Shareholder resentment at the annual meeting of Goshawk Insurance has caused leading investors to call for legal reform to protect their rights.
The shareholders expressed anger that an advisory resolution on the remuneration of Paul Spencer, Goshawk chairman, was passed on a show of hands when a full poll of votes, including proxies, would have defeated it.
Peter Montagnon, head of investment affairs at the ABI, said: "We do regard this as a serious breach of good governance."
Some institutional investors, fearing that Goshawk may set a precedent, are lobbying to reform the Companies Act to make it clearer that proxy votes should not be overriden in this way.
Spencer said, however, that Goshawk's lawyers had advised him that under the combined code of corporate governance, he could not call for a poll after a show of hands had occurred.
He said Phoenix Asset Management, Goshawk's largest shareholder, was exploiting the row in a campaign to oust Goshawk's management.
Gary Channon, a partner at Phoenix, said: "The chairman is supposed to ensure shareholders' views prevail."
