First some basic technical stuff. The vote doesn't mandate anything as it is only advisory, so there is no need for the company to claw back bonuses, resubmit the remuneration report or anything like that. It's embarrassing for them but doesn't require them to do anything.
Second, they clearly will have to do something about it. An obvious reponse would be to get rid of the discretion the remuneration committee has to over-ride/ignore performance targets, but I suspect quite a few shareholders will want to see a general overhaul of policy. The company will therefore have to consult with its biggest shareholders on how to put things right. There's also some talk about whether Shell's rem committee members should be ousted.
Thirdly a bit of context. That's four companies (the others are RBS, Provident Financial and Bellway) that have lost the vote on their remuneration reports so far this season. It's actually the same number (so far) as lost the vote in the 2005 season, so currently joint-top and this could well go on to be a record season.
But actually, given the scale of the crisis, is it that significant? I know there are lots of companies that registered near misses too, so the average vote against a rem report must be up quite a bit, but it's not a generalised revolt over executive pay. What it probably does represent is a toughened approach from some of the institutional investors (ie more willingness to vote against). But guess what, without mandatory voting disclosure we still can't tell exactly what is going on out there.
Looking more broadly, this AGM season probably will lead to more questions about remuneration. The select committee report last week was right to call for a review of how the shareholder vote on rem reports has worked. Have shareholders used the right effectively, and does it go far enough? Increasingly people seem to be asking whether the vote could be binding in any way. I suspect the momentum is there now to make this a live policy issue. Let's hope the Walker Review picks this up.
But to really push the envelope I think we ought to be thinking much more about whether executive remuneration as it is currently structured really does the job. Shareholders have chucked more and more money at directors in the past few years - do the returns they have received indicate it was money well spent? Can directors even influence some of the financial measures that underly incentive schemes, except by self-defeating short-term behaviour or massaging the figures? Don't underestimate the lack of a clear understanding of these issues amongst shareholders who have blindly pushed for 'performance-related' pay.
I don't think we are yet at the stage where shareholders are asking these deeper questions. But it is certainly the time to push in this direction.