MORGANTOWN, W.Va. — Mylan shareholders had their annual general meeting in Amsterdam on Friday and overwhelmingly approved election of the board of directors, including one additional member. They also approved, via an advisory vote, current executive pay.
In a non-voting discussion item, shareholders supported a proposal by the United Auto Workers Retiree Medical Benefits Trust for Mylan to strengthen its clawback policy for senior executive incentive pay.
The executive compensation vote is called Say on Pay. In its proxy statement, Mylan said, “Although advisory and not binding, the Compensation Committee and the board will take into account the outcome of this vote when considering future compensation arrangements for Mylan’s executive officers.”
The Say on Pay reflected the officers’ 2018 pay.
CEO Heather Bresch’s base pay has been unchanged since 2016: $1.3 million. But her total compensation, including stock awards, incentives and other income, has fluctuated: $13.33 million in 2018; $12.74 million in 2017; $13.78 million in 2016.
President Rajiv Malik is the second-highest earner. His base pay is $1 million. He made $9.5 million in 2018; $8.74 million in 2017; $8.69 million in 2016.
For 2018, former Chief Legal Officer Daniel Gallagher made $5.28 million; Chief Commercial Officer Anthony Mauro made $4.45 million; Chief Financial Officer Kenneth Parks made $4.4 million.
Tallied by shares, the advisory vote was 315.7 million for and 40.6 million against.
Mylan’s current board contains two executive directors, Bresch and Malik, and 10 non-executive directors: chair and former CEO Robert Coury, Robert Cindrich, JoEllen Dillion, Neil Dimick, Melina Higgins, Harry Koman, Mark Parrish, Pauline Mohr, Randall Vanderveen and Sjoerd Vollebregt.
The new, 13th member, is Richard Mark. All board members received more than 300 million votes, tallied by share.
Mohr did not serve the full year and Coury receives a different type of compensation package. The other directors received compensation ranging from $335,039 to $405,039. Coury earned $1.8 million.
Clawback means recouping incentive pay already granted.
Meredith Miller, chief corporate governance officer of the UAW Retiree Medical Benefits Trust, sent out a letter at the end of May shareholders to support the proposal on their proxy cards. The proposal was recommended by the Investors for Opioid Accountability, which includes state treasurers, comptrollers, asset managers, faith-based investors and public and labor pension funds.
She cited Mylan’s ongoing legal issues as a reason for Mylan to enhance its policy.
The proposal sought to have the Board of Directors’ Compensation Committee consider seeking recoupment of senior executive incentive pay if “there has been misconduct resulting in a material violation of law or Mylan policy that causes significant financial or reputational harm to Mylan, and the senior executive committed the misconduct or failed in his or her responsibility to manage or monitor conduct or risks.”
The committee would also disclose the circumstances of any recoupment if required by law or regulation or if the committee determines that disclosure is in the best interests of Mylan and its shareholders.
Currently, Mylan says in its proxy statement, it may recoup certain incentive compensation “resulting from specified misconduct that causes Mylan to materially restate its financial statements.”
Miller said, “In our view, significant financial and reputational harm can be caused by misconduct that does not necessitate a financial restatement, 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. Our proposal gives the committee discretion to decide whether recoupment is appropriate in particular circumstances.”
Mylan commented on the UAW proposal in its 8-K form filed with the SEC.
“Mylan appreciates the UAW’s perspective and welcomed the opportunity to discuss the shareholder proposal with shareholders,” it said. It also solicited shareholder views through the meeting proxy card.
“As a result of this solicitation, a majority of the proxies received indicated support for the shareholder proposal. … The chairman of the Mylan Board confirmed that the Mylan Board will continue to consider the views and perspectives expressed by shareholders on this topic.”