Commonwealth Bank shareholders have revolted over the bank's payments to top executives, slapping the lender with a historic "first strike" against its remuneration report.
During a shareholder meeting that was also briefly interrupted by protesters, the country's biggest bank on Wednesday became the first Big Four lender to incur a vote of more than 25 per cent against its executive pay report since the "two strikes" rule was introduced in 2011.
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How shareholders can rein in CEO salaries
The two strikes rule, introduced in 2011, allows shareholders at an AGM to hold a company board accountable for the pay of their top executives.
Proxy votes displayed at the meeting showed 49 per cent of votes received were against the remuneration report.
The final vote count was to be released later on Wednesday, but chairman David Turner flagged the bank would be getting a "strike."
Under the "two strikes" rule, if a company receives two consecutive votes of more than 25 per cent against its remuneration report, it sparks another vote on whether to force the board to stand for re-election.
The trigger for the backlash was a move to link chief executive Ian Narev's long-term bonus to new "soft targets," and concerns about the payment of multimillion-dollar bonuses despite a series of scandals.
Mr Turner acknowledged the concerns, vowing to engage with shareholders over the year ahead, after earlier withdrawing a controversial resolution asking shareholders to approve changes to Mr Narev' bonus scheme.
The withdrawn changes would have introduced new performance hurdles relating to people and culture.
The backlash came as Westpac's annual report showed its chief executive, Brian Hartzer, was paid $6.7 million in his first full year running the bank.
The hefty vote against CBA's remuneration was revealed during a meeting that was rowdy at times, and was briefly stopped because of protesters who were critical of the bank's financing of fossil fuels businesses.Â
'Lack of clarity'
Mr Turner acknowledged a "lack of clarity" in how the bank had explained its plan to change Mr Narev's long-term bonus, and said the bank would engage with shareholders on its plan to change incentives for top executives.
"We will receive a strike on the remuneration report, and as I said earlier, we will of course discuss this with shareholders over the course of the next 12 months," Mr Turner said.
In a sign the bank remains committed to some sort of bonus linked to non-financial measures, he said the bank needed to offer its staff incentives to achieve social and ethical goals, as well as financial targets.
Mr Narev was paid $12.3 million last year - significantly more than other Big Four bank bosses - but Mr Turner defended the payment, which will not be affected by the first strike. At the time of Mr Narev's appointment in 2011, his pay was set at a level below the bosses of other banks, and below that of his predecessor Ralph Norris, Mr Turner said.
The now-scrapped "culture bonus" was a key concern of investors and proxy advisors, as critics say it would reward executives for simply doing their job at the same time as bank returns are falling.
Some investors are also protesting against CBA paying out multimillion-dollar bonuses to staff despite a series of scandals at the lender.
The investor protest wasn't going to prevent the bank's move to pay Mr Narev $12.3 million for last year, though it is likely to pressure the board to make further changes to its executive pay regime in the future.Â
Under the resolution CBA withdrew hours before the meeting, 25 per cent of Mr Narev's incentive would have been linked to progress in areas including "diversity and inclusion, sustainability and culture," with the remainder linked to shareholder returns and customer satisfaction.
CBA is instead reverting to its original way of calculating Mr Narev's long-term bonus -  a 75 per cent weighting on shareholder returns and a 25 per cent weighting on customer service.
The meeting was the last for Mr Turner as chair, who is retiring to be replaced by former Telstra chair Catherine Livingstone. Her election to the board was endorsed by 97 per cent of proxy votes cast before the meeting.Â
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