Mylan investors favor expanding exec pay clawbacks. Will the company listen?

Mylan has faced investor pushback on its executive pay and governance for years and its 2019 shareholder's meeting was no exception.

Investors called on Mylan to expand its executive pay clawbacks—and now, the question is whether the company will actually take that advice.

Currently, Mylan limits executive pay clawbacks to misconduct that requires the company to restate its financials. But for this year’s annual meeting, the UAW Retiree Medical Benefits Trust proposed a resolution that the company expand clawbacks to other blunders.

In its proposal, UAW said mistakes that don't require new financials can still cause "significant damage." And it "may be appropriate to hold accountable a senior executive who did not commit misconduct but who failed in his or her management or monitoring responsibility," the trust said.

Mylan didn’t include the item in its voting section because the UAW didn’t hold enough shares—a move that in itself prompted criticism from pension fund advisor CtW. But the drugmaker did solicit investor feedback on clawback expansion, and most investors favored it. 

In an SEC filing after the meeting, Mylan said the company "appreciates the UAW’s perspective and welcomed the opportunity to discuss" the proposal. The board will "continue to consider the views and perspectives expressed by shareholders on this topic," the filing said. 

In a Monday note to clients, Wells Fargo analyst David Maris wondered whether the company will implement the policy or whether it’ll discuss the item at its July 31 investor day.

Before the annual meeting, Mylan investors were already punishing the company. Due to governance issues and more, investors sent the drugmaker’s shares down 24% in a decline that one analyst said was about more than just profits and losses.