Burberry justifies Bailey's 8 million pound pay package and potential 50 million pound share handout

British heritage label Burberry has defended its 8 million pound pay package for chief executive Christopher Bailey in its annual report, following strong opposition from shareholders last year. He could also be handed shares worth up to 50 million pounds from free handouts and shares from bonuses over the next coming years.

Details of his potential rewards came to light as the fashion house tried to appease shareholders by publishing a detail explanation of the 8 million pound in shares and cash paid out to Bailey last year in its report. "We acknowledge that we released information regarding Christopher Bailey’s remuneration package through a number of different mediums and therefore may not have been sufficiently clear on the context for the package and these exceptional share awards," read the explanation.

"In 2013, and as the chairman explained at the 2014 AGM, Christopher Bailey was approached for a role at another brand, rewarding him at much higher levels than his then existing Burberry package. Put simply, the market value for his creative talents was far in excess of what he was earning. The committee believed it was essential to take action to retain Christopher Bailey, and while we could not match the offer, we increased his remuneration package accordingly, including an exceptional award of one million shares that would vest in full only if he stayed at Burberry until 2018."

Bailey has been with the luxury label for 14 years and was previously appointed chief executive in conjunction with his role as chief creative director last May when Angela Ahrendts left the role to join computer giant Apple. Details regarding his pay package and shareholding had previously been unclear prior to the annual report. According to the Guardian, Bailey owns 300,000 shares outright, but he could eventually ended up with over 3 million shares in total, worth almost 50 million pounds at current share price from free awards and shares linked to internal performance criteria.

In a letter to shareholders, Ian Carter, non-executive director who chairs Burberry's remuneration committee said "the quantum and structure" of Bailey’s pay package was different in a UK context. Bailey has a salary of 1.1 million pounds as well as a 440,000 pounds "cash allowance," and for the financial year 2014-2015, Bailey received a total of 8 million pounds, which included 4.4 million pounds for a long term incentive scheme, his pay, allowance and an annual bonus of 1.7 million pounds.