Burberry is to give Christopher Bailey £10.5 million worth of shares next month as he hands over the day-to-day management of the luxury retailer to new chief executive Marco Gobbetti.
Bailey, who was paid £3.5 million last year, will receive 600,000 of the one million shares he was awarded in 2013, when he was named chief executive in addition to his role as chief creative officer.
After facing controversy with shareholders and leading the British brand through mixed financial results, Bailey will now step aside for Gobbetti and become president of Burberry next month.
At the current price of £17.65 the 600,000 shares that he will receive means they are worth £10.5 million. Burberry is expected to give him the rest of the one million shares at a later date.
The retailer’s annual report published on Tuesday indicates that Bailey’s £3.5 million pay package last year is up from the £1.9 million the previous year.
READ MORE: Burberry profits drop 21% as Gobbetti prepares to take over
Despite waiving his entitlement to any annual bonus this year year, it was still boosted by a £1.4 million payout from a further award of shares in 2014.
Bailey‘s salary will remain at £1.1 million when he becomes president next month, after a year in which Burberry’s underlying profits dropped by 21 per cent.
Gobbetti will also receive a £1.1 million salary, an £80,000 allowance for clothing, a car and travel, and a share deal worth £4.4 million.
The luxury goods brand’s report also includes changes to executive pay deals, such as lowering the maximum annual salary increase for its top executives from 15 per cent to 10 per cent.
Other changes include bonus pay being capped at twice the base salary compared to 2.25 times larger under the previous policy, and executive share plan awards for “exceptional performance” will be cut from six times the salary to just 3.75 times higher, while the maximum award for “normal” performance will drop from four times the base salary to 3.25 times larger.
The purpose of these changes is so Burberry can avoid a repeat of the shareholder rebellions, three years after Bailey fought with shareholders after more than half voted against is £20 million total pay package for 2014.
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