LONDON -- A leading shareholder advisory group has criticized BP PLC's decision to award its top directors their maximum bonuses for 2015, despite the company's lackluster performance, and recommended shareholders vote against the payment plans. 
 
 Last month, BP announced that Chief Executive Bob Dudley would receive a 20% bump in his total compensation package in 2015. Though much of this increase related to U.K. reporting requirements that inflated the rise in Mr. Dudley's pension, the oil executive's cash bonus increased to $1.4 million from $1 million in 2014. His total bonus for the year, including a portion paid in deferred BP shares, amounted to $4.2 million. That was the maximum amount he was eligible to receive for the year and was up from $3 million in 2014. Chief Financial Officer Brian Gilvary also received 100% of his possible bonus. 
 
 The awards follow a year in which the company lost $5.2 billion as oil prices plummeted. Since the start of 2016 it has announced plans to cut 7,000 jobs and has slashed spending to help manage the slump. 
 
 "We believe shareholders should question whether payouts were fully earned in respect of the past fiscal year relative to the company's performance," proxy advisory firm Glass Lewis said in a March report seen by The Wall Street Journal. 
 
 BP's compensation committee awards executive bonuses based on the company's performance in a number of strategic areas, including its safety record and internal targets for operational cash flow and underlying profits. 
 
 "BP executives performed strongly in a difficult environment in 2015, managing the things they could control and for which they were accountable," a BP spokesman said, adding that "safety and operational risk performance was excellent and BP responded quickly and decisively to the drop in oil price." 
 
 This isn't the first time Glass Lewis has raised objections to BP's executive pay. Last year, it also recommended that shareholders reject Mr. Dudley's pay package, noting that his compensation outpaced that received by chief executives at similar-sized firms "despite the company's relative underperformance." The executive's compensation was ultimately approved by around 86% of investors. 
 
 BP's shareholders will vote on the matter this year at the company's annual general meeting in London on April 16, along with a host of other issues. Glass Lewis has also raised concerns about the company's proposal to reduce its notice period for calling a general meeting, but supports most of the proposals, including the re-election of Mr. Dudley and his board. 
 
 Write to Sarah Kent at sarah.kent@wsj.com 
 
 More from MarketWatch ||||| Image copyright PA Image caption Bob Dudley took over as BP chief executive in the aftermath of the fatal Gulf of Mexico oil rig explosion 
 
 BP shareholders have rejected a pay package of almost £14m for chief executive Bob Dudley at the oil company's annual general meeting. 
 
 Just over 59% of investors rejected Mr Dudley's 20% increase, one of the largest rejections to date of a corporate pay deal in the UK. 
 
 The vote is non-binding on BP, but earlier, chairman Carl-Henric Svanberg promised to review future pay terms. 
 
 Mr Dudley received the rise despite BP's falling profits and job cuts. 
 
 Corporate governance adviser Manifest says the vote is at or above the fifth-largest in the UK against a boardroom remuneration deal. 
 
 'Last chance saloon' 
 
 In his opening address to the shareholders' meeting, before the vote had been formally announced, Mr Svanberg acknowledged the strength of feeling, saying: "Let me be clear. We hear you." 
 
 He continued: "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." 
 
 "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," he said. 
 
 The Institute of Directors said the shareholder rebellion would "determine the future of corporate governance in the UK". 
 
 "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," said director general Simon Walker. 
 
 Media playback is unsupported on your device Media caption Dudley's pay sends 'wrong message' investor says 
 
 'Out of touch' 
 
 Shareholders that criticised the pay deals included Aberdeen Asset Management and Royal London Asset Management. 
 
 Investor group Sharesoc branded the pay deal "simply too high", while Glass Lewis, ShareSoc, Pirc and Institutional Shareholder Services have also expressed their opposition. 
 
 Earlier on Thursday, Ashley Hamilton Claxton, corporate governance manager at Royal London, told the BBC: "The executives received the maximum bonuses possible in a year when [BP] made a record loss, and to us that just does not translate into very good decision-making by the board. 
 
