London - BP shareholders revolted en masse yesterday against plans to give the oil giant's chief executive a 20 percent pay rise after a year in which the company recorded a record loss.
Around 59 percent of shareholders voted against the proposal to pay Bob Dudley a package worth £14.1m at the firm's annual meeting. It is the largest shareholder rejection of a pay policy at a FTSE100 company since June 2012 when 69 per cent of WPP shareholders voted by a similar proportion against Sir Martin Sorrell's pay award.
Read: Chorus of protest grows over BP boss's pay
The vote is advisory and non-binding. But campaigners and investment groups nevertheless hailed the outcome as a possible turning point in shareholder attitudes to excessive executive pay.
“This is a significant moment,” said Stefan Stern, the director of the High Pay Centre.
“Investors are sending a clear message to executives on pay. They are saying enough is enough and you have gone too far”.
“How the board of BP reacts to this rebellion will determine the future of corporate governance in the UK,” said Simon Walker of the Institute of Directors. “The shareholders have spoken, and BP cannot shrug of this significant expression of disapproval with the CEO's pay package. British boards are now in the last chance saloon, if the will of shareholders in cases like this is ignored, it will only be a matter of time before the government introduces tougher regulations on executive pay.”
According to Manifest, the proxy voting and advisory service, yesterday's vote was the 5th biggest rejection of a remuneration proposal. Other FTSE100 companies that have seen their pay proposals voted down in recent years include the Royal Bank of Scotland, Shell, Burberry, WPP and Xstrata.
In response to the vote Ann Dowling, the head of BP's remuneration committee said she and her colleagues would “review” the pay package, taking into account how pay reflects oil price fluctuations. “I will report on this next year with our conclusions and with a new proposed policy based on the outcome of this review,” she said. Dowling also said she would engage directly with major shareholders.
Royal London and Aberdeen Asset Management were among those asset managers who said in advance of yesterday's meeting that they would oppose the pay policy.
“The 59.1 percent vote against the executive director's remuneration is extraordinary and shows a lack of discretion by BP's board,” said Ashley Hamilton Claxton, corporate governance manager at Royal London. “We hope that the board now seriously considers the views of its shareholders when deciding how to proceed.”
BP's shares fell 1.88 percent yesterday at 358.55p.
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