LONDON, (Reuters) – Royal Dutch Shell Plc faces a  possible shareholder revolt over its executive pay policy after  the Association of British Insurers (ABI), a large investor and  a corporate governance agency expressed concerns about the plan.

The ABI said yesterday it had issued an “amber top” notice  to members about the Shell Remuneration Committee’s decision to  exercise their discretion and award managers bonuses despite the  company’s failure to meet pre-set targets.

The ABI issues an “amber top” notice when it believes a  company has deviated from best corporate governance practice.

ABI members account for around 20 percent of investments in  the London stock market.

One of Shell’s 10 largest institutional investors said it  had already voted against the plan.

“We have voted against the company’s remuneration report  mainly because discretion seems to have been applied without any  justification – there seems to be no control over remuneration,”  said an official at the group, who spoke on condition of  anonymity.

“I think there will be a significant vote against the  company — possibly 30-40 percent,” the official said.

Sarah Wilson, chief executive of Manifest, an independent  governance and proxy voting agency, also criticised Shell’s  remuneration report, which will be put to investors at the oil  major’s Annual General Meeting later this month.   “We are concerned that it would be effectively rewarding  directors for failure, so they are likely to receive a very  heavy dissent vote against the remuneration report.”

Shell defended the decision to pay out bonuses despite the  company not achieving a targeted ranking within its peer group.

“Financial performance was good over the period” a spokesman  said.

Over a third of investors opposed rival BP Plc’s  remuneration report at its AGM last month, after management were  awarded bonuses without achieving peer group ranking targets.

The Financial Times said advisory group RiskMetrics has  recommended a vote against Shell’s remuneration report at its  annual general meeting on May 19.

Shell’s London-listed “A” shares traded up 1.4 percent at  1,592 pence at 1355 GMT, outperforming a 0.4 percent rise in the  DJ Stoxx European oil and gas sector index.