Bob Dudley BP boss

A majority of BP shareholders have rejected plans to give chief executive Bob Dudley a 20% pay rise that would see him earn around £14 billion.

An astonishing 59.1% of shareholders voting against the remuneration package, making it what is believed to be the second largest revolt against higher pay by a FTSE 100 company.

Several significant shareholders, including Aberdeen Asset Management and Royal London Asset Management, criticised the plans citing cuts to thousands of jobs and dramatically falling profits.

The vote is non-binding, meaning BP can still go ahead with the pay rise.

Before the vote, chairman Carl-Henric Svanberg tried to allay those who planned to vote against the new pay package. He said: "Let me be clear. We hear you... We will sit down with our largest shareholders to make sure we understand their concerns and return to seek your support for a renewed policy."

He added: "We know already from the proxies received and conversations with our institutional investors that there is real concern over the directors' pay in this challenging year for our shareholders.

"On remuneration, the shareholders' reactions are very strong. They are seeking change in the way we should approach this in the future."

Image: BP Group Image: BP Group

Tim Bush, head of governance at one of the shareholders planning to vote against the move, Pirc, told the BBC that the "pay model is broken".

"There is a major problem in the way chief executives are recruited and paid," he said.

BP's senior management pay is calculated by a formula agreed by 96% of shareholders in 2014. One shareholder said they blame the board, rather than Mr Dudley himself.

The Institute of Directors, which itself admitted doesn't often intervene in such matters, warned BP that governance guidelines suggest that pay should be linked to performance.

Simon Walker, director general of the Institute of Directors, said: "How the board of BP reacts to this rebellion will determine the future of corporate governance in the UK. The shareholders have spoken, and BP cannot shrug of this significant expression of disapproval with the CEO’s pay package. 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."

He also said: “BP is not a badly run company, and its current woes are common to other firms in the sector. Nevertheless, the UK Corporate Governance Code is clear that pay should be tightly linked to performance and that targets should be stretching and rigorously applied. Should the pay package be approved, it could send the wrong message to investors and other boards."