The David Jones board was smacked with a strongly supported "first strike" as investors registered their displeasure over controversial share trades by directors, and the untimely resignation of chief executive Paul Zahra.
At the shareholder meeting in Sydney on Friday, almost 40 per cent of shares voted on the company's remuneration report were directed against it.
Another vote of 25 per cent or more next year would trigger a resolution to spill the board. This would then require more than 50 per cent of shares voted for the spill to go ahead.
The annual meeting was widely expected to be the target of investor dissatisfaction, especially with regard to suspicions that a breakdown in the relationship between the David Jones board and the well-regarded Mr Zahra led to his resignation.
The retailer's chairman, Peter Mason, offered investors plenty of apologies - but took no blame - for allowing two board members to buy shares in the company days before the release of better than expected sales figures.
"I unreservedly apologise to the company and all our shareholders for the concerns that have been raised on this matter," he told investors. "Your board is committed to the highest standards of corporate governance, and therefore took the decision to raise this matter proactively with ASIC following media comment."
David Jones directors Leigh Clapham and Steven Vamos bought shares in the retailer three days before it told the market underlying sales in the first quarter were positive, which sent the stocks soaring. Mr Mason said the pair were "motivated by a wish to show support for the company".
He also rejected claims that Mr Zahra's decision to step down as soon as a replacement was found reflected a breakdown in his relationship with the board.
"Comments that the board and Paul are not working together collaboratively towards your company's success are untrue," Mr Mason said.
Mr Zahra said he "continued to work collaboratively with the board and with my management team while my successor is identified", but said very little apart from his prepared speech.
Mr Mason and Mr Zahra declined to comment after the meeting.
An adverse finding by ASIC could leave the company with an embattled chairman and a lame-duck chief executive at a time when its investment in an omnichannel strategy is at a critical juncture.
The retailer has raised gross profit margins by exiting low-margin categories, outsourcing others, and reducing promotional discounting.
No earnings guidance was offered on Friday, but the company reported that its online business contributed to profits (pre-depreciation) during its first year of trading. It said the average online transaction was three times the size of in-store transactions.
The company also promoted the potential development of its property portfolio, but warned that the process would take time.
David Jones tried to head off the first strike against the remuneration report by announcing a 17 per cent cut in base fees for non-executive directors - including the chairman - and freezing the fixed pay of its executive team.