Shareholder revolt over executive pay at Burberry
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One of the most important discussions in business is over the question of who matters most in decision making - shareholders, or a broader group of ‘stakeholders’.
Examples help illustrate the debate. Here’s one where the shareholders – the people who own the firm – clash with the managers of the business. The issue is the hot topic of the rewards claimed by top executives.
Burberry chief executive Angela Ahrendts must be doing something right. She’s been in charge of the business at the same time as the firm has bounced back from a damaged brand. The 155-year-old maker of raincoats and handbags reported a 39% increase in underlying pre-tax profits to £298m in the last year, after a 27% increase in revenues to £1.5bn.
Evidently the CEO was deemed to be worth a one-off £5.8m share payment which was equivalent to nearly six times her base salary of £990,000.
A lobby (or pressure) group which advises pension funds and asset managers, described these rewards as “excessive” according to The Guardian. They are urging Burberry shareholders to block the proposed package. That looks very doubtful.
I think it may be a long time before the City, politicians and society will be ready to change attitudes towards the global clique of super rich who have been able to vastly enrich themselves over the last 20-30 years. According to the article, one City source said he did not expect a significant rebellion over pay because the company had been so successful recently. This suggests that one group of stakeholders – chief executives – feel comfortable with facing down pressure from a small and isolated group of shareholders.
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