8. Realización del producto
8.1 Elección del CMS
The information set out in this section has been subject to external audit where indicated.
2.1. Single figure of total remuneration outcomes for 2014/15 (audited)
The table below sets out the single figure of total remuneration received or receivable by the directors in respect of the 2014/15 year (or the three-year performance period ending on 31 March 2015 in respect of the 2012 Co-Investment Plan and 2012 Restricted Share Plan awards).
The remuneration for Christopher Bailey relates to the period 1 May 2014 to 31 March 2015, the period during which he served as a director and Chief Creative and Chief Executive Officer. The remuneration for Angela Ahrendts relates to the period from 1 April 2014 to 30 April 2014, when she stepped down from the Board.
Salary/fees
£’000
Benefits/
allowances
£’000 Bonus
£’000 CIP
£’000 RSP
£’000 Total LTI
£’000 Pension
£’000 Total
£’000 Executive directors
Christopher Bailey
Year to 31 March 2015 1,008 424 1,782 4,426 – 4,426 303 7,943
John Smith
Year to 31 March 2015 588 41 719 – – – 176 1,524
Year to 31 March 2014 575 48 604 – – – 173 1,400
Carol Fairweather
Year to 31 March 2015 488 32 608 454 0 454 146 1,728
Year to 31 March 2014 302 23 308 325 – 325 91 1,049
Former executive directors Angela Ahrendts
Year to 31 March 2015 89 41 27 157
Year to 31 March 2014 1,057 467 1,492 4,674 – 4,674 317 8,007
Stacey Cartwright
Year to 31 March 2014 175 11 – – – – 53 239
Non-executive directors Sir John Peace
Year to 31 March 2015 400 4 404
Year to 31 March 2014 388 2 390
Fabiola Arredondo
Year to 31 March 2015 7 17 24
Philip Bowman
Year to 31 March 2015 135 2 137
Year to 31 March 2014 130 1 131
Ian Carter
Year to 31 March 2015 115 134 249
Year to 31 March 2014 109 78 187
Jeremy Darroch
Year to 31 March 2015 78 – 78
Year to 31 March 2014 15 – 15
Stephanie George
Year to 31 March 2015 80 74 154
Year to 31 March 2014 78 46 124
Matthew Key
Year to 31 March 2015 80 3 83
Year to 31 March 2014 47 1 48
Carolyn McCall
Year to 31 March 2015 47 3 50
David Tyler
Year to 31 March 2015 80 – 80
Year to 31 March 2014 78 – 78
Board and Governance – Directors’ Remuneration Report
The table below details the benefits/allowances received by the directors during the 2014/15 year:
advice Expenses Tax on expenses Total
Fabiola Arredondo 2 8 7 17
Philip Bowman – 1 1 2
Ian Carter 10 68 56 134
Jeremy Darroch – – – –
Stephanie George 10 35 29 74
Matthew Key – 2 1 3
Carolyn McCall – 2 1 3
David Tyler – – – –
Notes:
– Each executive director is entitled to an annual pension contribution or allowance equal to 30% of base salary. No director receives a defined benefit pension.
– Fees for Carolyn McCall relate to the period from 1 September 2014 (her appointment date) to 31 March 2015.
– Fees for Fabiola Arredondo relate to the period from 10 March 2015 (her appointment date) to 31 March 2015.
– Fees for Jeremy Darroch for 2014/15 are £78,000 rather than £80,000, due to a £2,000 adjustment for a payment received in March 2014 in relation to his 2014/15 fees.
– John Smith will invest 50% of his 2014/15 annual bonus after tax into shares, in accordance with the Remuneration Policy.
– The amounts shown for 2012 CIP awards vesting for Christopher Bailey and Carol Fairweather (for year to 31 March 2015) assume a share price of £17.93, based on the average share price over the three months to 31 March 2015, and payments of £208,578 and £21,406 respectively in lieu of dividends, because these awards are yet to vest.
– The amounts shown for 2011 CIP awards vesting for Angela Ahrendts and Carol Fairweather (for year to 31 March 2014) shown in the 2013/14 report assumed a share price of £14.75, based on the average share price over the three months to 31 March 2014, and payments of £233,595 and £16,259 respectively in lieu of dividends (because these awards had yet to vest). These awards vested on the 7 June 2014 at a share price of £14.79 and Angela Ahrendts and Carol Fairweather received payments in lieu of dividends of £233,596 and £16,259 respectively – the relevant amounts shown in the table above reflect these details.
