1 Nov 2011

Shareholders emboldened by new law

10:31 am on 1 November 2011

Shareholders in Australia are starting to speak their minds on executive pay.

Radio New Zealand's Sydney correspondent says the impact of a new law dubbed the "two strikes rule" is now being felt.

The rule was introduced in response to outrage among shareholder groups and voters over excessive executive pay at a time when many others are being asked to tighten their belts.

Under the rule, a vote on a board spill is automatically triggered if 25% or more of shareholders reject a company's remuneration report for two consecutive years.

In the past week, shareholders of two big companies - GUD Holdings and Pacific Brands - rebelled against big pay increases for chief executives.

Radio New Zealand's correspondent says this is seen as an overdue and welcome shift in improving corporate governance in Australia.