Australian shareholders 'need more power on pay votes'

Laws designed to give shareholders a greater say on executive remuneration at Australian companies have yet to have the desired effect, according to investment experts.

Shareholders were given the right to vote on their firm's pay report in 2005, but critics believe the system is unbalanced because institutional investors with more shares have more votes, ABC News reports.

"The simple way to get around that is that for the purposes of remuneration, it is one shareholder one vote, rather than based on the number you actually own," investment manager Roger Montgomery told the news provider.

Vas Kolesnikoff, chief executive of the Australian Shareholders' Association, said too many investors are still not engaging with the issue and making their voices heard.

However, the introduction of the 'two strikes' rule earlier this year looks set to make Australian businesses consider their pay structures more carefully.

Under the new law, all board members will be forced to stand for re-election if a firm's remuneration report is rejected by at least 25 per cent of shareholders at two consecutive annual meetings.