Royal Dutch Shell today suffered one of the UK's all time biggest ever shareholder revolts with a 57.1% vote Against the remuneration report vote.  Since the introduction of the Directors Remuneration Report Regulations in 2002 only two other FTSE100 companies have lost their say on pay vote: RBS in 2009 with 80.14% and GlaxoSmithKline in 2003 with 38% Against,  37% For and 25% Abstain.

Shell will take scant comfort from the fact that turnout for the meeting was below what a FTSE100 company would normally see, only 53.21% versus last year's average of 63% for an AGM. Looking back at the 2008 resolution which sparked most of the furore, the amendment of the restricted share plan the total dissent amounted to a total of 49.41% split roughly equally between against and abstain. If the company had taken account the total dissent they could have headed off this embarrassing rift in a less reputation-damaging way. Put another way, if one more shareholder had voted and the polite dissenters voted against the original proposals, today's vote would probably have passed without notice.

It is also interesting to look at the voting results of the Long-term Incentive Plan which was amended in 2005 and only saw 11.6% dissent. Despite the implied majority consent, the Remuneration Committee used its discretion for two years in a row to allow awards to vest under this plan, despite the performance conditions not having been met which riled shareholders the most. Ultimately, the issue is one of a breach of trust between the Remuneration Committee and the shareholders. It's not the first time, nor regrettably, the last.

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