News Column

As Burberry faces a shareholder revolt over chief Christopher Bailey's pay, is he worth it?

July 11, 2014

YES Qing Wang The success of Burberry is largely attributable to its seamless combination of creativity with tradition, which many think epitomises the essence of Britishness. Its chief executive Christopher Bailey is highly experienced (he worked as a designer at Gucci, then as creative director at Burberry since 2001), and has played a critical role in the brand's success. His remuneration package reflects the value of his long-term contribution to Burberry, as well as the confidence the board has shown in the future success of Burberry under his leadership. It is also a safer bet than hiring a new chief executive from outside - the recent crisis at Mulberry was partly a consequence of hiring someone who lacked an in-depth understanding and genuine appreciation of British heritage brands. In terms of the 20m figure linked to Bailey, the only meaningful comparison I can make is with his predecessor Angela Ahrendts, who has received a $68m (39.7m) share award from Apple.

Qing Wang is professor of marketing and innovation at Warwick Business School.

NO Helal Miah The encouraging figures released by Burberry recently are a reflection of strategies that have been in place for many years, rather than since Christopher Bailey took over as chief executive in May. Since he took over, it's more or less been a case of business as usual, and he's been helped by improved sentiment in the global economy. Some argue that he deserves higher pay for doing two jobs (he's continuing as creative director). But I don't think it's in the best interest of shareholders for an individual to hold two of the most senior positions in a company. I would prefer to see a chief executive able to criticise his or her creative director, rather than it being the same person. We think Burberry will continue to perform strongly because of the group's brand positioning, drive to take the business upmarket and focus on digital sales, not because of the work Bailey has done in the last two months. These strategies were in place under the previous chief executive. Helal Miah is investment research analyst at The Share Centre.

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Source: City A.M. (UK)

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