The Association of British Insurers has jumped to the defence of Lord Browne of Madingley, the BP chief executive, ahead of a possible shareholder revolt over his gold-plated £15 million leaving package Thursday.

The influential insurance trade body told Times Online that despite a growing controversy over the size of the payout it had “no serious issues” with BP’s renumeration policy.

City sources said BP has told investors the reason for the high payout is that Lord Browne brought forward his retirement date by 17 months to allow his successor, Tony Hayward, to start as soon as possible.

However, Lord Browne is already sitting on a pension pot of £21 million, which will make him one of the UK’s first £1 million pensioners.

Michael McKersie, assitant director of investment affairs, revealed the ABI had given BP a ‘blue-top’, essentially a clean bill of health in its traffic light system of judging corporate governance breaches.

Mr McKersie said: “A red top is a blatant failing by a renumeration committee. We have carefully looked at everything in BP’s report and it does not fall into this category.”

The comments came as the row over Lord Browne’s pay threatened to dominate Thursday's annual general meeting - the 59-year old’s last in charge.

Several investors are furious that although Lord Browne retires on June 30, he could earn at least £10 million under a three-year incentive scheme that runs until the end of 2009.

Details of the scheme emerged last month when BP revealed the chief executive pocketed £5 million in pay and bonuses last year - including a £1.5 million loyalty award.

One City fund manager said: “We cannot see how he is entitled to the full amount under the incentive scheme if he will not be there for the almost all of the three year period.

“He has done a great job at BP but the fear is that other companies will start to think this is OK and that they can follow suit.”

Pirc, the independent corporate governance body, the New York-based Amalgamated Bank and at least one European fund manager already plan to vote against BP’s renumeration report at the AGM.

Pirc has also called on BP to link a higher proportion of executive pay to process safety targets, following the damning Baker report earlier this year into the fatal Texas City refinery blast.

Mr McKersie said the ABI was satisfied BP had taken “appropriate” legal advice over what should be paid to Lord Browne under the terms and conditions of his contract.

He added that BP’s executive directors only received half their annual bonus last year because of the group’s safety problems.

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