Fashion house Burberry was hit by a shareholder protest over pay policies that could earn its chief executive an estimated £12.4 million if she was fired.

Just under a third of investors - other than majority shareholder GUS, which holds 77.5 per cent of the group's shares - voted against the company's remuneration report at its annual meeting in London yesterday.

Among non-GUS shareholders who voted, 70 per cent were in favour of the report with 30 per cent against.

Abstentions were not counted.

Burberry's remuneration report has been attacked by the National Association of Pension Funds (NAPF) and the Association of British Insurers, with both voicing concern about the size of pay packages and the lack of performance conditions.

NAPF urged shareholders to vote against the report, calling the pay awards "extraordinary".

Under the terms, Burberry chief executive Rose Marie Bravo - credited with reviving the fortunes of the group - received an annual salary last year of £920,000, plus a performance related bonus worth 86 per cent of that - the payment of which depends on her success in meeting group targets.

In addition, the company would pay Ms Bravo about £9.3 million as an alternative to the proceeds of two share option schemes, or in the event of termination of her two-year contract.

If her contract was terminated, Ms Bravo could potentially walk away with about £12.4 million, if salary and bonus settlements were taken into account.

At the meeting, chairman John Peace said the group took account of the concerns and views of its shareholders.

But he added the group was aware at the time of its flotation last year that some of the aspects of its executive remuneration policy "might be construed not as best practice from a UK perspective".

Mr Peace said: "We have to draw a balance between that and attracting and retaining the best people."

After the costs of its share offering, which included £22 million to set up employee share ownership plans, Burberry posted pre-tax profits of £85.1 million for the year to March 31, against £84.8 million the year before.

Burberry, famous for its beige-and-red house check, said contributions from nine new outlets opened in the last year had increased underlying retail sales by about 21 per cent in the three months to June 30.

Tactics used by Ms Bravo to revive the brand's popularity have included hiring supermodel Kate Moss to promote the look.

Wednesday July 16, 2003