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Other Disclosures

DISCLOSURE PURSUANT TO SECTION 430(2B) OF THE COMPANIES ACT 2006

Sir John Peace

1 August 2018

Further to the announcement by Burberry Group plc on 13 April 2018, Sir John Peace stood down as Chairman and a director of the Board at the end of the Annual General Meeting on 12 July 2018. Sir John received his usual Chairman fees up to the point of stepping down on 12 July 2018, but will receive no further payments thereafter. Sir John will not receive any payment for loss of office or otherwise in respect of his stepping down as Chairman or from the Board.

Disclosure pursuant to section 430(2B) of the Companies Act 2006

Christopher Bailey

On 31 March 2018, Christopher Bailey ceased to be a director of Burberry Group plc (the “Company”). Christopher will remain an employee of the Company until 31 December 2018.

Christopher has received or will receive the following payments, which are in accordance with his service agreement and/or the Company’s remuneration policy, as outlined in the Company’s Annual Report:

  • For the period of continued employment up to 31 December 2018, in accordance with his service agreement, salary, pension and contractual cash and non-cash benefits.
  • A bonus for the year ended 31 March 2018, subject to performance determination and payable in July 2018. The bonus amount (up to a maximum of £2,200,000) will be determined by the Remuneration Committee in May 2018, based on Adjusted PBT performance for the 2017/18 year, in accordance with Burberry’s normal practice.
  • No bonus will be paid in respect of the period April – December 2018.
  • The first tranche of the 2015 Executive Share Plan (ESP) (over 120,790 shares) will vest, subject to performance determination, in July 2018.  Christopher has agreed to waive the second tranche of the 2015 ESP and all other ESP awards granted in 2016 and 2017.
  • The second tranche of the 2014 Restricted Share Plan (RSP) award (over 3,591 shares) will vest in July 2018, as the 3-year performance period for this award was completed on 31 March 2017.  Christopher has agreed to waive the third RSP tranche.
  • The final tranche of the 2013 exceptional award (over 400,000 shares) will vest in accordance with its terms in July 2018.
  • The second tranche of the 2014 exceptional performance-based award, which originally related to 125,000 shares, will vest in accordance with its terms in July 2018 in relation to up to 91,837 shares, based on performance for the period up to 5 July 2017 when Christopher ceased to be CEO.  Christopher agreed to waive 26.5% of this tranche to reflect that he served as CEO of the Company for only the first quarter of the 2017/18 performance year, and for the same reason waived 100% of the third tranche of the 2014 exceptional award.  Full details of the performance assessment and vesting outcome of this award will be included in the 2017/18 Directors’ Remuneration Report.
  • Unexercised SAYE options (over 1,099 shares and 1,229 shares) will lapse on 31 December 2018 in accordance with their terms.
  • Legal fees of £40,000 have been paid directly to Christopher’s legal advisors (including, securing intellectual property rights) and, to recognise his extraordinary contribution to the transformation of Burberry since 2001, the Company gave gifts to Christopher to the value of £28,000, on a net of tax basis.

No other payments will be made.

Full details of all payments made to and receivable by Christopher in respect of his services as a director of the Company will be disclosed in the Directors’ Remuneration Report within the Company’s Annual Report and Accounts for the year ended 31 March 2018, and subsequent years, as appropriate.

Philip Bowman

29 November 2017

Further to the announcement by Burberry Group plc on 21 June 2017, Philip Bowman stood down from the Board as a non-executive director on 31 October 2017. Philip Bowman received his usual non-executive directorship fees up to the point of stepping down on 31 October 2017, but will receive no further payments thereafter. Philip Bowman will not receive any payment for loss of office or otherwise in respect of his stepping down from the Board.

