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Burberry: Corporate Governance Essay

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Updated: Jul 23rd, 2021


The concept of corporate governance is critical for organisations that want to achieve their potential and meet the demands of their stakeholders. It focuses on the structure and process through which leaders control companies while at the same time remaining accountable for their actions. The purpose of this report is to evaluate the leadership and managerial actions. Burberry undertakes and establishes whether it complies with the established UK Corporate Governance Code (2018) or not. The main sections of the code described in this report include leadership, effectiveness, accountability and remuneration. The analysis will examine how this company conforms to such requirements and presents evidence-based recommendations for transforming its corporate governance model.

Company Background

Burberry Group PLC is a successful British fashion house that distributes and markets trench coats, sunglasses, fragrances, fashion accessories, outerwear and cosmetics. The company has its headquarters in London, England. Thomas Burberry established this corporation in 1856 by developing and designing outdoor attire for different customers (Kitson 18). It delivers unique trench coats, pattern-based scarves and other branded accessories. Before 1955, Burberry was a small firm that was controlled by Burberry’s parents. In 2016, Burberry Group had a total of 498 locations or houses across the world (Kitson 121). Its revenues for 2018 stood at around 2.7 billion pounds, while the recorded net income during the same period was 293.6 million pounds sterling (Burberry 19). With its operations in 51 countries, Burberry is an FTSE 350 company listed on the London Stock Exchange (LSE).

Corporate Governance: Burberry

The ultimate objective of corporate governance is to support and maintain the most appropriate relationship between a company’s top management and its stakeholders. This concept creates the best opportunity for aligning organisational decisions with the outlined aims (Mallin 49). This discussion examines how Burberry fulfils the requirements of the UK Code of Corporate Governance.


The Leadership section of the UK code has five principles that encourage boards to promote and determine the culture of their companies and engage different stakeholders. Burberry has implemented a superior business model whereby workforce activities and policies are in accordance with the established values. Employees are allowed to present their grievances to their seniors or supervisors. Burberry’s Board is currently responsible for the operations and initiatives the company undertakes and has eight members (Mallin 21). These include the Chairman, Chief Executive Officer (CEO), Executive President, Chief Finance Officer (CFO) and five non-executive directors. The current Chairman is John Peace, while the CEO is Marco Gobbetti (Mallin 22). The CEO and the Chairman of this Board undertake different roles that are aimed at maximising performance and meeting stakeholders’ needs. John Peace understands his roles and makes appropriate decisions to deliver positive results. After taking over from Christopher Bailey, Marco Gobbetti has been focusing on leadership strategies and initiatives that are in accordance with the UK Corporate Governance Code. Additionally, Burberry has a workforce advisory panel whose role is to ensure that the Board engages different employees.


The UK code requires that boards be comprised of both non-executive and executive members. For Burberry, the Board has eight individuals whereby four of them are executives while the rest are not. This kind of arrangement ensures that the Board is well-structured. Additionally, members meet around six times every year. This initiative ensures that all individuals are involved in creating the best opportunity for addressing emerging issues. The chairman guides and leads the Board and ensures that all non-executive directors are involved in decision-making. The Board provides the right direction by overseeing the implementation of emerging ideas and setting the right strategy (Aras and Crowther 62). It monitors the nature of internal governance, risk management and control. The non-executive members have adequate time to complete their responsibilities.

Another critical requirement is that the Board and all committees should possess the right skills and knowledge. These committees support the performance of Burberry’s Board: nomination, audit and remuneration (Burberry 42). In order to improve effectiveness, such committees can liaise with different independent professional advisers and consultants. The Chairman can go further to invite directors and Senior Management Team members to provide timely advice. These practices show conclusively that Burberry’s corporate governance strategy is efficient.


The UK code requires that companies assess their activities and financial reports in a fair and transparent manner. Burberry has been focusing on this provision to prepare and present accurate company reports and audit documents. The effectiveness of this organisation’s business and financial reporting means that it operates in accordance with the stipulated guidelines and regulations (Som and Blanckaert 39). In terms of risk management and internal control, this company has several non-executive directors who form an integral part of the audit committee (Strangmueller 92). This committee also collaborates and liaises with the Board to ensure that every activity is completed effectively while at the same time presenting reliable financial reports.

The collected data and audit queries are taken seriously whenever implementing new strategies and focusing on future investments. Members of the audit committee meet regularly to maintain the integrity of Burberry’s financial statements. In order to achieve its objectives, the audit committee partners with the established risk committee (Mallin 63). The collected data is shared among these departments and relayed to members of the board. The company has gone further to establish global ethics and the global health and safety committees to meet the needs of both employees and customers.


