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2009-10-12

"Two strike rule" on executive pay incomprehensive and onworkable

Comments on news “Directors slam Productivity Commission's 'two strike' rule”, 12/10/2009, http://www.businessspectator.com.au/bs.nsf/Article/Directors-slam-Productivity-Commissions-two-strike-pd20091012-WQQTU?OpenDocument

It is unclear why the Productivity Commission has chosen 25% of shareholders as the deciding factor.

Why did the PC use that as opposed to the rule of majority of over 50%?

Requiring just a quarter of shareholders vote will be potentially very destabilising and will work against the interest of shareholders in the long run, because it will make the board less talented and profit driven to maximise shareholders' interest with less incentives to competent directors.

PC' recommendation is really strange and incomprehensive.

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