The backlash against excessive executive pay in Australia has continued as Tabcorp suffered a first strike from shareholders at its annual general meeting in Brisbane.

After a thumping 62% of Telstra shareholders gave the board a bloody nose on Tuesday, 40.4% of Tabcorp shareholders voted to reject the gambling company’s remuneration report on Wednesday.

If more than 25% of shareholders reject the remuneration report at next year’s annual meeting, it would constitute a second strike and trigger a forced spill of board positions.

Many shareholders and proxy advisers had been incensed by the company’s decision to ramp up bonuses for Tabcorp executives following December’s $11bn merger with Tatts.

Trying to head off the rebellion, chairman Paula Dwyer told the meeting earlier that the bonuses were in recognition of “extraordinary efforts” to complete a “complex transaction” that ultimately took 14 months. But she acknowledged shareholders wanted the rewards to be conditional on the success of the merger.

She said the merger completion awards were paid partly in cash and partly in restricted shares, subject to a two-year service condition, but added that the board acknowledged shareholders concerns.

“[We now] intend to apply a synergy-based performance measure and to extend the vesting period for the restricted shares granted to key management personnel under the merger completion award,” she said.

“The new performance measure will be based on the achievement of synergies and benefits from the combination at the end of FY21, and the vesting period will be extended from two years to three and a half years.”

Shares in Tabcorp were 12 cents, or 2.69%, higher at $4.765 on Wednesday afternoon.

Tabcorp swung to a net profit of $28.7m in 2017-18 following its merger with Tatts Group, with digital sales and the FIFA World Cup helping to lift the gaming giant’s reach and revenue.