The recent waves of CEOs’ skyrocketing wages in a number of underperforming companies led to the enforcement of the ‘two strikes rule’ in Australia. The Law is an attempt to put under higher scrutiny the board’s oversight role of managers’ pay and increases shareholders’ control power. Being the first country to introduce such regulatory provision, there is a debate about its effectiveness.
Some support the regulator’s effort and shareholders’ representatives and claim that the ‘2 strikes rule’ will help disciplining managers’ remuneration;Others counter-argue that the ‘2 strikes rule’ has a number of shortcomings undermining its effectiveness.
Which view do you agree? Explain.
