
Burberry said the vote was "disappointing".
However, it is not binding, so the company will not be forced to change its policy.
Mr Bailey, who was appointed chief executive in May, has an annual allowance of £440,000 on top of his £1.1m salary.
On his appointment, he was also given 500,000 shares in the company, currently worth more than £7m.
While shareholders voted down the remuneration report, rejecting the above pay package given to Mr Bailey, there was some better news for Burberry.
The binding vote on its new overall pay policy was passed with the backing of 84% of shareholder votes, and Mr Bailey's appointment was approved by 99%.
Investors had also expressed concerns about 1.35m shares he was allocated before becoming chief executive, which had no performance criteria attached to them.
At today's valuation, these shares would be worth £19.5m when he is eventually allowed to sell them in several years' time.
In the meantime, the company said he could earn more than £10m a year over the next five years, if the retailer hits its performance targets.
Mr Bailey retained his position as chief creative officer, when he took over from Angela Ahrendts as chief executive.
'A lot of money'
The Investment Management Association (IMA), had issued an "amber top" warning about Burberry's pay policy.
This is the second most serious censure the IMA, which represents the investment management industry, can give.
In addition PIRC -Pensions and Investment Research Consultants- advised its members to vote against the company's remuneration report.
But the company defended Bailey's pay package, saying that last year he was offered a higher salary elsewhere.
The board took the view that "it was essential that we retain Christopher in the business", said the chairman, Sir John Peace.
He said Bailey would only benefit from his share award if he stayed at Burberry for five years.
He also pointed out that apart from the extra half million performance-related shares, Bailey had received no salary increase when he became CEO.
"We know that 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.
This will of course also benefit shareholders," said Sir John.
"And we are acutely aware that he could command a much higher package outside of the UK," he added.
It is rare that protesting shareholders are in a majority, having happened just six times since 2000.
Amongst the most recent examples was that of the insurance giant, Aviva. In 2012 investors voted against the pay package of the then chief executive, Andrew Moss.
He resigned shortly afterwards.
Earlier this week Burberry announced healthy sales growth, particularly in China.
Retail revenues for the three months to the end of June were £370m, up almost 10% from a year earlier, while like-for-like sales increased by 12%.