CAIRN Energy suffered a humiliating 67% vote against its directors' remuneration report as it became the latest victim of the shareholder spring investor discontent about spiralling executive pay.

The company revealed it had suffered a massive reverse at the hands of shareholders hours after its chairman Sir Bill Gammell told Cairn's general meeting there had been a "large" vote against the pay report for 2011.

The report showed the directors' pay-bill surged to £7.2 million in 2011 from £4.8m in the preceding year. Sir Bill got £1.8m, including £1.4m compensation after he exchanged the chief executive's job for the chairmanship in July.

Edinburgh-based Cairn later told the stock market that votes in respect of 179 million shares out of a total 267 million cast had gone against the report. A further 27 million were withheld.

The size of the vote signals great unhappiness among institutional investors about pay policies in Cairn, which scrapped plans to pay a big one-off bonus to Sir Bill in January after these were opposed by some shareholders.

On Tuesday, The Herald revealed that a prominent corporate governance activist had renewed criticisms of the oil and gas firm's executive pay policies.

"Total remuneration is considered to be positioned above expectations given the company's size and scale, its sector and its performance," said Manifest, which drew attention to the £1.4m payments for loss of office paid to Sir Bill and criticised Cairn's bonus policy.

The organisation gave Cairn the same grade for its pay policies (D) as it had awarded to Barclays, which was embarrassed last month when almost one-third of shareholders failed to back its directors' pay report.

But Cairn eventually faced a revolt on a much bigger scale than those suffered by Barclays and some other big fish in financial services, whose massive customer bases keep them in the spotlight.

Andrew Moss resigned as chief executive of Aviva earlier this month after 54% of shareholders voted against the insurance giant's pay policies. Yesterday Prudential said investors who hold 30.33% of the financial services firm's stock voted against its remuneration report.

The size of the vote against the remuneration report surprised directors at Cairn Energy, which has made efforts to respond to its shareholders' views on pay. After scrapping a proposed one-off share option award worth £2.5m for Sir Bill in January, the company said it would consult investors about pay issues.

The Herald had revealed previously that Manifest had questioned the planned award, proposed to recognise Sir Bill's role in the completion of the $6bn (£3.8bn) sale of the bulk of Cairn's Indian business to Vedanta.

As votes on remuneration reports are purely advisory, Cairn is not required to take any action following yesterday's ballot.

Sir Bill told the general meeting: "The board and I fully acknowledge the strength of the views expressed by shareholders in some of their proxy voting.

"We are conscious of the responsibility we have to ensure best practice and will aim to continue an open and honest dialogue with our shareholders - to ensure that Cairn is striving to meet the highest standards of corporate governance."

He noted that directors had agreed at their March meeting that the remit of the nomination committee should be expanded to include corporate governance matters. Some 11% of votes cast opposed the re-election of Sir Bill to the board.

Asked after the meeting if the company would adjust the pay bill, Simon Thomson, who succeeded Sir Bill as chief executive in July, said: "There may have been some specific issues that shareholders were particularly concerned about but what we've got to do is take the fact there was that vote and listen to the reasons why."

He added: "We're not the kind of company that will say, let's ignore it."

Mr Thomson told the meeting: "It's appropriate to reflect that Cairn's success, while a team effort, would not have been possible without the inspirational and dedicated leadership of Sir Bill."

The company has returned $4.5bn to shareholders in the last five years.

Mr Thomson said Cairn had made a good start with its attempts to build a rebalanced portfolio, including the $453m acquisition of North Sea focused Agora Oil & Gas.

Cairn, which has extensive exploration acreage off Greenland, has also bid for licences off Cyprus.