Mylan Shareholders Reject Drugmaker's Executive Pay PackageBy , , and
Vote marks second time since 2011 holders voted against pay
Shareholders approved all directors nominated to Mylan board
A majority of Mylan NV investors voted against the drugmaker’s 2016 compensation program following a $97.6 million reported package for Chairman Robert Coury and controversy over prices for the company’s EpiPen allergy treatment.
The vote marks the second time that a majority of investors have rejected the company’s pay program since Mylan first held advisory votes on executive compensation in 2011. Shareholders also voted to approve all board nominees on Thursday at Mylan’s annual meeting in Amsterdam.
The moves follow an effort by a group of investors to unseat some Mylan directors, and an unusually public back-and-forth between the board and the largest U.S. proxy adviser. But analysts say the compensation vote isn’t binding and the drugmaker will likely make no changes.
“The compensation committee and board of directors will carefully consider these results, as well as future shareholder input, as we continue our investor outreach and in designing our compensation programs going forward,” Coury said.
The discord comes after a public-relations firestorm over the $600 price tag for Mylan’s life-saving allergy drug EpiPen. Mylan didn’t disclose any additional detail on the results of the votes but said it will provide more information in coming days.
“By failing to disclose the voting results during today’s shareowner meeting, Mylan’s board telegraphed that directors faced strong opposition.” said Scott Stringer, New York City comptroller, who co-wrote a letter with Dutch pension manager PGGM and the California State Teachers’ Retirement System calling for the ouster of six Mylan directors.
While the pay vote is a rebuke of Mylan and its directors, its effect may be limited. Since votes on compensation are merely advisory, Mylan is unlikely to take action, according to Ronny Gal, an analyst with Sanford C. Bernstein & Co.
“There’s no way for this to be enforced,” Gal said in an interview. “In the past when facing similar situations, Mylan’s position was that they need to educate shareholders more on the drivers of why they compensate management the way they do. I would be surprised if they pursue a different path here.”
Mylan shares advanced 2.3 percent to $39.14 at 12:37 p.m. in New York, but remain well below the peak of more than $76 seen in April 2015.
In May, Mylan disclosed the $97.6 million pay package for Coury consisting of new money and payouts of previous awards and benefits, triggered by his transition to nonexecutive chairman. The compensation raised eyebrows among investors and proxy-advisory firm Institutional Shareholder Services Inc., which took issue with the company’s governance on a broad scale and said the board had made “egregious” decisions on pay. Both ISS and rival Glass Lewis & Co. recommended investors vote against the compensation program.
Mylan’s executive-pay plan has drawn at least 30 percent shareholder opposition annually since 2010 -- the worst record by far among large U.S. drugmakers. Such sustained opposition is unusual, as boards often tweak compensation if enough investors dissent. Last year’s dissidents included BlackRock Inc. and the $960 billion Norwegian sovereign wealth fund.
Since taking over as Mylan’s chief executive officer in 2012, Heather Bresch has taken home $92 million, including salary, bonuses, perks, and the value of vested stock awards and stock options exercised. That’s almost twice as much as Pfizer Inc. CEO Ian Read and about what Johnson & Johnson CEO Alex Gorsky received over the same period. Both companies have more than five times Mylan’s revenue and ten times its market value.
Coury took home $210 million over the same period while serving as executive chairman, according to data compiled by Bloomberg. He stands to gain more than $50 million in stock and cash if he remains on the job until 2021, not counting almost $90 million in benefit awards and deferred separation payments that either vested or paid out last year. Neither Pfizer’s Read nor Johnson & Johnson’s Gorsky receive additional pay for being chairman of their respective boards.
— With assistance by Doni Bloomfield