Key facts
- Burberry proposed a new pay structure for CEO Joshua Schulman.
- The plan could award Schulman up to 300% of his salary in performance-based share bonuses.
- Institutional Shareholder Services (ISS) advised investors to vote against the proposals.
- Schulman's total pay could rise to £9.4 million, from a forecast £4.5 million.
- Burberry claims the new structure will aid its turnaround efforts.
Burberry is preparing for a potential shareholder backlash over a new compensation plan that could award its chief executive, Joshua Schulman, nearly £4 million in performance-based bonuses. The British fashion house aims to alter its bonus pay structure to permit awards of up to 300% of Schulman's salary in shares.
Institutional Shareholder Services (ISS), a prominent shareholder proxy advisory firm, has recommended that investors vote against these proposals at Burberry's upcoming annual general meeting (AGM). The company plans to present a motion to its AGM on Wednesday to transition to a hybrid pay incentive model.
Under the proposed structure, performance-based bonuses could reach 300% of Schulman's salary, in addition to an existing 150% share award. This new incentive could potentially grant Schulman approximately £3.7 million in shares in the upcoming financial year. Combined with his £1.2 million salary and the existing £1.9 million share award, his total compensation could reach as much as £9.4 million for the year, a significant increase from the £4.5 million forecast for the current year. Based on current performance, he is likely to receive £6.3 million.
Burberry asserts that the revised pay structure is designed to motivate executives to achieve high performance as the company pursues its turnaround strategy. Schulman, who was appointed CEO in July 2024, is credited with returning the luxury brand to profitability after a £66 million loss in the prior year, as Burberry shifts its focus to "timeless British luxury."
However, ISS noted that while Schulman has "performed well in leading a turnaround to date, and has a strong record at other companies, he does not yet have a long track record at Burberry." The advisory firm stated that the new package offers a "material increase in overall pay opportunity" without a sufficient reduction in certainty or adequate penalties for underperformance.
In May, Schulman described Burberry's full-year results as a "meaningful inflection point" and expressed confidence in the company's long-term growth prospects. The company reported £2.4 billion in revenues, a 2% decrease from the previous year, and secured £80 million in cost-cutting measures, with a target of £100 million by its next annual results. Burberry's shares were trading at 1,079p on Monday, having fallen 18% year-to-date.