Burberry, the luxury fashion brand popular with Romeo Beckham and Yanis Varoufakis, must be getting pretty bored with criticism over the size of its executives’ pack packages.
Annual eight-figure payments to former boss Angela Ahrendts attracted attention in the wake of the global financial crisis, while current chief Christopher Bailey faced a shareholder revolt before he’d even had time to settle into the top seat vacated by Ahrendts last year.
The tide may be turning, however, with the company admitting yesterday that pay packages will be cut across its organisation in light of tumbling profits. As analysts and shareholders increasingly turn their focus on to the company’s struggles, Burberry may end up harking for the days when criticism was limited to grumbles over remuneration.
Ahrendts, after all, presided over a period of exceptional share price growth, with the company’s stock rising by nearly 250 per cent during her time in charge. Its board argued that global competition forced its hand, pushing up the American’s take-home pay – and when Ahrendts was paid a reported $83m by Apple, after leaving Burberry for the US tech giant, it seemed like they had a point.
The same argument has been applied to Bailey, with Burberry citing interest in his talents from rival fashion houses.
The difference now, however, is that the share price – along with profits and pay – is tumbling. Stocks were down eight per cent yesterday, falling to levels not seen since the end of 2012 and wiping over half a billion pounds off its market cap. Suddenly the issue of a few million quid in a pay packet seems like a relative triviality.
Along with miners and the Aussie dollar, Burberry has taken a whack from the slowdown in China, which accounts for over a third of its global sales.
Sadly we don’t know what Bailey makes of this situation, as the shy Yorkshireman continues to avoid the media and leaves results calls with the media to finance chief Carol Fairweather.
This ‘paper has no gripe with high pay as a reward for delivering shareholder value, but with high pay comes high responsibility and a high degree of pressure – as Bailey is about to find out.