SYDNEY: Australian bosses, including Qantas' Alan Joyce and BHP Billiton's Marius Kloppers, are forgoing big bonuses this year as tough new laws on executive pay give more power to shareholders to sack them and their boards.

But it is far from clear whether the gestures represent a long-term change of heart or are just a one-off public relations exercise that can be abandoned next year.

The catalyst for many of the bonus announcements has been a tough new law introduced last year that empowered shareholders to dump a company board if they are unhappy with the pay regime.

Under the so-called “two strikes” rule, if more than 25% of shareholders vote down the executive pay scheme for two consecutive years, the board can be thrown out and new elections held.

“It isn't a magnanimous gesture to hand back a bonus,” said Australian Shareholders' Association chief executive Vas Kolesnikoff. “It's more of an acknowledgement that the contract and bonus structure is fundamentally flawed.”

At a time when institutional investors are growing weary of holding falling shares while executives reap big rewards, the law is influencing nervous boards anticipating tricky annual general meetings. Since the law's introduction last July, 108 listed firms have recorded first strikes.

Among the bigger names to have already earned a black mark are BlueScope Steel; Pacific Brands, the group behind brands including Dunlop, Hush Puppies and Slazenger; casino group Crown; and mining equipment maker Emeco Holdings.

Only a handful are expected to chalk up a second strike this year as companies have been trimming or cutting bonuses.

The fact that Qantas and BHP have avoided a first strike is credited to pre-emptive action because of the law. - Reuters