 "We think it sends the wrong message. It shows that the board is out of touch." 
 
 She told the BBC's Today programme that if 20%-25% of shareholders vote down the pay deal, it would force BP to "think long and hard about their decision". 
 
 The early voting figures suggest that the opposition is even bigger that she expected. 
 
 Image copyright Getty Images Image caption The Deepwater Horizon disaster forced BP to sell billions of dollars in assets to cover costs and compensation 
 
 Analysis: Simon Jack, BBC business editor 
 
 Giving someone a 20% pay rise for a year's work that saw BP record its biggest ever operating loss seems perverse even by chief executive pay standards. 
 
 If it's any consolation, (I doubt it will be), bosses at Exxon and Chevron got paid even more than Bob Dudley even though the value of their companies fell by more than BP. That's the bit that sticks in the craw for many. Under what circumstances don't these guys get paid a fortune? It would be fine if some years you win, some years you lose - but they never seem to lose. 
 
 We may get a rebellion of 20-30% of shareholders today but even if it was more than 50%, the board doesn't have to listen. Shareholders do have a binding vote every three years on the pay policy and formula. No use crying now, the formula that spat out £14m for Bob Dudley was approved in 2014 by 96% of shareholders. 
 
 Read Simon's full blog here. 
 
 BP's pay policy is subject to a binding shareholder vote every three years. It was last set in 2014, meaning new proposals are due to be put forward for shareholder approval again in 2017. 
 
 'Surpassed expectations' 
 
 Many experts argue that Mr Dudley is merely earning the market rate for international executives. 
 
 Mark Freebairn, partner at recruitment firm Odgers Berndtson, told Today: "If Bob Dudley was to leave [BP] it would be for a competitive company and remuneration would be part of the discussion. If you operate in a global market, you have to operate on a global scale." 
 
 BP was now in a far better position than when Mr Dudley took the helm, he said. 
 
 After the Gulf of Mexico oil disaster, BP's share price collapsed and it was forced to sell off assets worth billions of pounds to pay costs, fines and compensation. 
 
 However, the collapse in the oil price over the past 18 months saw BP's profit tumble, and the company is axing another 3,000 jobs worldwide on top of the 4,000 cuts already announced. 
 
 A spokesman for BP said before the meeting at London's ExCel centre had begun that shareholders had previously backed the pay formula. 
 
 "Despite the very challenging environment, BP's safety and operating performance was excellent throughout 2015... BP's performance surpassed the board's expectations on almost all of the measures that determine remuneration - and the outcome therefore reflects this. 
 
 "And these clear measures derive directly from BP's remuneration policy which was approved by shareholders at the 2014 AGM with over 96% of the vote," the spokesman said. 
 
 Mr Dudley's pay package was less than that earned by some rivals in the oil and gas industry, including at Exxon and Chevron. But it was more than the award for Ben van Beurden, chief executive at Royal Dutch Shell, whose salary package fell from €24.2m (£19m) in 2014 to €5.58m last year. 
 
 Experts point out, though, that it can be difficult to compare like-with-like. For instance, Mr van Beurden's 2014 pay involved one-off pension payments and "tax equalisation" measures when he moved from the UK to the Netherlands. 
 
 And in 2015 Mr Dudley and Mr van Beurden received very different rewards under their long-term incentive plans, LTIPs. Shell gave its chief executive 8% of the LTIP, down from 49% in 2014. Mr Dudley's long-term bonus increased from 63.8% of maximum to 77.6%. ||||| A majority of BP PLC’s shareholders voted against the company’s executive pay policy, a stinging — though nonbinding — rebuke to Chief Executive Bob Dudley and his board. 
 
 At the company’s annual meeting Thursday, the oil giant said preliminary results showed 59% of investors voting by proxy rejected the company’s executive compensation decisions for 2015. That included a controversial 20% increase in Dudley’s total pay for the year, at a time when the company lost $5.2 billion. 
 
