Investors in a UK-listed company have voted to reject its policy on executive pay amid concerns that it had breached corporate governance best practice.

The “no” vote is the first time that shareholders have rejected a remuneration report since 2003, when investors threw out pay plans at pharmaceutical company GlaxoSmithKline.

At the annual general meeting of house building company Bellway, the majority of shareholders voted against the board’s remuneration report. The move followed a briefing from the Association of British Insurers (ABI), a powerful shareholder group, which criticized the company’s behavior.

In a rare “red-top” alert, the ABI warned shareholders that the company had breached corporate governance best practice in awarding bonuses to the chief executive and two executives. It said the company had scrapped the directors’ original bonus targets when it became clear they were not going to meet them, and then decided to pay the bonuses anyway.

ABI Director of Investment Affairs Peter Montagnon said the shareholders’ rejection of the remuneration report “is a very clear message that there must be a proper link between reward and performance, even in a sharp economic downturn.”

He added: “Shareholders expect all companies to be sensitive to the need for bonuses to be paid only if stretching targets are met.”

Bellway had disclosed that the directors received bonuses worth 55 percent of their salaries in a year when shares in the company lost a quarter of their value and sales halved. The directors do not have to repay the money. Listed companies are legally required to give shareholders a vote on their remuneration report, but the vote is only advisory, not legally binding.

In a statement the company said “it was wrong in not consulting with major shareholders earlier. It therefore proposes to review future policy on this matter, in consultation with them, in the coming months.” At the AGM, 59 percent of votes cast were against the report on directors’ remuneration.

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