In a highly unusual move, investors in the mining company Lonmin voted by 55.2 per cent to 44.8 per cent to reject the directors' remuneration report yesterday.
Shareholders were especially incensed by the award of a £500,000 ex gratia bonus to a retired director, Sam Jonah.
Some shareholders condemned the "inadequate explanation" in the annual report of the payment to Mr Jonah, the prominent African businessman who worked for Lonmin for 35 years.
Although the vote has no legal force, Lonmin acknowledged the depth of feeling among some investors and said it was unlikely to make a similar payment again.
A spokesman said: "We have noted it with regret and we do not ignore our shareholders, but we don't think the company feels that it did anything wrong."
He said the payment related to a $112m (£59m) exceptional profit on its investment in Ashanti Goldfields, which the company said would not have been realised without the involvement of Mr Jonah.
The Association of British Insurers, whose members account for one-fifth of the London stock market, said it welcomed the vote. The ABI had issued its highest "red top" alert over what it said was a breach of corporate governance practice. "Our members take a very firm line against ex gratia payments that are not the way to link pay and performance," a spokesman said.
"Lonmin no longer sees such payments as appropriate but every company needs to take care that it hears the message of today's vote."
Successful votes against executive pay are rare. The highest profile casualty was JP Garnier, whose package was voted down by 51 per cent of shareholders in GlaxoSmithKline in 2003.
Despite yesterday's vote, the fuss was nothing compared with the heyday of Lonrho, Lonmin's predecessor run by Tiny Rowland. In 1973 small shareholders united to publicly fire eight directors who had attempted to oust Mr Rowland.Reuse content