* Draft legislation gives pay power to the people
   * Bosses will be banned from voting on own salary
   * Reforms aim to improve transparency in business

SHAREHOLDERS will be able to tell company executives what they think of their salaries under new laws allowing them to vote out managers paid too much.  

Company directors and senior executives will be banned from voting on their own remuneration packages in an effort to improve accountability and transparency.  

Parliamentary Secretary to the Treasurer David Bradbury will today release the draft legislation that from July next year would give shareholders unprecedented powers.

The reforms implement the Government's response to the recommendations made by the Productivity Commission in its inquiry into executive remuneration in Australia.  

"These measures are about giving more power to shareholders as well as improving the transparency, disclosure and accountability of the remuneration process," Mr Bradbury said.


"Executives should be appropriately rewarded for their work and for the value they bring to a company if Australian companies are to remain internationally competitive.

"But directors should also be accountable to shareholders for the level and composition of executive remuneration.

The draft legislation introduces a two-strikes rule, which gives shareholders the opportunity to vote out directors if at least 25 per cent reject the company's remuneration report two years in a row.

"After these two strikes, a resolution supported by a majority (50 per cent) of shareholders can force a spill of the board," Mr Bradbury said.

Shareholders can vote to remove the directors at a subsequent meeting to be held within 90 days of the second annual general meeting.

The exposure draft of the Corporations Amendment (Improving Accountability on Director and Executive Remuneration) Bill 2011 will be open to consultation until January 20, and can be found at www.treasury.Dave.au.

The Government intends to introduce the Bill into Parliament next year.

The Gillard Government will also today release a Treasury discussion paper for consultation on a proposal to "clawback" remuneration paid to executives if it were based on dodgy financial figures.