Action taken in relation to Burberry's remuneration reporting in 2017 

24 November 2017

We have fully considered shareholder feedback in our decision making in relation to policy and its application. Following continued engagement with shareholders in 2017:

  • On 6 June 2017, we published the Company’s Directors’ Remuneration Report for the year ended 31 March 2017 (the ”DRR”).
  • On 26 June 2017, we announced that Julie Brown (Chief Operating and Financial Officer) decided to waive 75% of the Executive Share Plan award she was granted on 30 January 2017 due to the overlap of the 2016/17 performance period with an award bought-out from her previous employer.  Julie Brown also decided to waive a portion of the buy-out award she was granted on 30 January 2017 in the light of the vesting outcome of her 2014 award from her former employer. The Remuneration Committee welcomed and agreed with her decision. This totalled 141,959 shares with a value of £2.5 million based on the closing price on 23 June 2017.  
  • At this time, we also provided additional information on our website on the assessment of performance for the 2014 Exceptional performance-based share award granted to Christopher Bailey (then Chief Creative and Chief Executive Officer). 
  • On 13 July 2017, we announced that 68.52% of shareholders voted in favour of the DRR, and 31.48% voted against it, at the 2017 AGM.  At the same time, we also announced a vote of 93.40% in favour of the Directors’ Remuneration Policy, reflecting support for the Policy changes made during the 2016/17 year to reduce overall headline quantum, incorporate best practice features and ensure long term alignment with shareholders.
  • On 31 October 2017, we announced the remuneration implications of Christopher Bailey’s (now President and Chief Creative Officer) transition from Burberry. As part of that, we announced Mr Bailey’s decision to surrender:
    • the pro-rated portion of the second tranche of the 2014 exceptional performance-based award and the third tranche of the 2014 exceptional performance-based to reflect that he only served as CEO of the Company from 1 April to 5 July of the 2017/18, and
    • his Executive Share Plan awards and Restricted Share Plan awards due to vest after July 2018.

These totalled 830,550 shares with a value of £16 million based on the closing price on 30 October 2017.

We will continue to engage with our investors in early 2018 as part of our commitment to build on the constructive dialogue we have established.  

 

 

Information on Christopher Bailey’s 2014 Exceptional Award

Additional information on Performance Assessment for 2016/17 for the vesting of Tranche 1

The Remuneration Committee is making available the following information in addition to the disclosures on pages 100 to 101 of the 2016/17 Annual Report in relation to its assessment of performance at 50% for 2016/2017 for Christopher Bailey’s 2014 Exceptional Award.

As set out in the Annual Report, the Committee considered Christopher’s performance as Chief Creative Officer and CEO for the full financial year 2016/17 against a number of measurable criteria.  The table below sets out the performance criteria considered, associated commentary and the overall performance assessment for each element.  As a result of this assessment the Committee determined that a 50% performance achievement for 2016/17 was appropriate. 

The Remuneration Committee previously assessed performance at 85% in 2014/15 and 50% in 2015/16, and these assessments were supported by shareholders in those years.  Including the 50% in 2016/17 gives an overall vesting outcome of 61.7% of maximum for tranche 1 of this award based on annual assessment of performance over three years.

  Performance element (weighted equally, 25% each) Commentary  Performance Assessment for 2016/17 (of maximum for each element)
1. Strategic development

In May 2016 Burberry outlined its plans to accelerate its productivity and efficiency agenda, including a programme of action to deliver significant cost savings. These plans were built into the five key strategies. During the year the strategies have been embedded into the business and significant progress has been made against all of the objectives. Pages 33 to 46 of the strategic report (in the 2016/17 Annual Report) cover in detail what has been achieved during 2016/17 and the early results of this multi-year programme. 

As Chief Creative Officer and CEO, Christopher led the development of this strategy and its expected implementation in the year, and the Committee considered that this element of the criteria was fully delivered during the period.

25/25 (100%)
2. Financial performance

Adjusted PBT of £462m (down 21% underlying) was generated in 2016/17. This performance was in part impacted by actions to elevate the brand, including the rationalisation of distribution in several major markets (including Beauty) and also the benefits of the strategic cost saving programme. This is below the level of the CIP performance condition threshold of 5% growth.

