Rail operator Aurizon's shareholders have delivered a `first strike' against what they have cited as an overly generous executive pay policy.
A vote resulted in 28 per cent of shareholders rejecting the report.
If 25 per cent or more of investors reject the report again in 2014, delivering what is known as a `second strike', they may get a vote to oust several board members at Aurizon, formerly known as QR.
Both the Australian Shareholders Association (ASA) and proxy advisers ISS had recommended voting against executive pay.
An increase in chief executive Lance Hockridge's base pay from $1.65 million to $1.93 million, plus a larger short term bonus of $2.5 million, were criticised.
Longer term performance rights for Mr Hockridge potentially worth millions more were also criticised for being too generous, along with a jump in chairman John Prescott's pay to $479,000 from $407,000.
Aurizon's annual profit rose by one per cent in 2012/13 to $477 million, as higher earnings offset redundancy costs.
A high protest vote of 18.6 per cent was also lodged against awarding the performance rights to Mr Hockridge.
The ASA has called for Mr Prescott to resign, arguing he has allowed bonuses to be paid that should not have.
"We think the grant is excessive," an ASA spokesman told Mr Prescott at the company's annual general meeting.
Mr Prescott defended Aurizon's remuneration policies, saying they were aligned with creating shareholder value, and fixed remuneration was frozen for now.
Aurizon shares lost 16 cents, or 3.3 per cent, to $4.65.
Formerly owned by the Queensland government, Aurizon was privatised in late 2010, and derives the bulk of its earnings hauling coal from mines in Queensland and NSW to ports.
Several shareholders raised concerns about plans to transport coal near the Great Barrier Reef, while protesters outside the meeting were also critical of hauling coal from the Galilee Basin.
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