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Australia’s ‘two strikes’ rule empowers shareholders to vote on a board spill if the compensation report of a public company receives 25% or more dissenting votes for two consecutive years. ‘Say on pay’ legislation has been introduced in several countries but Australia’s version is unique in giving shareholders the right to spill the board whilst not requiring a binding vote on pay.

This project aims to test the proposition that the ‘two strikes’ rule has increased directors’ accountability beyond executive pay because it has substantially lowered the cost to activists of organising sufficient votes to threaten directors with a board spill.

In this interview, Professor David L. Yermack (NYU Stern School of Business) and Professor Ray da Silva Rosa (University of Western Australia) discuss the findings of their CIFR-funded research project. Professors Yermack and Da Silva Rosa, with co-researchers Professor Terry Walter (The University of Sydney), Professor Martin Bugeja (University of Technology Sydney) and Dr Yaowen Shan (University of Technology Sydney), examine the impact and effectiveness of the two strikes rule in Australia.

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