DEF 14A 1 d157810ddef14a.htm DEF 14A DEF 14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.    )

Filed by the Registrant x                              Filed by a Party other than the Registrant  ¨

Check the appropriate box:

 

¨ Preliminary Proxy Statement
¨ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
x Definitive Proxy Statement
¨ Definitive Additional Materials
¨ Soliciting Material Pursuant to Rule 14a-12

MYLAN N.V.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

 

x No fee required.
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¨ Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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Robert J. Coury  

 

Executive Chairman  

  LOGO     LOGO    

 

Heather Bresch

 

Chief Executive Officer

 

 

To Our Shareholders, Employees, Customers, Patients and Friends:

 

2015 represented yet another remarkable year for Mylan on many fronts, not the least of which was our continued execution on our long-standing strategy. We made excellent progress against each of the key pillars of this strategy by further strengthening Mylan’s exceptional and differentiated global operating platform; continuing to diversify the company’s product portfolio, which is already one of the industry’s broadest; and further building out our powerful commercial infrastructure. We also continued to position the company for long-term growth through significant investment in our organic growth drivers, which we complemented by executing on value-creating, strategic acquisitions and other business development opportunities.

In addition to our continued focus on building Mylan’s business for the future, we did not take our eye off the ball with regard to the day-to-day core business and short-term execution, as the company’s record financial results for 2015 clearly demonstrate.

In 2015, we delivered total revenues of nearly $9.4 billion and adjusted diluted earnings per share (“adjusted diluted EPS”) of $4.30, an increase of 22% and 21%, respectively, compared to our very strong performance in 2014 (U.S. GAAP diluted earnings per share were $1.70, a decrease of 27%). All of the company’s regions and businesses contributed to this strong growth, and we achieved it despite strong foreign-currency headwinds. We also had a record year with respect to adjusted EBITDA, which increased 27% compared to 2014, and adjusted free cash flow, which more than doubled over the prior year (U.S. GAAP net earnings attributable to Mylan N.V. ordinary shareholders decreased 9% and U.S. GAAP net cash provided by operating activities increased 98%).

Our consistent execution and strong performance in 2015 contributed to a long-term compound annual growth (“CAGR”) in adjusted diluted EPS of 27% since 2008.

 

 

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Proven Track Record of Success

 

 

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Adjusted diluted EPS is a non-GAAP financial measure. See Appendix A for reconciliation of adjusted diluted EPS to the most directly comparable U.S. GAAP measure.

*Midpoint of 2016 guidance range

**Stated 2018 target; this is a long-term target only and does not represent company guidance.

U.S. GAAP diluted earnings per share in 2008 were $(1.10), 2009 were $0.30, 2010 were $0.68, 2011 were $1.22, 2012 were $1.52, 2013 were $1.58, 2014 were $2.34, and 2015 were $1.70. The midpoint of forecasted U.S. GAAP diluted earnings per share for 2016 is $2.41.

 

 

We also continued to advance a number of our strategic growth drivers during 2015.

EpiPen® Auto-Injector remains an important and growing product, generating more than $1 billion in annual sales since 2014. We continued to advocate for legislation to increase access to “stock,” or undesignated, epinephrine auto-injectors in schools and other public places to ensure availability of this life-saving treatment for severe allergic reactions, or anaphylaxis. In addition, in 2015, Mylan continued a multi-year strategic alliance agreement with Walt Disney Parks and Resorts to help increase awareness of anaphylaxis. Maps in Disney’s domestic theme parks and on its cruise ships, as well as signage in the parks, highlight locations with EpiPen® and EpiPen Jr® Auto-Injectors to help ensure visitor access to these products.

Through Mylan’s new “On Location” program, which we will begin piloting next year with EpiPen® Auto-Injector, we hope to provide enhanced access to this product in more public places around the U.S.

We also remain committed to continuing to invest in education and building awareness about the need for access to these life-saving treatments for anaphylaxis.

