The Revised Shareholder Rights Directive 2017: Policy Implications for Workers

5 Pages Posted: 29 May 2018

See all articles by Andrew Johnston

Andrew Johnston

Warwick Law School

Paige Morrow

ARTICLE 19; University of Kent - Brussels Campus

Date Written: April 6, 2018


The 2017 revised Shareholder Rights Directive gives shareholders a say on executive pay and requires institutional investors to improve shareholder engagement. The directive is thus designed to provide a counterweight to the increasingly dominant ‘shareholder’ model of corporate governance which has put the interests of firms’ shareholders ahead of other stakeholders, including their workers. Drawing on the experience of the UK, Europe’s leading exponent of the shareholder model whose experience heavily influenced the Commission’s thinking, this brief analyses the workings of the directive, discusses its implications for worker’s rights and suggests how trade unions should respond.

A frequent criticism of institutional investors, such as mutual and pension funds, is their passivity in influencing the companies they invest in despite the power of exit they hold over them. This has been blamed for short-termism, undermining the trust of workers and fueling excessive executive pay. The directive tries to address these problems by increasing transparency and engagement, and requiring investors to show how their portfolios conform to their long-term investment strategies. Although the directive sets no cap on executive pay it provides shareholders with more control over company policies that include pay. The brief critically examines the effectiveness of these policies, arguing that these do not go far enough and may even be unworkable. The advice for trade unions is to continue pushing on issues such as boardroom pay, particularly the notion that it should be set according to the firm’s share price.

Keywords: EU Law; EU Directive; Workers Rights; Workers Participation; Trade Union Role; Wage Policy; EU Countries

Suggested Citation

Johnston, Andrew and Morrow, Paige, The Revised Shareholder Rights Directive 2017: Policy Implications for Workers (April 6, 2018). ETUI Research Paper - Policy Brief 2/2018, Available at SSRN: or

Andrew Johnston (Contact Author)

Warwick Law School ( email )

Gibbet Hill Rd.
Coventry, West Midlands CV4 8UW
United Kingdom

HOME PAGE: http://

Paige Morrow

ARTICLE 19 ( email )

60 Farringdon Road
London, EC1R 1UQ
United Kingdom

HOME PAGE: http://

University of Kent - Brussels Campus ( email )

Espace Rolin, Boulevard Louis Schmidt 2A
Brussels 1040

HOME PAGE: http://

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