We got a fair few press calls last week about easyJet losing the vote on its remuneration report. The interesting thing is that at least a couple of the journos we spoke to mentioned - unprompted - that the company had told them that the vote was only advisory and didn't compel them to do anything.
This is obviously absolutely true. It's also IMO a pretty clear indication of what the company is going to do in response to the vote - nothing if at all possible. The company's AGM statement made clear that the source of most dissatisfaction, the pay-out to the former chief exec, was a one-off that wouldn't be repeated. Therefore the company's position seems to add up to 'we won't do it again, but we're not forced to do anything'. Given that the vote is advisory and backward-looking their position is pretty solid I would say.
The interesting question is what events like this do for the legitimacy of shareholder oversight of executive pay. If a company can even lose the vote on its remuneration report and still not do anything in response then things start to look a bit wobbly. Add to this the fact that companies who get big (ie 30%-40% plus) votes against usually spin them as 'a win is a win' and the fact that even in the 'record' season of 2009 only five companies were actually defeated. You can see how faith in a purely shareholder-focused system can look misplaced.