While it seems as if many CEOs were paid regardless of performance in 2015, at least one chief executive can attest to the opposite.
Burberry cut CEO Christopher Bailey’s pay from $10.8 million to $2.7 million in 2015—a 75% decrease as profits tanked and the luxury apparel retailer struggled to show growth, according to its annual report.
That’s because Burberry bases a portion of its pay on profits for the year. That metric, adjusted profits before tax, fell 7.7% to $421 million last year—missing the company’s target.
As a result, Bailey’s bonus feel to zero, while some stock awards failed to vest. Notably, while Bailey did not receive a bonus, nor did any of his executive directors.
“Our overall approach to incentive structures for all staff, including senior management, is based on performance—so when the business does not perform as well, this has an impact on what we pay to our staff,” chairman John Pearce wrote in the report. “And when the share price falls as it has in the past year, this has a substantial impact on historical share awards.”
Burberry’s stock, which trades in London, has fallen 35% in the past year.
The pay cut comes following a year that has been tough on retailers, especially those of luxury goods. Fewer tourists, many from China, have damaged revenue. Burberry is also heavily dependent on department stores—a struggling concept—with 26% of sales derived from wholesale agreements, according to the Wall Street Journal.
Burberry’s poor performance over the past year has also worried investors about whether Bailey was stretched too thin working as both CEO and chief creative officer.
