Shareholders in Royal & Sun Alliance have staged one of the biggest rebellions over 'fat cat' pay so far.

At RSA's annual shareholder meeting on Wednesday, 28% of proxy voters opposed the company's pay awards to top executives, and a further seven percent abstained.

Shareholder anger was directed in particular against a �250,000 ($400,000 ; 350,000 euros) retention bonus for RSA finance chief Julian Hance, and a �1.44m severance payment to former chief executive Bob Mendelsohn, who stepped down last year.

The pay awards come at a time when RSA's faltering performance has triggered a steep decline in its share price, diluting the value of shareholders' stake in the company.

The general level of remuneration today is actually bordering on the outrageous RSA shareholder Geoffrey Lloyd

RSA, battered by asbestos-related claims, has lost nearly two thirds of its market value in the past year, putting it among the worst performing insurers on the London stock market.

Investor outrage

"What shareholders here are increasingly concerned about are the enormous amounts of money which are paid to people who quite manifestly do not deserve it," shareholder Geoffrey Lloyd told the meeting.

"The general level of remuneration today is actually bordering on the outrageous."

RSA chairman John Napier defended the pay awards, but said top executives' contracts would be restricted to a period of one year from now on.

The National Association of Pension Funds (NAPF), which has spearheaded a campaign against excessive pay for underperforming chief executives, welcomed the latest shareholder revolt.

"We are very pleased to see that people are taking note of good corporate governance because we believe it can lead to good corporate performance," a spokesman said.

The NAPF - which represents pension funds controlling about a fifth of the shares on the London Stock Exchange - has asked its members to abstain from voting on pay awards at a series of annual general meetings this year.