LONDON — Burberry is rejecting the British government’s help in the wake of the coronavirus, vowing to maintain base pay for all employees unable to work remotely, and slashing top bosses’ salaries by 20 percent for the April-to-June period.
The company is also pushing back its 2019-20 results announcement to May 22 from May 14 in order to accommodate auditors who are overwhelmed by work during the crisis.
Marco Gobbetti, Burberry’s chief executive officer, said since the outbreak began, the company’s priority has been the safety and well-being of its employees, customers and communities.
“While we continue to take mitigating actions to contain our costs and protect our financial position, we are also committed to safeguarding jobs and supporting the relief efforts during this global health emergency,” he said.
The company said it was “looking hard” at its cost base and reducing spend on “nonessential” areas. It has temporarily closed its retail stores, and turned over its Yorkshire trenchcoat factory to the production of personal protection equipment, or PPE, for medical and care workers.
Burberry said during the crisis it will maintain base pay for all employees who are unable to fulfill their roles because of store or site closures, and it will not rely on government support for jobs in the U.K., where more than a third of its employees are based.
In a bid to avert layoffs and keep the already fragile economy moving, the British government has promised to pay 80 percent of workers’ salaries up to 2,500 pounds per month, and 80 percent of the profits of the self-employed up to 2,500 pounds per month.
Burberry added that senior leaders will also take a voluntary, 20 percent pay cut from April through June. Members of the board have also agreed to a 20 percent reduction in their base salary and fees during the same three-month period, with the equivalent cash amount to be donated to the Burberry Foundation COVID-19 Community Fund.
The fund was established earlier this month so that Burberry employees could support communities in need globally. Burberry noted that the fund is in addition to the financial donations the company has made to vaccine research and charities alleviating food poverty. Money is going toward procuring and distributing PPE, helping food banks and supporting health-care charities worldwide.
Burberry’s decision to downsize management paychecks follows similar moves by other large British businesses. It also comes amid reports that March retail sales in the U.K. sank to their lowest level on record, with a 5.1 percent monthly decline. While sales of food, alcohol and home products are thriving, nonessentials such as fashion and luxury are not among consumers’ priorities right now.
Primark’s parent Associated British Foods plc, Arcadia Group and other companies worldwide have been cutting executive pay due to the crippling effects of the coronavirus.
ABF’s ceo George Weston and John Bason, the finance director, requested that their base pay be reduced temporarily by 50 percent, while bonuses relating to the current financial year will not be paid to the executive directors.
Paul Marchant, ceo of Primark, has also requested that his base pay be reduced temporarily by 50 percent. Arcadia bosses will see their paychecks reduced up to 50 percent, with ceo Ian Grabiner electing to receive no salary or benefits until further notice.
According to Burberry’s annual report for fiscal 2018-19, Gobbetti took home nearly 4 million pounds, while Julie Brown, Burberry’s chief operating and financial officer, received about 2 million pounds. Both packages comprised fixed salary, bonuses and money from Burberry’s executive share plan.
The company’s Yorkshire factory is currently manufacturing nonsurgical gowns and supplying them to the U.K. National Health Service. Burberry said it is also sourcing surgical masks through its supply chain and dispatching them to the NHS and charities such as Marie Curie, which provides nursing care for families living with terminal illness in the U.K. It said it has donated more than 100,000 pieces of PPE to date.