Centrica, the parent company of British Gas, experienced a significant shareholder backlash during its annual meeting, where nearly 40 percent of investors who cast their votes opposed the company’s executive compensation.

During the Manchester meeting, 39.98 percent of shareholders voted against the approval of Centrica’s annual remuneration report, which outlines the compensation packages for its top executives.

The spotlight has been on the pay of Centrica’s directors, particularly its chief executive, Chris O’Shea.

O’Shea received a total of £4.3 million last year, a significant decrease from his earnings in the previous year, which included bonuses and share-related pay. However, his basic annual salary saw a 29 percent increase, reaching £1.1 million.

In a previous interview with the BBC, O’Shea acknowledged that his salary was “impossible to justify.”

Prior to the meeting, Institutional Shareholder Services (ISS), an advisory body, recommended that investors oppose the pay report, highlighting the substantial increases bestowed upon O’Shea and Russell O’Brien, Centrica’s chief financial officer, whose salary rose by 8.5 percent.

ISS characterized the pay increases as “materially above those awarded to the broader workforce” and noted that the rationale behind the CEO’s pay positioning did not convincingly justify the rise.

A representative from Centrica stated, “We acknowledge the outcome of the vote regarding the directors’ remuneration report. While we appreciate the majority of shareholders supporting that resolution after extensive compensation discussions, we will maintain constructive and open dialogue with shareholders. An update will be provided within six months of today’s meeting.”

This vote follows similar shareholder revolts concerning executive pay at other companies, including Unilever and Melrose, which occurred in April.

Despite the unrest regarding executive pay, Centrica is moving forward with plans to increase its annual dividend per share to 5.5p for 2025, even as Centrica Energy Storage+ anticipates an adjusted operating loss in the projected range of £50 million to £100 million.

Centrica Energy Storage+ manages Rough, a gas storage facility in the North Sea, and is engaged in discussions with government officials to secure funding for transforming this site into a leading methane and hydrogen storage facility, a move predicted to create 4,000 skilled jobs.

During the annual meeting, O’Shea mentioned that “constructive discussions are currently ongoing with the UK government to secure a regulatory support mechanism that would unlock £2 billion in investment.”

As concerns linger regarding the company’s investment in the upcoming nuclear project Sizewell C, O’Shea expressed optimism about this development in East Suffolk, while also indicating that future investment in Hinkley Point C, a nuclear project in Somerset, remains a possibility.

Following a drop in gas prices due to milder weather, Centrica reported that its British Gas residential supply business faced challenges; nonetheless, the annual adjusted operating profit is still projected to meet medium-term target goals.

Centrica’s shares declined by 12p, or 7.6 percent, closing at 147p on Thursday.