Christopher Bailey, the fashion designer and new chief executive of Burberry, has been handed a golden hello in shares worth up to £7.6m and an annual pay package worth up to £8.1m a year, including a £440,000 cash allowance to cover clothing and other items.
Bailey, who keeps his role as creative head of the luxury fashion house, took over this month from US chief executive Angela Ahrendts, who controversially received a £387,000 annual cash perk to cover the cost of her car, driver, Burberry clothing and other costs described as an “overseas allowance”.
The latter was first awarded to Ahrendts in 2006 after she moved from America and was initially designed to cover “accommodation, travel and school fees etc for a period of no longer than five years”.
The contract for UK-born Bailey, however, entitles him to receive an allowance worth £53,000 more than the perk awarded to Ahrendts, who recently went to work for Apple as its head of retail.
The company declined to say what expenditure Bailey’s allowance is expected to cover. Bailey, like all senior managers, receives an 80% discount on the retail price of Burberry products.
His contract of employment, seen by the Guardian, simply states: “The executive shall have a taxable, non-pensionable allowance of £440,000 per annum, payable in equal monthly instalments.”
The allowance does not include medical or life insurance, which are all provided for separately by Burberry, as is the cost of first-class air travel for work and other expenses.
The highlights of Bailey’s employment contract were recently sent to major shareholders after the paperwork was signed just one day before Bailey started in his new role on 1 May. Some investors are known to dislike large awards of shares for internal promotions, and Burberry could face tough questioning over the its decision. Large golden hello payments are typically reserved for top executives arriving from other businesses, where their departure caused them to lose out on a performance payout.
The one-off award of 500,000 shares is understood to be subject to performance criteria and will be released between 2017 and 2019. It is described in Bailey’s contract as an award “in consideration for the executive’s appointment to the roll of chief executive”. However, the small print also makes clear that Bailey does not lose the performance-linked share awards he had already accrued in his previous role as chief creative officer. He has been at the company since 2001.
Only limited details of Bailey’s employment terms will be disclosed when Burberry publishes its annual report next month because he was promoted to chief executive after the company’s year-end.
His contract, however, sets out in detail how he will receive a salary of £1.1m, a £440,000 allowance, and an annual cash bonus of up to £2.2m as well as £330,000 in pension contributions. In addition, the Guardian understands he will also receive share awards of up to £4.4m separate to the golden hello.
Bailey has indicated that he will donate 10% of his salary after tax to The Burberry Foundation, a charity that supports projects targeted at disadvantaged young people.
In addition to setting out his pay, Bailey’s contract makes clear that Burberry has agreed that “it will cooperate with the executive to … take reasonable measures to protect the name ‘Christopher Bailey’ as a trademark and within internet domain names to its expense”.
Meanwhile, Bailey has pledged to allow Burberry to use his name and image rights for publicity and marketing. “The executive shall make himself available to attend and participate in public events,” the contact stipulates.
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