Throughout the year, we also worked with a variety of stakeholders in our continued fight against HIV/AIDS and other infectious diseases. We announced, for example, that we expect to be the first to launch TLE400, an antiretroviral medication that we developed in partnership with the Clinton Health Access Initiative, for $99 per patient, per year. Today more than 50% of patients in the developing world receiving treatment for HIV/AIDS rely on a Mylan product.

 

 

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In addition, we expanded our Hepatitis C licensing agreement with Gilead Sciences, a valued partner since 2006. As Gilead’s exclusive branded-medicine distribution partner in India, we launched its Solvaldi® product there in 2015, as well as introducing MyHep, the generic form of Solvaldi, in India and other emerging markets. Early this year, we announced the launch of MyHep LVIR, the generic form of Harvoni®, in India.

In our respiratory program, we filed our Abbreviated New Drug Application with the U.S. Food and Drug Administration for generic Advair Diskus® at the end of 2015. We continue to look forward to being the first company to bring generic Advair to the U.S. market, in 2017.

We also announced a partnership with Theravance Biopharma with the goal of developing and commercializing Revefenacin, a once-daily nebulized product used to treat chronic obstructive pulmonary disease, or COPD, and other respiratory diseases. Through our partnership with Prosonix, we continued work on our generic Flovent® program for the U.S. The product’s counterpart in Europe, Generic Flixotide®, is on track to be approved this year. In addition, we launched Sirdupla, the generic version of Seretide® Evohaler®, in the U.K.

In partnership with Biocon, we progressed our biologics and insulin-analogs programs and expect this year to submit in the U.S. and Europe three biosimilar applications – Pegfilgrastim, Trastuzumab and Adalimumab – and an interchangeable glargine application. Further, we completed and qualified a state-of-the-art glargine production facility in Malaysia.

In early 2016 we also announced an exclusive global agreement with Momenta that expands our portfolio of biologics with up to six additional products and broadens the scope and scale of our capability. The combination of this program and our Biocon partnership positions Mylan to become a worldwide leader in the biologics space.

As for inorganic growth opportunities, in February 2015, we completed our acquisition of Abbott’s non-U.S. developed markets specialty and branded generics business. The transaction further diversified the business and strengthened the company’s commercial platform outside the U.S. It also significantly enhanced Mylan’s financial flexibility, optimized the company’s global tax structure and increased our balance sheet capacity. The integration of the two organizations has been going well, and the business’s performance has exceeded our own expectations: We reversed its decline and grew it 2% year over year in 2015 on a constant currency basis, demonstrating again our ability to take an underappreciated asset and drive expansion within our platform.

In November 2015, we acquired certain female healthcare businesses from Famy Care, a valued partner since 2008. The transaction brought us a broad portfolio of products (primarily oral contraceptives), strong technical capabilities and dedicated hormone manufacturing. By combining these assets with our global commercial footprint and supply chain infrastructure, we look forward to creating a leading women’s healthcare franchise and providing enhanced access to these products around the world.

We also laid out during the year our vision for the industry’s future and the importance of building additional scale across geographies, products and channels so that Mylan can meet the evolving needs of our consolidating customer base.

In early 2016, we took the next step in executing on our vision by announcing that we would acquire Meda, a leading international specialty pharmaceutical company which has served as our marketing and distribution partner for EpiPen® Auto-Injector in Europe since 2011.

 

 

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The combination will create a global pharmaceutical leader with 2015 combined revenues of nearly $12 billion,1 a diversified portfolio of more than 2,000 products, and critical mass across all commercial channels, including a $1 billion over-the-counter (OTC) business. Geographically, we gain a more balanced and expanded global footprint with an even stronger presence across Europe; a leading U.S. specialty business; and an expanded presence in emerging markets, including several new and attractive ones such as China, Southeast Asia, Russia, the Middle East and Mexico. We also will become a leader in the global respiratory/allergy market and achieve scale in many other therapeutic areas, including dermatology and pain, offering us even greater opportunities for growth in these therapeutic franchises. Completion of the Meda transaction is subject to a public offer to the shareholders of Meda to acquire all of Meda’s outstanding shares and other customary closing conditions. We expect to complete the transaction by the end of the third quarter in 2016.

