Corporate Governance

Dear Shareholder,

This has been a dynamic year for Burberry with the continued strong performance of the business, the leadership transition to Christopher Bailey as Chief Creative and Chief Executive Officer and the continuing evolution of the Board through its ongoing succession plan.

As a Board it is our responsibility to support management in its strategic aims, to enable the Company to continue to perform successfully and sustainably for our shareholders and wider stakeholders. Underpinning this is the Board’s commitment to seek to operate to the highest standards of corporate governance. I am pleased that following an independent evaluation of the Board and our Committees during the year, the results confirmed that the Board operates effectively, in an open and collegiate manner.

It is also important to have an open dialogue with our shareholders and other stakeholders. This year the Board has been reflecting carefully on the results of last year’s Annual General Meeting. Although we were pleased to gain 84% of votes in favour of our remuneration policy, we were extremely disappointed that we did not receive a majority of support for our Remuneration Report. The Chairman of the Remuneration Committee and I have met with or spoken to the majority of the Group’s largest 50 investors to better understand and respond to the areas of concern, and have met with a significant number of them. The Remuneration Committee has invested considerable time during the year considering the outcome of these discussions. More detail on the activities of the Remuneration Committee can be found in the Directors' Remuneration Report.

Board composition has been a particular focus over the past two years as the Board continues to build on its relevant skills and competencies for the future under its succession plan. The Board has evolved significantly with the appointment of four new non-executive directors and a new executive team. I am delighted to welcome Carolyn McCall and Fabiola Arredondo who have joined the Board as nonexecutive directors during the year. Their appointments bring important skills and experience to the Board, reflecting the Group’s strategy. In the context of the substantial changes to both executive and non-executive Board membership, the Board believes that to ensure stability and continuity of knowledge, new Board members should be given the opportunity to settle into their roles before longer-serving members step down. The Board will continue to execute against its succession plan and it is anticipated that there will be further changes to the Board in the coming year.

While all Board appointments are made on merit, the Board believes in the importance of a diverse Board and has always had strong gender diversity among its membership, particularly at executive level. As female Board members currently comprise 33% of our Board, I am pleased that we have exceeded the goal set by Lord Davies in his review of the diversity of FTSE 100 boards.

With the expectation that the year ahead will continue to be impacted by a challenging external environment, the Board will continue to support management in the execution of its strategies, while continuing to keep the long term interests of our shareholders top of mind. This report outlines our approach to governance and our key activities during the year.

Sir John Peace

Chairman