Aurizon has received a stinging rebuke from shareholders for its executive pay, incurring a "first strike" despite it attempting to allay concerns by making it harder for managers to earn bonuses.
The Queensland rail company also received a backlash against the granting of share options to chief executive Lance Hockridge. Almost 19 per cent of votes were against the granting of the performance rights, which were described as "excessive" by the Australian Shareholders' Association.
But the board copped the biggest backlash at the annual meeting in Brisbane on Wednesday over its remuneration report, with 28 per cent of votes cast against it.
The company formerly known as QR National has borne the brunt of investor ire over its pay packages since it was floated three years ago. But this is the first time it has suffered a first strike under the "two-strikes" rule, forcing the board to re-examine its pay policies by putting it a step closer to a board spill next year.
Independent director Russell Caplan also received a large protest vote against his re-election to the board.
More than 11 per cent of proxies were cast against his re-election. Before the voting began, Aurizon chairman John Prescott told shareholders the executive pay practices were "operating effectively and are aligned to shareholder interests".
Mr Prescott, who himself faced calls to step down, emphasised that Aurizon was "cognisant of current market trends", and its top 80 managers would not receive any increase in their fixed pay this financial year.
He also cited other changes to its pay polices including the ability for the company to clawback a portion of short-term executive bonuses in the "event of material financial misstatement".
"Whatever views you may have on specific aspects of our remuneration arrangements, I submit [they] should be tested against the overall outcomes achieved for shareholders," Mr Prescott said.
Before the meeting, the shareholders' association had called for Mr Prescott to step down as chairman because it believed there needed to be "boardroom accountability after three successive years of remuneration controversy".
It cast its proxy votes against both the executive pay report and the granting of share rights.
Meanwhile, Aurizon reiterated its guidance for the amount of coal it will haul this financial year of between 200 million and 205 million tonnes despite a strong performance in the first quarter.
The company said it had kept its forecast unchanged because of the end of a contract last month, and potential disruptions to its rail haulage operations from the looming wet season in Queensland.