By JIM ROSS
The State Journal
CHARLESTON, W.Va. — Some large pension funds say upper management at Mylan NV is overpaying itself, so they are seeking to unseat six members of the company’s board of directors.
Mylan CEO Heather Bresch was listed as an executive who was overpaid last year, although the pension funds do not seek her removal.
The letter was filed with the Securities and Exchange Commission May 30. It was signed by the New York City Pension Fund; the California State Teachers’ Retirement System; PGGM, the second-largest pension fund in the Netherlands; and Thomas P. DiNapoli, the New York state comptroller.
Two directors – Bresch and company President Rajiv Malik – are Mylan executives. The other nine are non-executive directors. The pension funds want six of the nine removed, although an alternative slate was not included in the letter.
“As long-term Mylan shareowners, collectively holding about 4.3 million shares valued at $170 million, we believe the time has come to hold Mylan’s Board accountable for its costly record of compensation, risk and compliance failures,” the letter begins.
The letter says Mylan’s board “reached new lows in corporate stewardship” last year when it agreed to make “extraordinary and egregious payments” then and over the next five years to Chairman and former CEO Robert Coury. Coury received more than $160 million last year as part of his third new compensation arrangement since he retired as CEO on Jan. 1, 2012 while still remaining chairman through 2016, according to the letter.
Coury received his compensation during a year in which Mylan had to deal with the EpiPen controversy, the letter says.
“Mylan has since suffered significant reputational and financial harm; been the subject of multiple federal and state investigations, as well as civil litigation; and paid $465 million to settle U.S. Justice Department allegations that it overcharged the government over five years for its EpiPen,” the letter says.
“This controversy also caused investors – including several of us – to urge the Board to strengthen its oversight of Mylan’s drug-pricing strategy and risks, requests that have been largely ignored.
“These circumstances reinforce investors’ longstanding concerns with the Board’s oversight, independence and accountability.”
In a bad year financially for Mylan sharelholders, Bresch and “felt no comparable financial pain,” the letter says. Both received annual bonuses that exceeded their base salaries, although they were lower than they were in 2016.
The letter noted that two years ago the Mylan board of directors rejected an offer to sell the company for $82 a share, which is double what shares are worth now.
Mylan issued its response May 31.
“Mylan’s Board has overseen the development of a differentiated, clear and consistent long-term strategy that has created sustained long-term value for shareholders, while also serving the best interests of all stakeholders,” the statement said.
“The Mylan Board has designed executive compensation programs to drive continued execution against our strategy to create a leading, robust, sustainable company, while aligning compensation with company performance and long-term shareholder value creation and other stakeholder interests.
“With regard to Mr. Coury’s compensation specifically, almost all of it was granted and earned over his 15-year tenure as CEO and then Executive Chairman or directly relates to his retirement as an executive in 2016 and transition to Non-Executive Chairman. This compensation was previously disclosed in Mylan’s prior proxy statements and other filings, including its Say On Pay proposals, which shareholders have consistently supported since 2013. During Mr. Coury’s long tenure, Mylan has delivered strong financial performance and shareholder growth, and his new compensation structure continues to be aligned with the Company’s stock performance while providing shareholders with the benefit of his continued leadership and guidance in setting Mylan’s strategic direction.”
See more from The State Journal