Pension funds push shareholders to shake up Mylan’s board
A group of high-profile pension funds — concerned about the “extraordinary and egregious” pay package awarded to Mylan Chairman Robert Coury last year — is appealing to shareholders of the generic drug company to shake up the board.
In a letter filed this week with the U.S. Securities and Exchange Commission, the funds urged shareholders to vote against the reelection of Mr. Coury and five other longstanding directors at the drugmaker’s June 22 annual meeting.
“Mylan’s board reached new lows in corporate stewardship in 2016 when it agreed to make extraordinary and egregious payments in 2016 and over the next five years” to Mr. Coury, the letter stated.
Mylan disclosed last month that it paid Mr. Coury $97.6 million in 2016, a year in which the company’s stock tumbled 29 percent amid outrage over the soaring price of its EpiPen emergency allergy shot. The pay package included $22.3 million in transition payments related to Mr. Coury’s switch from executive chairman to non-executive chairman last year. He stepped down as CEO in 2012.
Scrutiny over Mylan’s EpiPen pricing led to a proposed $465 million settlement with the U.S. Justice Department for overcharging the Medicaid system for the device. On Wednesday, Sen. Chuck Grassley, R-Iowa, indicated the final settlement could end up costing Mylan a lot more. He said data he received from the U.S. Department of Health and Human Services indicated the government may have overpaid for the auto-injector by as much as $1.27 billion.
“We believe the time has come to hold Mylan’s board accountable
for its costly record of compensation, risk and compliance failures,” the pension funds wrote in their letter, signed by the New York City and New York State pension funds, California State Teachers’ Retirement System and PGGM, a Dutch pension fund.
Together the funds own about 4.3 million shares, or less than 1 percent, of Mylan’s outstanding shares.
The letter noted persistent concerns about the board’s lack of “oversight, independence and accountability,” including “repeatedly ratifying excessive pay.”
Mylan did not respond to emails Wednesday seeking comment.
Wells Fargo analyst David Maris called the pension fund campaign a potential positive for the company.
“If successful, we believe this campaign to unseat the chairman would address some governance concerns we have regarding compensation and performance at Mylan,” Mr. Maris wrote in a comment to clients.
Besides Mr. Coury, the directors targeted by the letter were Wendy Cameron, Robert Cindrich, Neil Dimick, Mark Parrish and Randall Vanderveen. All six are running unopposed.
The pension funds also are asking shareholders to reject the company’s compensation plan for top executives in a non-binding sayon-pay advisory vote.
Although such plans are rarely voted down, it happened at Mylan’s annual shareholders meeting in 2012. At the time, the board’s compensation committee chairman, Rodney Piatt, issued a statement saying the committee would “take this input from our shareholders into consideration.” Mr. Coury was paid $21.3 million as chairman and CEO in 2011.
Mylan is set to hold its annual meeting this month in Amsterdam, the Netherlands, where the drugmaker reincorporated in 2015 to cut its tax bill. The company continues to be run from executive offices in Cecil.