Background: Reece is the Aussie plumbing and bathroom supplies giant with over 900 branches across Australia, New Zealand and the US. Over the past decade its shares have skyrocketed more than 500%… but more recently things have turned. Its CEO warned that EBIT fell 20% last financial year and investors were far from impressed.

What happened: Shareholders have now delivered a protest vote on Reece executive pay. 44.4% voted against the remuneration report after Reece’s share price fell 30% over the past six months. And this isn't the first time - it's actually a second strike, which automatically triggered a board spill vote.

What else: The big headache? Reece’s $1.9 billion acquisition of US-based plumbing and HVAC distributor Morsco, which has been struggling in a soft US housing market and rising competition. Shareholders want execs to share the pain of the downturn, and the second strike is a serious corporate governance warning.

What's the key learning?

💡When a company stumbles, the quickest place shareholders look is the exec pay packet. Investors expect leadership to share the pain when performance weakens.

💡A second strike is the corporate version of hitting the big red alarm button. If 25% of shareholders vote down pay two years in a row, it triggers a board spill vote where the entire board (except the CEO) can be removed.

💡Even if the board survives, a second strike sends a veeery loud message. It signals deep shareholder frustration with both results and pay, and puts pressure on the board to course-correct fast.