BlueScope chief latest to forgo bonus

His announcement follows that of BHP Billiton head Marius Kloppers, and Rio Tinto's Tom Albanese, who both decided to waive their bonuses. It also turns attention to whether the "two-strikes" policy is bearing fruit in boardrooms. If a company records two consecutive votes against its remuneration report it is required to put a spill resolution to shareholders.

With BlueScope set to record a $1 billion loss for 2011-12 after its restructuring of operations at Port Kembla and Westernport, Mr O'Malley said he thought his pay decision was appropriate. He said he didn't want the company's performance to be "obscured" by comment about his remuneration.

Mr O'Malley said the board had accepted his offer, and BusinessDay understands the board has told institutional investors for several months of the pay decision.

His announcement was made as BlueScope unveiled details of a $1.36 billion joint venture with Japan's Nippon Steel Corporation, which will give it access to the whitegoods manufacturing market across south-east Asia. BlueScope shares leapt by more than 55 per cent on the news, before closing up 34 per cent at 35?.

BlueScope's plummeting share price was the source of investor ire at last year's AGM, with a 39 per cent vote against its remuneration report as the company recorded a "first strike". The contentious 2011 remuneration report awarded board members bonuses of $2.6 million. Mr O'Malley, on an annual salary of $2 million, received a $750,000 bonus.

Michael Robinson, from executive remuneration specialist Guerdon Associates, said the two-strikes policy was having an impact in boardrooms.

"They (the boards) are pushing right back. There's a lot of unhappy executives out there," he said

"They are still giving long-term incentive plans, but there's a lot of pushing back. I think boards in the past 18 months have been very assertive, particularly on base salary and bonuses."

He expected the Australian Council of Superannuation Investors survey on executive pay yet to be released would show that 50 per cent of executives will receive fewer bonuses than last year.

Martin Lawrence, research director at Ownership Matters, said it was difficult to say whether it was two strikes, or that companies had traditionally responded to a strong "no" vote.

Australian Institute of Company Directors general manager of communications and public affairs Steve Burrell said executives who waived pay "are making judgments about the company performance, the business and the economic environment the company is operating in, and obviously the views of the shareholders are taken into account".

"Whether this recognises the power of shareholders and the efficacy of the two-strikes policy is a different matter."

Australian Shareholders Association director Vas Kolesnikoff queried whether Mr O'Malley would have been entitled to a bonus anyway. "If he is, the board should be taking a good hard look at itself."

He said given most companies had warned shareholders not to expect an earnings upside, he believed several executives should forgo bonuses and incentives this year.