BP responded to a barrage of complaints from shareholders on Thursday over CEO Bob Dudley's pay package amid falling profits and job losses at the oil major.
The London-listed company reported a loss of $6.5 billion for 2015, its worst annual loss in 20 years. But it also increased Dudley's pay package (which includes pension payments) by 20 percent to $19.6 million from $16.4 million a year before.
Reacting to angry investors, who voted against the pay rise at the annual general meeting taking place in London, Chairman Carl-Henric Svanberg said the company had always judged executive performance "not on the price of oil or bottom line profit but on measures that are clearly within management's control."
"But let me be clear. We hear you," he said, according to a transcript of his speech on the company website.
"On remuneration, the shareholders' reactions are very strong. They are seeking change in the way we should approach this in the future ... 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."
The AGM on Thursday presented the remuneration report to shareholders, but a vote on the policy - which 59.11 percent voted against - was only advisory. The pay rise was actually voted for at the AGM 2014 and the next time shareholders can change the CEO's pay rise is in 2017. Nonetheless, any dissent or revolt could put pressure on Dudley and the company.
A slew of shareholders vented their anger in the days leading up to the meeting. ShareSoc, an organization that promotes the interests of private investors, said in a press release this week that it considered the pay of the CEO to be "simply too high."
Royal London Asset Management, which holds a £443 million ($626 million) stake in BP called the increase "unreasonable and insensitive."
"While we acknowledge BP has had to weather a turbulent period for oil markets, we strongly believe that executive remuneration should remain tied to performance," Ashley Hamilton Claxton, corporate governance manager at Royal London Asset Management, told CNBC via an emailed statement.
BP has taken restructuring charges as plunging oil prices continue to weigh on the firm. Brent crude prices have tumbled around 65 percent since June 2014 to trade around $44 a barrel this week. BP's share price has lost 30 percent during the same time period.
However, Dudley has also received praise in the five years that he has been CEO, including for his response to the Gulf of Mexico oil spill in 2010 and the lawsuits that followed. In the invite to Thursday's AGM, BP praised Dudley for the way he has "transformed BP into a safer, stronger and simpler business" and the way he has "guided BP's recovery to a position of greater resilience."
The U.K.'s Institute of Directors (IoD) has also urged shareholders to scrutinize the pay deal for Bob Dudley. It believes if it had been endorsed it could have set the "wrong message" to other companies.
"We are concerned ... that Dudley's £14 million pay package will seem unjustified to many shareholders, considering the performance of the company over the last 12 months," Simon Walker, director general of the IoD said in a statement.
"BP is not a badly run company, and its current woes are common to other firms in the sector. Nevertheless, the U.K. corporate governance code is clear that pay should be tightly linked to performance and that targets should be stretching and rigorously applied."
