Taking the cue from the inquiry conducted by the Productivity Commission on executive pay in Australia, the federal government is floating a draft legislation that empowers company shareholders to expel firm directors that are deemed collecting undue high compensation.

If passed by the Australian Parliament, company shareholders that were able to muster at least 25 percent of members would be able to legally boot out not only erring but also overpaid directors.

The proposed bill also stressed that the same number of shareholders should have at least thumbed down two consecutive remuneration declaration prior to the actual vote of no confidence for the particular company director or directors.

According to the Parliamentary Secretary to the Treasurer David Bradbury, the bill is aimed by the government to considerably encourage the practice of better transparency and accountability by Australian firms.

In a statement released on Monday, Bradbury said that "the central element of these proposals is to ensure executive pay rewards and good performance rather than simply paying those executives as a result of contracts previously entered into."

The government introducing the legislation following the suggestions outlined by the Productivity Commission on its recently-concluded investigation on the compensation practices of corporate Australia.

The government legislation, according to Bradbury, is gunning to provide enough leverage for shareholders to probe and determine executive pays while at the same ensuring that corporate salaries are performance-based.

Also, the proposed bill would prohibit senior executives and directors from sidestepping on their previously agreed salary packages and forced their inhibition on any board procedures that directly impact their compensation benefits.

Bradbury noted that the new laws would discourage the use of undirected proxies to circumvent the provisions of the legislation, which he stressed should be effective measures in combating internal corporate corrupt practices.