 Earlier in the day, the company also signaled in its clearest terms yet that the oil giant may have to reduce its dividend, as low oil prices continue to threaten the once-sacrosanct investor payouts across the industry. 
 
 Both moves heap pressure on Dudley and his board, as they try to navigate low oil prices like the rest of the industry but also contend with increasing shareholder unease. 
 
 BP BP., +0.88% BP, +0.60% Chairman Carl-Henric Svanberg, speaking to investors before the vote, defended the pay package, which he said was based on “exceptional” company performance during a difficult year. He said, before the vote, that the board would discuss possible changes to its compensation plan for next year. 
 
 After the vote, Svanberg said that despite the nonbinding vote, the company wouldn’t adjust Dudley’s pay. 
 
 An expanded version of this report appears on WSJ.com 
 
 More from MarketWatch ||||| Angry shareholders mounted an unprecedented protest against BP on Thursday, rebelling against a 20 per cent pay rise for chief executive Bob Dudley despite the oil group making its worst ever loss. 
 
 Investors voted against the company’s pay decisions for the first time in living memory, with 59 per cent of proxy votes cast going against BP’s decision to pay Mr Dudley nearly $20m for 2015, a year in which the company ran up a $5.2bn loss. 
 
 It was the first time that a top British company was defeated over executive pay since shareholders at advertising group WPP and Xstrata, the mining company, rebelled four years ago during what was dubbed the “shareholder spring”. It left BP scrambling to win back support of some of the City’s biggest institutions. 
 
 The rebellion highlighted a growing trend of institutional investors and advisers around the world taking a more aggressive stance over pay. 
 
 Smith & Nephew, the FTSE 100 medical devices group, also suffered a defeat on their remuneration report on Thursday as 53 per cent of shareholders voted against the pay package of chief executive Olivier Bohuon. Although Mr Bohuon’s overall pay fell to $5.5m in 2015 compared with $6.8m in 2014, shareholders protested because the company allowed long-term incentives to vest despite falling below initial targets. 
 
 US banks from Citigroup to Bank of America have faced pressure to toughen bonus “clawback” regimes, which put executives on the hook for future losses. A resolution demanding more details of JPMorgan’s clawback plans attracted 44 per cent support last year. 
 
 Mr Dudley’s pay looked particularly out of line to shareholders because other major energy company bosses took pay cuts in 2015, a year when energy companies were hit hard by the oil price crash. 
 
 According to ISS Corporate Solutions in the US, the median pay of an S&P 500 energy company chief executive, excluding their pension, fell by 1.8 per cent last year after four years of increases that ranged from 4.8 to 8.2 per cent. 
 
 Lombard Shareholders get sniffy over Dudley’s pay City nostrils are twitching for the whiff of other corporate fat cats, writes Jonathan Guthrie. 
 
 The BP vote results — which were non-binding — were announced at an occasionally mutinous annual general meeting in London, where several shareholders publicly criticised the Mr Dudley’s pay increase. 
 
 Royal London Asset Management said after the vote: “The vote against the executive directors’ remuneration is extraordinary and shows a lack of discretion by BP’s board.” 
 
 Some investors said Dame Ann Dowling, the head of the company’s remuneration committee, would have to consider her position. 
 
 One senior corporate governance investor said: “The company has ignored warnings. They really need to get this right next time, or it could mean people will have to step down.” 
 
 BP has already paid Mr Dudley, who took over as chief executive in 2010 after the Deepwater Horizon disaster in the Gulf of Mexico, and other directors. It said after the meeting that none of the money would be paid back. 
 
 The company defended the pay rise, saying Mr Dudley had met or exceeded every one of the targets he had been set. Those targets related to operational and safety measures such as the amount of cash generated, the number of major projects begun on time and the amount of oil and gas that was spilled. 
 
 Lex Oil prices: owe you one Only higher prices will reduce crude producers’ high leverage 
 
 But Carl-Henric Svanberg, the chairman, promised to review the terms on which pay is awarded in consultation with shareholders before next year. 
 