Additionally, revenue of £2.8bn (down 2% underlying) was realised with retail outperforming at up 3% overall, negatively impacted by a substantial decline in US wholesale as actions were undertaken to reposition the brand and also by the planned licence expiry in Japan.

Given the outcomes, the Committee considered that no portion of the award in relation to financial performance should pay out.

0/25 (0%)
3. Personal contribution

Christopher continued to drive the business through this transitional period, whilst evolving the key strategies. He ensured that the senior executive team continued to be focused on both the delivery of the key strategies and the management of the business in a challenging economic climate. Furthermore, Christopher oversaw significant change across the senior team and embedded new executives and retained existing talent. 

Notwithstanding Christopher’s personal commitment throughout 2016/17, the Committee awarded a 60% outcome to this measure, again noting the level of financial performance.  

15/25 (60%)
4. Shareholder value 

The share price increased by 16% since Christopher’s appointment to Chief Creative and Chief Executive Officer on 1 May 2014 to 31 March 2017, and dividends for 2016/17 were 38.9p per share. This was an increase of 5% on 2015/16.

Overall Total Shareholder Return (‘TSR’) for Burberry for the three years to 31 March 2017 was 31.9% (as confirmed by Willis Towers Watson), which compared to an average TSR of 23.8% for our core luxury peers* and 24.3% for the FTSE 100.

While noting the above, the Committee awarded a 40% outcome to this measure as a result of the total level of financial performance realised.

* Boss, Coach, Ferragamo, Hermes, Kering, LVMH, Prada, Ralph Lauren, Richemont, Swatch, Tiffany, Tod’s.

10/25 (40%)
    Overall outcome 50/100 (50%)

Disclosure pursuant to section 430(2B) of the Companies Act 2006

John Smith 

On 31 March 2017, John Smith ceased to be a director of Burberry Group plc (the “Company”). John remained an employee of Burberry until 12 June 2017.

John has received or will receive the following payments, which are in accordance with his service agreement and/or the Company’s remuneration policy, as outlined in the Company’s annual report:

  • Salary, allowances, pension and contractual non-cash benefits up to 12 June 2017.
  • A cash bonus of £408,000 for the year ended 31 March 2017, paid on 25 June 2017.
  • The legacy Restricted Share Plan (RSP) grant from 2014, in the form of nil-cost options, vested based on performance at 19.25% of the maximum award and so 7,729 shares of a total 40,154 shares were due to vest. The first tranche of these shares, 3,864 shares (50% of the 7,729 shares), was released and exercised by John on 12 June 2017.  The balance of shares, due to be released in a further two tranches (25% on 12 June 2018 and 25% on 12 June 2019), has lapsed.
  • Both the legacy 2014 Co-Investment Plan (CIP) grant and the 2015 Executive Share Plan (ESP) grant have lapsed.

No other payments will be made.

Full details of all payments made to and receivable by John are disclosed in the Directors’ Remuneration Report within the Company’s Annual Report and Accounts for the year ended 31 March 2017, and subsequent years, as appropriate.

Carol Fairweather

On 18 January 2017, Carol Fairweather ceased to be a director of Burberry Group plc. Carol will remain an employee of Burberry Group plc until 31 March 2017.

It is anticipated that Carol will receive the following payments,which are in accordance with her service agreement and/or the Company’s remuneration policy, as outlined in the Company’s annual report:

  • Salary, allowances, pension and contractual benefits up to 31 March 2017.
  • A payment in lieu of notice equal to 12 months’ salary, allowances and benefits (including pensions allowance) of £675,000 paid as a lump sum in April 2017, together with a payment in lieu of accrued but not taken holiday entitlement as at 31 March 2017.
  • Subject to the achievement of the relevant Adjusted Profit Before Tax performance condition, a cash bonus payment for the year ended 31 March 2017. The amount of the bonus will be determined by the Remuneration Committee in accordance with the performance condition set at the beginning of the financial year and approved remuneration policy. Any cash bonus will be paid at the same time as payments are made to other participants. As Carol was employed for the entirety of the performance period, no pro-rating will be applied.
  • Outstanding awards under the legacy Restricted Share Plan (RSP) and outstanding matching share awards under the legacy Co-Investment Plan (CIP) (each in the form of nil-cost options) will vest on the first vesting date, subject to the achievement of relevant performance conditions, in accordance with the relevant plan rules. Subject to performance outcomes, Carol will, from June 2017, be able to exercise her options and receive a maximum of 78,869 shares, less any shares sold to cover tax. Options will be exercisable for a six month period from the first vesting date. In respect of the CIP, on exercise Carol will also receive a cash payment equivalent to the dividends which would have been received during the period between grant and exercise in respect of the shares acquired on exercise.
  • Outstanding awards under the Executive Share Plan (ESP) (in the form of nil-cost options) will vest on the normal vesting date, subject to the achievement of relevant performance conditions and time pro-rating, in accordance with the plan rules. Subject to performance outcomes, Carol will be able to exercise her options and receive a maximum of 26,156 shares from July 2018, a maximum of 26,157 shares from July 2019, a maximum of 12,547 shares from January 2020 and a maximum of 12,548 from January 2021, less any shares sold to cover tax. Options will be exercisable for a six month period from vesting. On exercise, Carol will also receive a cash payment equivalent to the dividends which would have been received during the period between grant and exercise in respect of the shares acquired on exercise.
  • Options held under the 2015 Sharesave scheme will become exercisable on 1 April 2017 until 30 September 2017, at an option price of £13.64, to the extent of savings contributions made at the time of exercise.

A payment of £5,000 (excluding VAT) was made directly to third party service provider in respect of legal services. Until 31 March 2018 (or later, if the Remuneration Committee so determines), Carol will continue to receive private medical insurance and access to employee discount, each at a level consistent with those provided to Burberry Group plc’s executive directors from time-to-time.

No other payments will be made.

Full details of all payments made to and receivable by to Carol will be disclosed in the Directors’ Remuneration Report within the Burberry Group plc Annual Report and Accounts for the year ended 31 March 2017, and subsequent years, as appropriate.

David Tyler

Further to the announcement by Burberry Group plc on 24 September 2015, David Tyler stood down from the Board as a non-executive director on 31 December 2015. David Tyler received his usual non-executive directorship fee up to the point of his retirement on 31 December 2015, but will receive no further payments thereafter. David Tyler will not receive any payment for loss of office or otherwise in respect of his retirement from the Board.

Burberry 2016 Executive Share Plan Awards

As set out in Burberry Group plc’s Directors’ Remuneration Report 2015/16, published in May 2016, the Company delayed the grant of 2016 Executive Share Plan (the “ESP”) awards while new initiatives to deliver productivity and efficiency improvements, also announced in May 2016, were first being implemented. This was to ensure that the ESP performance targets were properly aligned with Burberry’s updated strategic goals.

The 2016 ESP awards were granted on 30 January 2017 and the vesting of these awards is subject to three performance measures, as summarised in the table below. 

Performance level
(% of maximum vesting)
ESP Performance Measure Definition
 
Weighting (% of award) Threshold
(25%)
Target
(50%)
Maximum
(100%)
Group Adjusted Profit Beofre Tax 3-year growth, calculated on a constant currency basis 50% 1.0% p.a. 2.7% p.a. 6.0% p.a.
Group Revenue 3-year growth, calculated on a constant currency basis 25% 1.0% p.a. 2.5% p.a. 5.5% p.a.
Return on Invested Capital 3-year average 25% 13.9% 14.3% 15.2%

These performance conditions will be measured over the 3-year period, from 1 April 2016 to 31 March 2019. The targets for all three performance measures have been carefully calibrated by the Remuneration Committee based on Burberry’s 3-year financial goals, external expectations for the business and the sector, and to align with long-term value creation for shareholders