Oil major Royal Dutch Shell's (RDS) board was shocked by shareholders who refused to go along with the company's remuneration report and shot down the board's proposals to award its directors bonuses.

The company said that the unexpected result revealed that the more than 50 per cent of shareholders had given a thumbs down to it.

The company said the shareholders rejected the report 59.42 per cent to 40.58 per cent with 1.3 billion votes in favour and 1.9 billion votes against.

Analysts say that it was time the company paid heed to shareholder objections and re-appraised its whole remuneration package and put it back to the vote of its shareholders.

The payout dispute has erupted in the wake of the poor performance of the company as against its peers with shares taking a fall of around 25 per cent from £21.50 to yesterday's close of £16.35

The terms of a previous agreement allowed directors to earn up to 200 per cent of their salaries in shares if the company outperformed three of its rivals.

The company failed to do so, but directors decided to go ahead to help themselves with some of the pay award which led to shareholders voicing their disapproval.

RDS chairman Jorma Ollila, said, 'We are taking this very seriously and we will be meeting with shareholders to take the right decisions.'

The decision has left RDS directors red-faced. RDS is one of the largest companies to face a revolt over payouts to executives.

The company will now have to go back to shareholders. According to analysts the vote does not mean that directors will have to pay back to Shell, however, it will be under pressure to review its remuneration package.

All other resolutions were carried.

Standard Life Investments was among the dissenters, angry with the board's decision to exercise discretion again. Last year's remuneration packages had also been opposed by shareholders.

With the economic slowdown shareholders have started getting increasingly vocal and RDS is only one among a growing number of companies that have had to face shareholder opposition.

Mining major Xstrata and high street retailer Next have also had to face the music from angry shareholders.