 BP blamed the falling oil price and a $9.8bn charge to settle claims related to Deepwater Horizon for its loss, among other factors. 
 
 Mr Svanberg told the meeting: “On remuneration, the shareholders’ reactions are very strong. They are seeking change in the way we should approach this in the future. 
 
 “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.” 
 
 Stefan Stern, director of the High Pay Centre, said: “Investors are sending a clear message to executives on pay. They are saying enough is enough and you have gone too far.” ||||| The author is a Reuters Breakingviews columnist. The opinions expressed are his own. 
 
 BP faces opposition from some shareholders for handing Chief Executive Bob Dudley a 20 percent increase in his total remuneration package for 2015 to $19.6 million. It may seem hard to square that amount with BP’s $5.2 billion loss last year, and the fact that it is slashing thousands of jobs in response to falling oil prices. But that’s actually the point. Managing an oil company when crude is trading at $100 per barrel is easy compared to the current environment. Instead, Dudley has to work harder than his predecessors. 
 
 Dudley, whose pay was going to a non-binding shareholder vote on April 14, has done what was needed of him. His two big challenges were to clean up the financial spill from the 2010 Gulf of Mexico disaster and change the culture at BP, which was tainted by safety concerns and excessive risk taking. Last year the company saw the number of recorded oil spills and employee injuries both at five-year lows. 
 
 He has also delivered decent returns when compared to peers. BP ranks third among the big six oil majors, which include Exxon Mobil and Royal Dutch Shell, in total shareholder returns over the last three years, according to Eikon data – even despite 2010’s rig blowout. Drawing a line under the environmental catastrophe last year by agreeing to pay up to $18.7 billion in penalties cleared the decks for the company to start rebuilding its balance sheet. 
 
 Compared to counterparts, Dudley’s remuneration appears generous. Although Shell Chief Executive Ben van Beurden pocketed 24.2 million euros ($27.2 million) in 2014, this figure fell to 5.6 million euros last year, according to the company. Over the same period Dudley’s base salary has remained flat, with the biggest boost to his overall financial reward coming through his pension and deferred bonus shares. 
 
 The mild-mannered American has had possibly the toughest job in the oil industry. His rewards look in line with that task.
– Oil giant BP lost $5.2 billion last year, but the company somehow saw fit to propose maximum bonuses for 2015 for its top executives, including a 20% pay increase for CEO Bob Dudley—a proposal that 59% of shareholders roundly rejected by proxy vote at Thursday's annual meeting, MarketWatch reports. The company had indicated earlier in the day that it may also have to reduce its dividend, the Wall Street Journal reports. Dudley is set to receive the full bonus he was eligible for, which comes to $4.2 million (including $1.4 million in cash and a portion in deferred BP shares), per an earlier MarketWatch report. This amount was bumped up from the $3 million ($1 million in cash) he received in 2014. BP's CFO was also on the list to rake in his full bonus. "We think it sends the wrong message," a rep for shareholder Royal London Asset Management tells the BBC. "It shows that the board is out of touch." Not only did BP suffer straight-up monetary losses as the price of oil fell, it also announced it will be getting rid of about 7,000 jobs and taking other belt-tightening measures. And the Financial Times notes that other energy company execs saw their pay slashed in 2015. But a BP spokesman says "executives performed strongly in a difficult environment in 2015, managing the things they could control and for which they were accountable." Andy Critchlow, writing for the Reuters Breakingviews blog, agrees. "Dudley has to work harder than his predecessors," he writes, noting the CEO has helped the company recover from the 2010 Deepwater Horizon disaster and improved safety protocol. "The mild-mannered American has had possibly the toughest job in the oil industry. His rewards look in line with that task." Carl-Henric Svanberg, chairman of BP's board, says the nonbinding shareholder vote won't alter the payouts they've already decided on, but that the board will take investors' concerns into account when coming up with next year's compensation packages.