Shareholders of British oil company BP repudiated a 20 percent pay bump for Chief Executive Bob Dudley on Thursday, with about three in five votes objecting to Dudley's raise in one of the strongest investor revolts of recent years.
Investors rarely disapprove of company executives' pay packages, according to executive pay firm Equilar. Last year, shareholders approved of companies' remuneration policies in 99.6 percent of cases tracked by Equilar, which examined votes held by companies in the Standard & Poor’s 500 Index.
Such "say on pay" proposals are non-binding, so companies are free to disregard them and pay their executives as they wish. But businesses that ignore shareholder revolts risk alienating investors, who ultimately own the company.
BP suffered a record $5.2 billion loss last year amid a drop in oil prices and continuing costs from the 2010 Deepwater Horizon spill in the Gulf of Mexico. Oil giants Chevron, Exxon Mobil, Royal Dutch Shell and Total all reported profits for last year.
Despite the plunge in earnings, BP's board gave Dudley $19.6 million for his performance in 2015, up from $16.4 million the previous year.
BP Chairman Carl-Henric Svanberg said in a statement that he is disappointed with the vote: "We have already spoken to a number of shareholders and have a continuing dialogue. They are seeking changes to our remuneration policy for the future. We will continue that engagement and will bring a revised policy to our next [annual general meeting] in 2017."
More than 59 percent of votes cast went against Dudley's pay package, the biggest revolt against a big publicly traded company in the U.K. since 2012, The Financial Times reported.
Over the past five years in the U.S., investors have rejected S&P 500 companies' "say on pay" proposals a total of 27 times, with fewer than 10 rejections in each year beginning in 2011, according to Equilar.
Last year, S&P 500 companies garnered more than 95 percent support in 49.7 percent of those votes, Equilar said.
The sharp disapproval underscores BP investors' general unhappiness. The company's stock price is down about 22 percent over the past year, according to data from the London Stock Exchange.
The company faces additional challenges after nearly 200 nations agreed in December to aggressively combat climate change, setting a goal of limiting global warming to “well below” 2 degrees Celsius (3.6 degrees Fahrenheit) above pre-industrial levels.
Some groups warn that oil companies face the risk of permanently reduced profits if governments' commitment to halt rising temperatures results in oil reserves being kept underground, rendering so-called stranded assets worthless.