– Amounts for shares under Burberry’s SAYE will be included in the single figure of total remuneration for the year in which they are exercised. No SAYE share awards were exercised by executive directors during the 2014/15 year.
– No shares were awarded under the Burberry SIP or Free Share plans to executive directors in the 2014/15 year.
– For the full year to 31 March 2014, Angela Ahrendts served as Chief Executive Officer and was therefore entitled to an annual bonus, her 2011 CIP award, which vested in full (300,252 shares at a price of £14.79, plus a dividend equivalent payment of £233,596) and the final tranche (25%) of her 2009 RSP award which vested in full (112,500 shares at a share price of £15.33). All other outstanding share awards held by Angela Ahrendts lapsed in full upon her departure from Burberry, in accordance with the rules of each plan and as stated in the 2013/14 Directors’ Remuneration Report. Angela Ahrendts did not receive any payment for loss of office or otherwise in respect of her departure from the Company.
– No payment has been made to a past director during the 2014/15 year, other than to Angela Ahrendts, as stated above.
– Cash allowances for Fabiola Arredondo, Ian Carter and Stephanie George are attendance allowances of £2,000 for each meeting attended outside of their country of residence.
– The reimbursement of certain expenses incurred by non-executive directors in the performance of their duties is deemed by HM Revenue & Customs to be subject to UK Income Tax. The tables above include figures for ‘Benefits/allowances’, including costs in respect of air travel and other incidental costs incurred in attending regular Board meetings. Any tax liabilities arising on the reimbursement of these costs will be settled by the Company. Amounts disclosed have been estimated and have been ‘grossed up’ at a tax rate of 45%. The comparatives have been restated to reflect these benefits. Note that expenses for Fabiola Arredondo, Ian Carter and Stephanie George include travel expenses from the USA. Ian Carter has incurred larger expenses than the other Non-Executive Directors arising from his role as Remuneration Committee Chairman, requiring additional travel from the USA to the UK to attend engagement meetings with Burberry’s larger shareholders.
2.2. Salary for 2014/15
When Christopher Bailey became an executive director and took on the role of Chief Creative and Chief Executive Officer on 1 May 2014, his salary remained unchanged at £1,100,000. John Smith’s salary was reviewed in July 2014 and increased by 3.0% to £592,000. Carol Fairweather’s salary was also reviewed in July 2014 and increased by 11.1% to £500,000 in recognition of her strong performance as CFO and to address that her salary was set at below market levels when she was appointed to the role. The executive directors have decided not to accept any increase to their salaries for the 2015/16 year.
2.3. Annual bonus outcomes 2014/15 (audited)
Annual bonuses for 2014/15 were based entirely on Adjusted PBT. For the year to 31 March 2015, the 2014/15 Adjusted PBT achieved was between the target and maximum level set by the Committee, which resulted in bonuses for the executive directors of 81% of maximum, as set out in the table below.
Annual bonus for 2014/15
Christopher Bailey 200% Threshold: 465 162% 1,782
John Smith 150% Target: 475 494 81% 122% 719
Carol Fairweather 150% Maximum: 505 122% 608
* The bonus outcome is calculated using the average exchange rates of the year on which the targets were based, as set out in the performance condition to awards (at the start of the performance period). The level of Adjusted PBT achieved is therefore different (higher this year) than the reported 2014/15 Adjusted PBT due to the adjustments made by the Committee to reflect constant exchange rates.
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Board and Governance – Directors’ Remuneration Report
The 2013/14 Adjusted PBT targets were set at £440m (threshold), £450m (target) and £470m (maximum). The level of Adjusted PBT achieved in 2013/14 was £457.7m which resulted in 2013/14 bonuses of 70% of maximum. This level of Adjusted PBT achieved was lower than the reported 2013/14 Adjusted PBT due to adjustments made by the Committee to reflect constant exchange rates and any other items deemed to be outside of management’s control.
John Smith will invest 50% of his bonus (after the deduction of tax) into Burberry shares, in accordance with the Remuneration Policy.
2.4. Co-Investment Plan outcomes for 2014/15 (audited)
In June 2012, Christopher Bailey and Carol Fairweather were awarded Co-Investment Plan (‘CIP’) matching awards of 313,534 and 32,178 shares respectively. Vesting was subject to performance from 1 April 2012 to 31 March 2015, as follows:
25% of awards vest if growth in Adjusted PBT is 5% per annum over three years, 100% vest if Adjusted PBT growth is equal to or exceeds 10% per annum over three years. The vesting outcome based on three-year Adjusted PBT growth is calculated using Adjusted PBT as disclosed in the annual accounts. Actual Adjusted PBT growth over the three-year period to 31 March 2015 at constant exchange rates was 8.3%, therefore 75% of awards will vest in June 2015, as set out in the table below.
