Oil giant Royal Dutch Shell suffered a dramatic shareholder revolt today amid fury over its recent pay awards.
The group saw around 59.4% of investors vote against its remuneration report at the annual general meeting held in The Hague and London today.
Shell has come under fire after making huge payouts as part of its long-term incentive plan, despite missing performance targets.
But the shareholder rejection - a rare occurrence in UK corporate history - is only advisory and is not set to see pay deals thrown out automatically.
According to Shell's annual report, CEO Jeroen van der Veer, who received a total package worth £8.2m sterling in 2008, was awarded 77,518 shares - worth almost £1.3 million at current prices.
The Anglo-Dutch firm maintained that it had used its discretion under previously agreed rules when deciding on the bonuses. Its incentive award targets are largely based on its performance against peers BP, US firms Chevron and ExxonMobil and France's Total.
Despite record £22 billion profits last year on soaring oil prices, Shell was ranked fourth out of five. This should have meant no share awards were made under the group's long-term incentive plan, but Shell's remuneration committee decided that the difference between third and fourth place was 'marginal' and therefore allowed payouts of 50% of the maximum entitlement.
The group stressed it outlined plans each year in its annual report on how it would use other measures to assess bonus windfalls in cases where the ranking did not fully reflect Shell's relative performance.
However, today's vote demonstrated investor discontent at the decision and came after at least two voting advisory firms recommended that investors throw out the remuneration report, including the Association of British Insurers.
The vote marks the latest in a line of shareholder protests over pay, although only a few have previously resulted in a majority rejection.
Housebuilder Bellway similarly became victim to a high profile investor rebellion, when in April its shareholders voted down a controversial bonus payment of £630,000 to executives after a disastrous year for the group.
Others to suffer investor defeats over pay deals include GlaxoSmithKline in 2003 and more recently Royal Bank of Scotland amid the furore over Fred Goodwin's pension payment.
And fashion chain Next received a warning shot from shareholders today after it softened the rules on bonuses to boost payouts to directors. The firm's remuneration report failed to win backing from almost one in four shares that voted at the meeting. More than 16% voted against, with 8% abstaining.
Under changes to the rules to set less taxing targets introduced in September last year, Next's directors gained an extra £351,000 between them.
