Burberry boss faces shareholder revolt over bumper £9.4m pay package
Burberry is bracing for a shareholder revolt over a new pay package which could hand the fashion house’s boss nearly £4m in extra bonuses.
The British fashion house, known for its iconic trench coat and checked scarves, wants to change its bonus pay structure to allow it to hand chief executive Joshua Schulman a shares bonus worth as much as 300 per cent of his salary.
This has attracted the ire of two leading shareholder advisory groups, who have urged investors to slap down these proposals.
The FTSE 100 firm has tabled a motion to its annual general meeting (AGM) on Wednesday to shift to a hybrid pay incentive structure. This would introduce performance-based bonuses of up to 300 per cent of Schulman’s salary, on top of an existing 150 per cent share award.
This new incentive award could hand the fashion boss as much as £3.7m in shares in the coming financial year, on top of a £1.2m salary and the existing £1.9m share award.
The new pay plan could boost Schulman’s total pay to as much as £9.4m for the coming year, up from the £4.5m forecast for this year, though he would likely land £6.3m based on current progress to performance-based targets.
Burberry boss ‘not yet proven’
Burberry claims that the new pay structure will encourage its executives to perform to a high level as the fashion house accelerates its turnaround.
Schulman was appointed as chief executive in July 2024 and returned the luxury brand to profit following a £66m loss in the previous year, as it pivots to focus on “timeless British luxury” after a short-lived foray into ultra-high fashion.
Burberry argues that its new boss has drawn customers back to the brand, driving improvements in profit and cashflow.
But Institutional Shareholder Services (ISS), the world’s leading shareholder proxy, told investors that Schulman has not yet earned this multi-million pound pay rise.
ISS told investors that, while Schulman “is agreed to have performed well in leading a turnaround to date, and has a strong record at other companies, he does not yet have a long track record at Burberry”.
The shareholder advisory said that the new pay package would deliver a “material increase in overall pay opportunity” but would not deliver sufficient penalty for Schulman’s failure against performance targets.
“The overall framework still results in a significant increase in total opportunity with only a limited reduction in certainty,” it said.
Rival shareholder proxy Glass Lewis has also urged investors to refuse these plans. It criticised Burberry’s remuneration committee for failing to provide “a sufficiently compelling rationale for the scale” of Schulman’s proposed bonus package.
The advisory group also said that the proposals mirror those of companies in the “upper quartile” of the FTSE 100, which it claimed was inappropriate because Burberry’s market cap has “substantially decreased since the last policy cycle,” to rank 93rd in the index as of last month.
Fashion house returns to profit
Delivering Burberry’s full-year results in May, Schulman hailed a “meaningful inflection point” for the company, claiming it is “firmly positioned” for long term growth.
In the year prior, the firm said it had secured £80m in cost-cutting, with a target of £100m by its next annual results.
Burberry met consensus expectations with £2.4bn in revenues, down two per cent from last year, while the recovery from its loss was not enough to meet analysts’ £88m pre-tax forecasts.
The fashion group’s shares opened at 1,079p on Monday. The stock has shed 18 per cent of its value in the year to date.
Burberry was contacted for comment.