Australia’s capital markets are strengthened by governance settings that support investor confidence, market integrity and long-term value creation.
For long-term institutional investors acting on behalf of millions of Australians saving for retirement, these settings are not incidental. They are foundational to positive investment outcomes, supporting efficient capital allocation, helping to manage financial risks and opportunities, and reinforcing trust between companies and their long-term owners.
Executive remuneration is of interest to shareholders because incentives can shape behaviour. Well-structured remuneration can support the long-term success of a company, however, in contrast, when excessive pay, performance-related remuneration that is not genuinely at risk, persistently high bonuses and overemphasis on short-term incentives erode shareholder value, shareholders and their beneficiaries bear the cost.
In 2009, the Productivity Commission launched an inquiry into executive remuneration in Australia, triggered, as its final report said, by “concern that executive pay had got out of hand. This perception was fuelled by practices in financial institutions abroad that were seen as a key contributor to the global financial crisis.”
In 2011, following the Productivity Commission’s inquiry and recommendations, legislation creating a new regime – the Two Strikes Rule – came into force. Under the Rule, a remuneration report with an ‘against’ vote of 25% or higher receives a ‘strike’. If, at the following year’s AGM, the remuneration report receives another against vote of 25% or greater, the company faces a motion to spill the board, passed on a simple majority. If this resolution is passed, directors are required to stand for re-election at a separate meeting within 90 days.
The large majority of remuneration resolutions are supported by investors. Each year since the introduction of the Rule, an average of 24 ASX300 companies has received a remuneration strike (first or second). Our observation is that voting on remuneration resolutions is carefully considered, supported by engagement between companies and investors where appropriate, and that votes against reflect significant concerns.
First strikes
An average of 21 companies have received first strikes every year since 2011. The highest number of first strikes have come in the most recent three years: 2023, 2024 and 2025. Investors support most ASX300 companies’ remuneration practices, and our analysis is that strikes reflect significant shareholder concerns. These include the payment of bonuses that are misaligned to the shareholder experience and bonus outcomes that do not reflect accountability for serious management failings. The years since 2020 have also been marked by post-COVID remuneration outcomes in LTIs, and turbulent periods for companies and the market, which may have resulted in votes against remuneration outcomes.
Second strikes
A second strike occurs when a company receives 25% against its remuneration report in a second consecutive year. Second strikes could only be registered from 2012 and have increased since then. In the first seven years of the regime (2013-2018), an average of 1.8 second strikes were recorded at ASX300 companies. From 2019-2026, this increased to an average of 5.3 second strikes per year. Second strikes are often indicative of ongoing issues or shareholder dissatisfaction with the company response to issues raised by investors. As outlined in the sections below, academic evidence has found weaker performance-based links in companies that experienced a second strike than those that experienced a first strike.
Second strikes increased in 2024 and 2025, though they still remain relatively low, at 12 and seven respectively across the ASX300. As noted above, these increases followed years of more significant first strikes in 2023, 2024 and 2025 (39, 26 and 25 respectively). These higher-than-average first strike results flowed through to greater numbers of second strikes in subsequent years.
