Burberry Group PLC Chief Executive, Christopher Bailey, has received a 75% pay cut for fiscal 2016. The payment he received will be £1.89 million ($2.74 million), which is made up of £1.1m in salary, £330,000 pension contributions and £464,000 in benefits, down from £7.51 million a year earlier. Bailey’s base salary remained flat but his bonuses were cut to zero because profits were a disappointment this year.
Christopher Bailey, who is not only Burberry’s CEO but also the chief creative officer in the company, has been one of the best-paid bosses in the FTSE 100 since his promotion in 2014. Before Bailey became chief executive, he was awarded a million shares in 2013, however, the Burberry remuneration committee did not make sure the payment date for the first chunk especially in face to the serious downing sales of Burberry.
Burberry’s finance director, Carol Fairweather and chief operating officer John Smith, also received no bonus or share awards. Fairweather’s pay fell by £1m to £683,000 and Smith’s from £1.52m to £813,000.
Sir John Peace, Burberry’s non-executive chairman, said: “Our overall approach to incentive structures for all staff, including senior management, is based on performance. When the business does not perform as well, this has an impact on what we pay our staff.”
With the decreasing profits in Burberry sales, its shares declined 10% in 2016 and have lost 35% in the past 12 months. The pretax profit dropped 10% to £421 million and Burberry said it would cut costs by £100 million by 2019. Recently, Burberry announced a cost-cutting plan and a share buyback, which specifically is cutting jobs and reducing its product range to save money.
Besides, the downing sales in Asia’s market seriously impacted Burberry this year, especially a steep slump in sales in Hong Kong. The world’s second biggest economy has hit the company’s performance through that Chinese shoppers have been turning away from Burberry’s trademark checked trench coats and other luxury goods, while Burberry is trying to deal with currency fluctuations and a shift in how its core Chinese customers shop.