While 2015 was distinguished by our many accomplishments, it was not without its challenges. We believe that the year represented an inflection point for Mylan, as well as for the entire pharmaceutical industry. We have long held that you cannot build a great company simply by driving quarter to quarter. This holds particularly true today, as our ever-dynamic industry continues to transform even more rapidly and dramatically, and is exposing companies not driven by fundamentals. That is why we believe it is critical to continue to have in place a Board of Directors that is capable of, and committed to, setting a compelling long-term strategic direction for the Company, and a strong management team that can deliver against this vision, while also continuing to effectively lead the business through the challenges and opportunities that present themselves daily in our industry.

We applaud the increasing number of leaders and shareholders that have joined the conversation about the need for companies to have a long-term mindset and question short-term actions that do not deliver against this longer-term vision. That said, these voices remain outnumbered and outweighed by the continued focus on, and rewards for, hitting quarterly earnings estimates, delivering financially (vs. strategically)-driven transactions, and taking other short-term actions that briefly enhance the bottom line at the expense of sustainable longer-term growth. We are anxious to see more leaders prioritize, incentivize, and reward the building of great companies and long-term shareholder value over today’s continued myopia on short term actions that may maximize real-time trading value but sacrifice sustainability.

For Mylan, building a great company has always meant focusing on our mission of setting new standards in healthcare and providing the world’s 7 billion people access to high quality medicine. To do so, we innovate to satisfy unmet needs; make reliability and service excellence a habit; do what’s right, not what’s easy; and impact the future through passionate global leadership.

Achieving our mission within our fast-changing industry will require us to continue to think differently in the years ahead. We believe that we have assembled an unmatched portfolio of assets across generics, branded prescription medicines, OTC products and innovative healthcare solutions. Looking forward, we anticipate leveraging these assets in exciting and unconventional ways to bring a differentiated value proposition to customers, shareholders and other stakeholders and change the conversation with the consumer as the Mylan brand increasingly intersects with the patient journey.

 

 

1 Combined company figures represent an aggregation of Mylan figures derived from financial information prepared in accordance with U.S. GAAP and Meda figures derived from financial information prepared in accordance with International Financial Reporting Standards as adopted by the European Union and do not reflect pro forma adjustments (including no elimination of transactions between Mylan and Meda).

 

 

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Achievement of our goals relies on our dedicated global workforce, which now numbers nearly 35,000 talented individuals. We consider them to be Mylan’s most important asset. On behalf of Mylan’s Board of Directors and senior leadership team, we would like to extend our sincere appreciation to each and every one of them for their exceptional performance to date. In order to continue to execute against our mission, strategy and financial objectives, our employees must be incentivized to deliver against both our short-term goals and priorities, as well as our long-term vision and mission. To this end, we focused throughout 2015 on driving even greater focus, accountability and alignment across our leadership and entire workforce.

 

  

 

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Our ability to do good while doing well has been a Mylan hallmark since its founding more than 50 years ago. Our company is defined by the bedrock belief that every person in this world matters and that access to better health is a right, not a privilege. By remaining focused on our mission and strategy, not only do we believe we can deliver Better Health for a Better World, we are confident that we will continue to deliver exceptional financial performance for Mylan’s shareholders.

 

We thank you for your continued support of Mylan.

