Angry shareholders mounted an unprecedented protest against BP yesterday, rebelling against a 20 per cent pay rise for chief executive Bob Dudley despite the oil group making its worst ever loss.
Investors voted against the company’s pay decisions for the first time in living memory, with 59 per cent of proxy votes cast going against BP’s decision to pay Mr Dudley nearly $20 million (€18 million) for 2015, a year in which the company ran up a $5.2 billion loss.
It was the first time a top British company was defeated over executive pay since shareholders at advertising group WPP and Xstrata, the mining company, rebelled four years ago during what was dubbed the "shareholder spring". It left BP scrambling to win back support of some of the City's biggest institutions.
The rebellion highlighted a growing trend of institutional investors and advisers around the world taking a more aggressive stance over pay.
Smith & Nephew, the FTSE 100 medical devices group, also suffered a defeat on their remuneration report yesterday as 53 per cent of shareholders voted against the pay package of chief executive Olivier Bohuon. Although Mr Bohuon's overall pay fell to $5.5 million in 2015 compared with $6.8 million in 2014, shareholders protested because the company allowed long-term incentives to vest despite falling below initial targets.
US banks from Citigroup to Bank of America have faced pressure to toughen bonus "clawback" regimes, which put executives on the hook for future losses. A resolution demanding more details of JPMorgan's clawback plans attracted 44 per cent support last year.
The BP vote results – which were non-binding – were announced at an occasionally mutinous annual general meeting in London, where several shareholders publicly criticised the Mr Dudley’s pay increase.