Blue chip companies have reached the “last chance saloon” for outlandish boardroom pay packages, as leading investors warm up for what could be another shareholder spring following Thursday’s rejection of BP’s $20m pay deal for CEO Bob Dudley.
An unprecedented 59.29 per cent of BP shareholders voted against Dudley’s proposed $19.6m (£13.8m) remuneration package, which was 20 per cent up on the $16.4m he was paid the year before.
“I do have the impression that there’s been a hardening of views,” said a spokesperson at Aberdeen Asset Management, a BP shareholder that voted against the Dudley deal.
“I suspect there will be some more votes like this, but I can’t predict where they will fall or which companies they will affect.”
Read more: BP pay gusher reignites shareholder rows
The Institute of Directors (IoD) warned that if companies continued to propose big boardroom pay deals, the government might issue more red tape.
Simon Walker, director general of the IoD, said: “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.”
Tim Bush, head of governance and financial analysis at Pensions and Investment Research Consultants, told City A.M.: “A lot of other companies are likely to be concerned about the implications for their 2016 AGM, as many uses very similar schemes. And it’s the schemes that are at fault, giving unwarranted outcomes.”
Shareholder society ShareSoc has already recommended that shareholders throw out Anglo American’s remuneration report when the miner hosts its AGM next week.
A City fund manager said that he believed “the lesson here [from BP] is that the remuneration committees have got to step up”.
BP’s shareholder vote is only advisory and the oil major could still award Dudley his $19.6m after all.
However, BP chairman Carl-Henric Svanberg said: “On remuneration, the shareholders’ reactions are very strong. They are seeking change in the way we should approach this in the future.”
Meanwhile, last night, former business secretary Sir Vince Cable, who brought in rules which changed how shareholders vote on executive pay, told Sky News that investors should be targeting “both” Dudley and the remuneration committee.