  
  
  

Sincerely,

 

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Robert J. Coury

Executive Chairman

  

Heather Bresch

Chief Executive Officer

 

 

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Mylan Proxy Statement

 

2016 Annual General Meeting of Shareholders

 

 
   

 

June 24, 2016                

 

 

 


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LOGO

 

 

Dear Mylan N.V. Shareholders:

 

You are cordially invited to attend the annual general meeting of shareholders of Mylan N.V. (“Mylan” or the “Company”), which will be held on Friday, June 24, 2016, at 2:00 p.m. Central European Time (CET), Hotel Okura Amsterdam, Ferdinand Bolstraat 333, 1072 LH Amsterdam, the Netherlands.

During the annual general meeting, shareholders will be asked to vote on the appointment of directors; the adoption of the Dutch annual accounts for fiscal year 2015; the ratification of the selection of Deloitte & Touche LLP as Mylan’s independent registered public accounting firm for fiscal year 2016; the instruction to Deloitte Accountants B.V. for the audit of Mylan’s Dutch annual accounts for fiscal year 2016; the approval, on an advisory basis, of the compensation of the Named Executive Officers of the Company; re-approval of the performance goals set forth in the Company’s 2003 Long Term Incentive Plan; and authorization of Mylan N.V.’s Board of Directors to acquire ordinary shares and preferred shares in the capital of Mylan (each a “Proposal” and together the “Proposals”).

The enclosed Notice of Annual General Meeting of Shareholders and Proxy Statement contain details regarding each of the Proposals, the annual general meeting and other matters. We encourage you to review these materials carefully.

Thank you for your continued support of Mylan. We look forward to seeing you on June 24th.

 

 

Very truly yours,

 

LOGO   LOGO

Robert J. Coury

Executive Chairman

Mylan N.V.

 

Heather Bresch

Chief Executive Officer

Mylan N.V.

The accompanying proxy statement is dated May 25, 2016 and is first being mailed to the shareholders of Mylan on or about May 25, 2016.

 

 


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Mylan N.V.

Building 4, Trident Place

Mosquito Way, Hatfield,

Hertfordshire, AL10 9UL England

+44 (0) 1707 853 000

   LOGO

NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS

To Be Held On June 24, 2016

On behalf of the Mylan N.V. Board of Directors (the “Mylan Board”), we are pleased to convene the annual general meeting of shareholders of Mylan N.V. (“Mylan” or the “Company”), which will be held at Hotel Okura Amsterdam, Ferdinand Bolstraat 333, 1072 LH Amsterdam, the Netherlands on June 24, 2016 at 2:00 p.m. Central European Time (CET), with the following agenda:

 

    Opening of the annual general meeting

 

    Appointment of directors (voting items)

 

    Explanation of remuneration policy for the Mylan Board (discussion item)

 

    Mylan Board report for fiscal year 2015 (discussion item)

 

    Adoption of the Dutch annual accounts for fiscal year 2015 (voting item)

 

    Ratification of the selection of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for fiscal year 2016 (voting item)

 

    Instruction to Deloitte Accountants B.V. for the audit of the Company’s Dutch annual accounts for fiscal year 2016 (voting item)

 

    Approval, on an advisory basis, of the compensation of the Named Executive Officers of the Company (voting item)

 

    Re-approval of the performance goals set forth in the Company’s 2003 Long-Term Incentive Plan (voting item)

 

    Authorization of the Mylan Board to acquire ordinary shares and preferred shares in the capital of the Company (voting item)

 

    Questions

 

    Closing of the annual general meeting

 

 


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No business will be voted on at the annual general meeting except such items as stated in the above-mentioned agenda. Please refer to the accompanying proxy statement for further information with respect to the items as stated in the above-mentioned agenda.

The annual general meeting will be held on June 24, 2016, and May 27, 2016 is the record date (registratiedatum) (the “Record Date”). The Mylan Board has determined that Mylan’s shareholders’ register (the “Register”) is the relevant register for determination as of the Record Date of the holders of Mylan shares and others with meeting rights who are entitled to attend and, if relevant, vote at the Mylan annual general meeting. The Mylan Board has chosen to apply the Record Date to all Mylan shares, including preferred shares. Those who are holders of Mylan shares or who otherwise have such meeting rights with respect to Mylan shares on the Record Date and who are registered as such in the Register may attend the annual general meeting of shareholders and, if relevant, vote at such meeting in person, or authorize a third party to attend and, if relevant, vote at the meeting on their behalf through the use of a proxy card.

