The luxury fashion market is set to feel the heat this week as Burberry faces a shareholder revolt over its proposed executive remuneration package. The £9.4 million pay deal for CEO Joshua Schulman has been met with strong opposition from Institutional Shareholder Services (ISS), which advises investors to reject the motion at Wednesday's Annual General Meeting (AGM). Under the new hybrid pay structure, Schulman could receive up to 300% of his £1.2 million salary in performance-based share bonuses, in addition to an existing 150% share award.
The FTSE 100 firm is seeking to implement a system that would grant the fashion boss as much as £3.7 million in shares for the upcoming financial year, on top of his £1.2 million salary and the current £1.9 million share award. This could elevate Schulman's total pay to an estimated £9.4 million, a significant jump from the £4.5 million forecast for the current year, although a more likely figure based on current performance targets is around £6.3 million.
Burberry defends the proposed pay structure, arguing it is crucial for incentivising high performance from its executives as the company accelerates its turnaround strategy. Schulman has been credited with guiding the luxury brand back to profitability after a reported £66 million loss in the preceding year. The company's strategy involves a renewed focus on "timeless British luxury" following a brief venture into ultra-high fashion.
ISS, however, has expressed reservations about the new pay package, highlighting that it represents a "material increase in overall pay opportunity" but lacks sufficient penalties should Schulman fail to meet performance targets. The advisory firm concluded that the overall framework delivers a "significant increase in total opportunity with only a limited reduction in certainty" for investors.
In its full-year results announced in May, Burberry reported revenues of £2.4 billion, a two per cent decrease from the previous year, meeting consensus expectations. Despite returning to profit, the recovery was not enough to meet analysts' pre-tax forecasts of £88 million. The company had also announced £80 million in cost-cutting measures, with a target of £100 million by its next annual results.
Burberry's shares opened at 1,079p on Monday, having shed 18 per cent of their value year-to-date, reflecting a challenging period for the company. The luxury fashion brand has been working to regain its footing in the market after a tumultuous few years, with Schulman at the helm since July 2024.