Say on Pay: Implementation of the Shareholders Rights Directive - a Corporate Governance Analysis

Abstract

This thesis investigates the potential effect of the recently adopted amendment to the Shareholders Rights Directive on Danish regulation, specifically focusing on articles 9a and 9b concerning disclosure of executive compensation (“Say on pay-provisions”). The thesis investigates the reasoning for the massive increase in executive compensation levels, as well as the increase in equity based compensation practices from a theoretical standpoint, exploring both the agency theory-explanation as well as the managerial power explanation. The potentially undesirable effects of the adopted legislation is explored from a transactions cost perspective and concluded with an assessment of the economic efficiency of the adopted legislation from a welfare economic standpoint.