Today's announcement by Cairn Energy that it will withdraw resolution 2 at its General Meeting next week, demonstrates that shareholders can act on egregious pay awards when they really want to.

Cairn had proposed the award of shares to Sir Bill Gammell with a value of £2.5m (based on average closing share price for the 3 days prior to 6 January 2012), to be released after three years. Vesting was not to be subject to performance conditions.Not only that, but on his promotion from CEO to Chairman, he had received £1.4m in compensation for loss of office (as CEO). Manifest raised serious concerns in our research report published for clients on 12 January.

The Herald newspaper ran a story on Manifest's concerns on 18 January, followed later that day by the  Guardian.com and the FT.com as other advisory firms also alerted clients to the proposed breach of best practice. Subsequent engagement by shareholders reinforced the message and today the company has backed down on its proposals.

One-off special awards generally provoke a reaction from shareholder and the company may have been poorly advised on this occasion.

But shareholders need to be willing to tackle more complex issues, in particular looking long and hard at the structure of long-term incentive plans, too many of which reward share price volatility not company performance. A willingness to vote against binding resolutions on share plans and not just against advisory votes on the remuneration report would help too. Otherwise the clamour for government intervention on executive pay will grow even louder.