AGL Energy shareholders have delivered a first "strike" on executive pay as the company pledges to boost dividend payouts and forecasts profit growth.
Nearly a third of shareholder votes at AGL's annual general meeting went against the company's remuneration report, which included the use of non-financial targets and underlying earnings to calculate chief executive Andy Vesey's $6.94 million pay packet.
"A 9.5 per cent increase in the CEO's salary is ridiculous and highly excessive, particularly in relation to competitors of similar size and business," a shareholder told the meeting ahead of the vote.
AGL chairman Jerry Maycock labelled the vote as "a disappointing result", and said AGL's pay structures were appropriate for management's performance.
However, he promised to review future disclosures in relation to executive remuneration and short-term incentives.
Shareholder votes on the remuneration report are non-binding, but two "strikes" - two consecutive years where more than a quarter of votes go against the report - can trigger a vote for a spill of a company's board.
The protest vote comes after AGL made a $408 million net loss in 2015/16, mainly due to large impairments related to its exit from gas exploration and production.
Its underlying profit rose 11.3 per cent, which the company said reflected steady margins and reduction in costs.
Ahead of Wednesday's meeting, AGL forecast a lift in underlying profit in the current financial year and announced a near $600 million share buyback and higher dividend payout, as it benefits from strong wholesale electricity margins.
AGL, one of Australia's largest energy retailers, expects underlying profit to rise to between $720 million and $800 million in 2016/17, up from $701 million in the previous year.
The improvement would come despite unseasonably mild weather, squeezed margins in its gas portfolio, rising competition in the market and ongoing enterprise bargaining agreements at two of its major power plants.
AGL said it will also target a dividend payout ratio of 75 per cent of underlying profit, up from the current average of 60 to 65 per cent, with a minimum franking level of 80 per cent.
In addition, it announced an on-market buy-back of up to five per cent of its issued shares, valued at $596 million based on Tuesday's closing price.
"These initiatives reflect the strength of AGL's liquidity position and the highly cash-generative nature of our portfolio," Mr Maycock said.
The news helped push AGL Energy shares up 5.8 per cent to $18.70.
AGL's board and executives also faced noisy protests outside the meeting, with nearly 100 placard-waving protestors calling on the company to get out of fossil fuels.
"AGL is already Australia's number one carbon polluter and they plan to keep burning coal for another 32 years, when all climate science shows we need to be out of fossil fuels in the next 10 years," 350.org's Josh Creaser said.
AGL last year committed to closing all of its existing greenhouse gas emitting plants by 2050, and has outlined plans to become one of the largest providers of rooftop solar, energy storage and electric vehicle services by 2020.
