That's despite Tabcorp chairman Paula Dwyer assuring shareholders that speculation the combined Tabcorp/Tatts group would not sell its lotteries business, as some have theorised.

The gaming company narrowly missed a strike against its remuneration report at its annual general meeting in Sydney on Tuesday despite unveiling the merger deal a few days ago.

Proxy votes delivered ahead of the meeting showed 22.45 per cent of shareholders did not support the company's remuneration report.

The protest came after Tabcorp decided to increase the pay packet of chief executive David Attenborough to $3.19 million in 2016 from $2.73 million the year prior.

Mr Attenborough received the pay rise despite Tabcorp's net profit plummeting nearly 50 per cent to $169.7 million during the year. During the same period underlying profit grew 8.4 per cent to $185.9 million.

Shareholder Eric Chan challenged the performance hurdles Tabcorp used in granting bonuses to its executive team, criticising Tabcorp's pay structure where the chief executive can collect a bonus despite the share price falling or the company booking reduced profits.

"I'm not quite happy about it.... You don't align shareholders and CEO performance really," Mr Chan said.

He said the company should introduce an absolute return measure that took into account poor results for shareholders instead of the company's relative performance measure – which compares Tabcorp's performance to the performance of other companies.

Ms Dwyer said relativity was an independent measure of performance.

"[Relatively] is appropriate because investors have a universe of stocks to invest in and we are part of that universe," Ms Dwyer said.

"We will be reviewing the plan next year and considering the introduction of a second hurdle (for long term incentives) which is likely to be a capital measure."

Shareholders also protested the re-election of Tabcorp director and former Telstra executive Justin Milne, with a 25.44 per cent vote against his re-election.

A little over 24 per cent of shareholders also baulked at increasing the director fee pool by $500,000 to $2.5 million.

The Australian Shareholders Association – which was representing more than 450 retail shareholders at the meeting – also criticised the structure of Tabcorp's deal with Tatts.

Under the deal, Tabcorp would issue 100 per cent of its capital to buy Tatts. As a result of the deal, existing Tatts shareholders will end up with 58 per cent of the merged entity, while Tabcorp shareholders will receive 42 per cent of the combined group.

Under Australian law, only Tatts shareholders will get to vote on the deal despite Tabcorp shareholders being diluted, ASA monitor for Tabcorp Mary Curran  said.

"There is clearly is a gap in the legislative rule which we understand ASX are looking to fix. Will Tabcorp voluntarily provide its shareholder with an opportunity to vote on the transaction?" Ms Curran asked.

Ms Dwyer said there was no requirement for Tabcorp shares to vote on the deal.

"Rest assured in considering the transaction and in arriving at a proposal your board has considered very strongly the impact on Tabcorp shareholders," Ms Dwyer said.

"The transaction is in the interest of our shareholders. We believe it represents compelling value for our shareholders. And we look forward to getting through the regulatory hurdles and implementing it," Ms Dwyer said.

Ms Dwyer also assured a shareholder the combined Tabcorp-Tatts group would not sell its lucrative lotteries business post merger.