Burberry has made an eleventh-hour attempt to clarify why it has awarded a £440,000 allowance to chief executive, Christopher Bailey, issuing a supplementary note to shareholders.
The move came as the fashion house braced itself for a protest vote from shareholders unhappy at pay arrangements for Bailey, who was promoted to chief executive in May. As well as his cash allowance, investors are concerned about £22.5m of "golden handcuff" and other share awards in the last year.
The Investment Management Association (IMA) has given Burberry an "amber top" rating for its executive pay arrangements, suggesting its members, who speak for about 15% of the stock market, should closely review Bailey's awards before casting their votes. The IMA voting advice was offered despite Bailey being promoted to chief executive after the end of the group's financial year.
In Burberry's "additional disclosure" note, published ahead of Friday's shareholder meeting, the group said the unusually high award was offered "as a means of providing [Bailey] with an increase to his fixed remuneration without increasing other elements of his remuneration".
The note adds: "For example, if the allowance had been provided as an increase to his salary, this would have substantially increased the value of his annual bonus share awards and pension allowance."
In May the Guardian revealed details of Bailey's contract, including the £440,000 cash allowance. Other elements of his remuneration include a salary of £1.1m, an annual cash bonus of up to twice his salary (£2.2m), share awards of up to four times his salary (£4.4m), and pension contributions of a third of his salary (£330,000).
The additional disclosure, which quietly appeared on the Burberry website on 25 June, well after the notice of the group's shareholder meeting was sent out to investors, did not explain why an additional remuneration sum should not be linked to performance targets.