An extraordinary shareholder revolt against BP CEO's pay

The vote against Bob Dudley's pay package is embarrassing but non-binding. Credit: Reuters

BP shareholders have just rejected the company's remuneration report.

This result is quite extraordinary. Shareholder revolts aren't uncommon but on this scale they are most unprecedented.

BP's board had argued that outstanding performance in difficult circumstances justified Bob Dudley's £14 million award for 2015. Evidently, 59.11% of shareholders disagree.

The vote is a colossal embarrassment for BP but is non-binding, so the board is free to push on regardless.

Perhaps surprisingly, that's exactly what the board intends to do. BP's chairman, Carl-Henric Svanberg, promises to change future remuneration policy but has made it clear that existing plans will not be altered.

The owners of the company have spoken, the people that run the company have decided to ignore them. What does this tell us about the strength of shareholder democracy?

The Institute of Directors is incredulous. It is urging BP to listen to its shareholders."This is last chance saloon for boards to change," Simon Walker tells me.

"How BP reacts now will determine the future of UK corporate governance."