Say-on-Pay Failures more Common at Midsize Companies

By Cydney Posner

According to this article in the WSJ, when it came to say on pay this year, shareholders were toughest on midsize companies. According to a review of nearly 2,800 annual meetings by Broadridge Financial Solutions Inc. and PwC, 5% of midsize companies (with market values between $2 billion and $10 billion) failed to get majority support for their say-on-pay proposals at annual meetings this year, representing more than twice the percentage failures for this group last proxy season. By contrast, approval ratings are higher at large-cap companies (with market values over $10 billion), which reported just 0.3% say-on-pay vote failures this year.

The reason for the increased failures at midsize companies is somewhat puzzling since "midcap stocks are actually broadly outperforming large caps." The article speculates that the reason may be that, since large-cap companies were more the focus of shareholders in past years, these companies may have learned to conduct better shareholder outreach. Alternatively, it could be that institutional investors are now paying "closer attention to midsize companies."

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