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iiNet chief executive Michael Malone. Picture: Sharon Smith/The West Australian.
iiNet chief executive Michael Malone. Picture: Sharon Smith/The West Australian.

WA market darling iiNet has blamed a failure to adequately explain its long-term executive bonus scheme for a surprisingly strong protest vote against its remuneration report.

Proxies votes lodged ahead of today's annual meeting showed 23.3 per cent against the report, with another 0.93 per cent open to the chairman's discretion.

The company, Australia's second biggest DSL internet service provider, has recorded rapid growth since listing on the Australian Securities Exchange in 1999.

Last financial year, it lifted net profit 11 per cent on revenue growth of 19 per cent, with its shares last week hitting a record closing high of $4.33.

Chairman Michael Smith told the annual meeting in Subiaco this morning that iiNet suspected it had not explained the remuneration report "as clearly as we might".

Shareholders were told proxy advisory ISS had recommended against the report based on concerns over chief executive Michael Malone's potential long-term bonus of $5.13 million for the 2011-2014 period.

However, the head of iiNet's board remuneration and nomination committee, Peter James, told shareholders the maximum bonus was subject to various performance hurdles and none of it was payable until iiNet had achieved a challenging compound annual growth in earnings per share of 15 per cent.

iiNet shares were up one cent to $4.16 at 12.10pm.