According to Burberry’s website, its remuneration packages are aimed at rewarding the performance and contributions of different employees. The salaries and remunerations also reflect the performance of executive members. However, this company’s CEO earns more than 1.1 million pounds sterling annually and a bonus of 2.2 million pounds (Mallin 69). He is also entitled to 500,000 shares that are worth 4 million pounds (Kitson 102). This kind of policy has received criticism from different stakeholders and advisers. Burberry’s top leaders receive bonuses and payments that do not reflect performance (Mallin 78). This means that it has not been complying with the outlined 2018 UK code. While the remuneration package of executive leaders attracts and retains employees, this company needs to offer salaries in accordance with its size. This approach will ensure that it is in line with the established or presented code.

Burberry’s remuneration committee meets more than ten times every year to analyse the existing policies and ensure that salaries and allowances are aligned to the code. The Chair of this committee is not a member of Burberry’s Board (Peng 38). This initiative is relevant to ensure that the right procedures are followed with external influence. The salaries for other leaders and managers adhere to the UK Corporate Governance Code.

Relations with Shareholders

The UK Corporate Governance Code requires that companies maintain mutual understanding with their shareholders. Burberry ensures that all financial reports and business performance documents are available to all stakeholders in a timely manner (Mallin 69). Different participants are encouraged to attend all meetings and learn more about this company’s performance. Such partners can access all relevant documents and reports via Burberry’s website (Sarah 274). Such stakeholders can offer evidence-based insights for improving performance.

Burberry’s annual reports reveal that it strives to improve the existing relations with different shareholders continuously. Investor relations reports are also shared with board members to receive their insights. This initiative ensures that the board is aware of the measures implemented to meet the demands of all shareholders and other partners (Peng 42). Currently, there is a clear framework for engaging different stakeholders in different countries. The dialogues and ideas different individuals present are not taken seriously and studied to improve operational efficiency (Peng 72). Additionally, there are no clear guidelines implemented to sensitise and inform more stakeholders about Burberry’s operations and initiatives.


The above analysis has indicated that Burberry complies with the 2018 UK Corporate Governance Code. This is true since the composition of the board is structures in such a way that there are both non-executive and executive members who make decisions and implement strategies that can drive organisational performance. However, the leadership criteria described under the code can become a powerful model for promoting inclusivity (Som and Blanckaert 41). For instance, the board can have one representative of the workforce to meet the demands of such stakeholders. In terms of effectiveness, the board needs to collaborate with different committees and seek timely answers from them. This initiative can minimise the take taken to make decisions and eventually transform performance. Although there is adequate compliance with the Accountability section, Burberry needs to consider the importance of green accounting practice and make it part of its reporting procedure (Strangmueller 73). This model will create a new opportunity for supporting the company’s corporate social responsibility (CSR) agenda while at the same time attracting more stakeholders.

The remunerations available to different leaders and executives at Burberry are aimed at attracting top talent and sustaining organisational productivity. However, the company can consider the best initiatives to ensure such salaries are not unsustainable. Currently, Burberry has adequate approaches for communicating with shareholders and providing timely information (Burberry 138). This concept makes it possible for Burberry to make decisions much faster and efficiently. However, this corporation can consider the importance of meeting its key stakeholders more frequently and addressing all their concerns (Hannigan 83). These changes and improvements will ensure that Burberry fulfils and even surpasses all the requirements outlined in the UK code.


The completed analysis has indicated that Burberry complies with the UK Corporate Governance Code. This achievement explains why it continues to attract competent individuals who can promote performance and present evidence-based ideas for increasing profits. The only area of noncompliance is that of remunerations for senior officials. The implementation of the above recommendations will, therefore, make it possible for this company to address most of the current challenges and transform its corporate governance model. It will go further to meet the demands of all shareholders and eventually become more profitable. In conclusion, Burberry’s corporate arrangements are acceptable and in line with the UK’s code. This is a clear indication that any investor can select Burberry and be in a position to achieve his or her business aims.

Works Cited

Aras, Güller, and David Crowther, editors. A Handbook of Corporate Governance and Social Responsibility. 2nd ed., CRC Press, 2016.

Burberry. Annual Report 2017/2018. Burberry Group, 2018.

Hannigan, Brenda. Company Law. 5th ed., Oxford University Press, 2018.

Kitson, Brian. Burberry Days. Austin Macauley Publishers Limited, 2016.

Mallin, Christine A. Corporate Governance. 6th ed., Oxford University Press, 2019.

Peng, Mike W. Global Business. 4th ed., Cengage Learning, 2017.

Sarah, Radebe M. “The Benefits of Good Corporate Governance to Small and Medium Enterprises (SMEs) in South Africa: A View on Top 20 and Bottom 20 JSE Listed Companies.” Problems and Perspectives in Management, vol. 15, no. 4, 2017, pp. 271-279.

Som, Ashok, and Christian Blanckaert. The Road to Luxury: The Evolution, Markets, and Strategies of Luxury Brand Management. Wiley, 2015.

Strangmueller, Marcel. Economic Strategies. Potential Improvements for Burberry. GRIN Verlag, 2016.

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