Changing board behaviour: The role of the \u27Two Strikes\u27 rule in improving the efficacy of Australian Say-on-Pay

This article analyses whether the transition from the 2004 CLERP 9 advisory Say-on-Pay regime to the \u27Two Strikes\u27 rule in 2012 influenced CEO pay in Australian firms. Analysing a panel of 2,074 firm-years (2005-2015), we find that (i) CEO pay is a positive predictor of shareholder dissent; (ii) firm performance has a reducing effect on shareholder dissent; (iii) excessive shareholder dissent moderated CEO pay under the \u27Two Strikes\u27 rule relative to the CLERP 9 regime, and (iv) the market responded favourably to the introduction of the \u27Two Strikes\u27 rule and negatively to \u27strike\u27 instances after its introduction