Christopher Bailey 313,534 Threshold: 5%
Maximum: 10% 8.3% p.a. 75% 4,426
Carol Fairweather 32,178 75% 454
* The amounts shown for 2012 CIP awards vesting for Christopher Bailey and Carol Fairweather (for year to 31 March 2015) assume a share price of £17.93, based on the average share price over the three months to 31 March 2015, and payments of £208,578 and £21,406 respectively in lieu of dividends, because these awards are yet to vest.
# The CIP outcome is calculated using the average exchange rates of the year on which the targets were based, as set out in the performance condition to awards (at the start of the performance period). The level of Adjusted PBT achieved is therefore different (higher this year) than the reported 2014/15 Adjusted PBT due to the adjustments made by the Committee to reflect constant exchange rates.
John Smith became an executive director on 4 March 2013 and so did not receive a CIP award in 2012.
2.5. Restricted Share Plan outcomes for 2014/15 (audited)
In June 2012, Carol Fairweather was awarded a Restricted Share Plan (‘RSP’) award of 39,651 shares. Vesting was subject to performance from 1 April 2012 to 31 March 2015, as detailed in the table below. The overall outcome is that 0% of the total award will vest.
RSP outcomes for 2014/15
Carol Fairweather 39,651 Growth in
Adjusted PBT
# The RSP outcome is calculated using the average exchange rates of the year on which the targets were based, as set out in the performance condition to awards (at the start of the performance period). The level of Adjusted PBT achieved is therefore different (higher this year) than the reported 2014/15 Adjusted PBT due to the adjustments made by the Committee to reflect constant exchange rates.
* The vesting outcome based on TSR is calculated by Towers Watson, The TSR peer group for the 2012 awards comprised: Coach, Compagnie Financière Richemont, Estée Lauder, Fossil, Fifth & Pacific (formerly Liz Claiborne), Geox, Hermès International, Hugo Boss, Inditex, Kering (formerly PPR), Luxottica Group, LVMH Moët Hennessy Louis Vuitton, Nike, Nordstrom, Polo Ralph Lauren, Saks, Swatch, Tiffany & Co, and Tod’s.
Board and Governance – Directors’ Remuneration Report
2.6. Change in the Chief Executive Officer’s remuneration relative to all employees
The table below sets out Christopher Bailey’s base salary, benefits and bonus received for 2014/15. As Christopher Bailey was appointed to the role of Chief Executive Officer on 1 May 2014, the year-on-year change reported compares his salary, benefits and bonus received for the full 2014/15 year (including April 2014 when he was Chief Creative Officer) to that received in 2013/14 in his previous role as Chief Creative Officer. The year-on-year change (2014/15 vs. 2013/14) of salary, benefits and annual bonus received for a comparator group of UK-based employees is shown.
Salary Benefits Bonus
Chief Creative and Chief Executive Officer £’000 £1,008 £424 £1,782
Year-on-year change (%) 0% 0% 16%
Employees* Year-on-year change (%) 2.0% 0% 16%
* The comparator group includes employees in senior corporate roles based in the UK. This group has been chosen as these employees have a remuneration package with a similar structure to the CEO (including salary, benefits/allowances and annual bonus) and being UK-based, most closely reflects the economic environment encountered by the CC & CEO. For the comparator group of employees, the salary and bonus year-on-year changes include the annual salary review but exclude any additional changes made in the year (to salary or bonus levels), for example on promotion. In 2014/15, the bonus outturn based on Adjusted PBT performance was 81% of maximum, compared to 70% of maximum in 2013/14. The 0% increase for benefits for the comparator group of employees reflects no change to benefits policies or levels during the year. It does not reflect any changes to the level of benefits an individual may have received as a result of a change in role, for example on promotion. For all employees, the average salary increase was 2.0% (including annual salary review but excluding any additional changes). A meaningful year-on-year change for benefits and bonus for all Group employees cannot be provided due to the variation in structure of these pay elements across roles and regions.
2.7. Relative importance of spend on pay for 2014/15
The table below sets out the total payroll costs for all employees over 2014/15 compared to total dividends payable for the year.
Relative importance of spend on pay 2014/15 2013/14
Dividends paid during the year (total) £m 144.9 130.7
% change +10.9%
Payroll costs for all employees £m 468.1 441.3
% change +6.1%
Average number of full-time equivalent employees 10,309 9,698
% change +6.3%
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