Westpac shareholders have handed the bank a first strike on executive pay in protest over bonus cuts they say did not go far enough.

The bank’s chairman, Lindsay Maxsted, told shareholders on Wednesday that more than half the votes cast ahead of the bank’s annual general meeting in Perth had gone against the remuneration report.

All but one Westpac group executive had short-term cash bonuses cut and top-tier staff saw an average 25% drop in rewards, but the bank still joined Telstra, Tabcorp and Harvey Norman in copping a first strike during a volatile AGM season.

Ending a torrid year for the banks, Westpac shareholders cited unhappiness over the size of bonuses amid the fallout of the scandals heard at the financial services royal commission.

“Although the board took events over the year into account, many have questioned whether we went far enough, particularly in reducing short-term variable reward paid to the CEO and other executives,” Maxsted said on Wednesday.

Maxsted defended the bonus structure but said the bank would respond to the sizeable revolt, which puts the board at risk of a second strike and spill vote at next year’s AGM.

“The board takes your feedback very seriously,” Maxsted said. “Given the many concerns expressed we will reach out to more shareholders this year to fully capture and understand your views.”

The cash bonus handed to Brian Hartzer, the bank’s chief executive, was down about 30% to $1.04m for a year in which profits were flat and the big banks were hauled across the coals at the royal commission.

Hartzer’s total realised remuneration fell 9.4%, or $512,325, from $5.46m to $4.94m.

Maxsted said the issues raised at the royal commission – which included Westpac’s admission of falsely witnessed loan documents – did not represent the culture of the industry or the bank.

“Although the royal commission has clearly focused on matters of extreme importance, it has captured only a fraction of the activity taking place inside financial institutions,” Maxsted said.

Nonetheless, Maxsted said Westpac had taken four key lessons: it was slow to understand and react to complaints, it did not quickly enough focus on conduct and reputation, some bonuses encouraged poor behavour, and it did not appreciate risks in financial planning.

Westpac has put aside $281m for customer remediation and associated costs, but has indicated more could follow.

Maxsted said the royal commission should not be allowed to define the way the banking sector was perceived.

“There is also a risk that the misconduct raised at the royal commission may inadvertently come to define the culture of the sector,” Maxsted said. “Speaking for Westpac, that is not the case.”

Westpac shares, which were worth $39.84 in 2015 and $31.74 in January this year, were up 0.76% at $25.25 on Wednesday afternoon.