Holders of Mylan ordinary shares and others with meeting rights with respect to Mylan ordinary shares who are not registered in the Register may request, if eligible for registration, to be registered in the Register not later than the Record Date by means of a request sent to Mylan either in writing (such notice to be sent to Mylan’s office address as set out above to the attention of Mylan’s Corporate Secretary) or by sending an e-mail to corporatesecretary@mylan.com.

Unless the context otherwise requires, references to (a) “Mylan ordinary shareholders” refer to both (i) shareholders who on the Record Date are registered in the Register as holders of Mylan ordinary shares and (ii) others with meeting rights under Dutch law with respect to Mylan ordinary shares, who on the Record Date are registered as such in the Register, (b) “Mylan preferred shareholders” refer to both (i) shareholders who on the Record Date are registered in the Register as holders of Mylan preferred shares and (ii) others with meeting rights under Dutch law with respect to Mylan preferred shares who, on the Record Date, are registered as such in the Register, and (c) “Mylan shareholders” refer to Mylan ordinary shareholders and Mylan preferred shareholders. As of May 16, 2016, no Mylan preferred shares were outstanding. The invitation to attend and vote at the annual general meeting is being extended to such persons and also to the beneficial owners of Mylan ordinary shares held through a broker, bank, trust company or other nominee.

Beneficial owners of Mylan ordinary shares that are not traded through the Tel Aviv Stock Exchange (“TASE”) and held through a broker, bank, trust company or other nominee may not vote the underlying ordinary shares at the Mylan annual general meeting of shareholders unless they first obtain (where appropriate, through the relevant broker, bank, trust company or other nominee) a signed proxy card from the relevant shareholder who is registered in the Register as the holder on the Record Date of the underlying ordinary shares. In addition, beneficial owners of Mylan ordinary shares must provide proof of ownership, such as a recent account statement or letter from a brokerage firm, bank nominee, or other institution proving ownership on the Record Date.

Beneficial owners of Mylan ordinary shares that are traded through the TASE may not vote the underlying ordinary shares at the Mylan annual general meeting of shareholders unless they first obtain an ownership certificate from the Tel Aviv Stock Exchange Clearing House Ltd. (the “TASE Clearing House”) member through which the underlying ordinary shares are registered (which you can obtain from your TASE broker) indicating the beneficial ownership of those ordinary shares on the Record Date.

Mylan shareholders and holders of a proxy card to vote Mylan shares who wish to attend and, if relevant, vote in person at the annual general meeting of shareholders must notify Mylan of their plan to attend the meeting no later than 5:00 p.m. Central European Time (CET) on June 23, 2016 (the “Cut-Off Time”), in writing (such notice to be sent to Mylan’s office address set out above to the attention of Mylan’s Corporate Secretary). In addition, proper identification, such as a driver’s license or passport, must be presented at the meeting.

Proxy cards to vote ordinary shares and preferred shares, in person or otherwise, must be completed and received by Mylan no later than the Cut-Off Time.

 

 


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For more information, see “The Annual General Meeting” beginning on page 6 of the accompanying proxy statement.

If you do not expect to attend the annual general meeting in person, you may vote your ordinary shares after the Record Date but no later than the Cut-Off Time by (1) accessing the following Internet website: https://www.proxyvotenow.com/myl, or (2) calling the following toll-free number: 1-866-361-3801, or (3) marking, signing, dating, and returning a proxy card for all of the shares you may vote (for which purpose you may use the postage-paid envelope provided), so that your shares may be represented and voted at the annual general meeting. If you beneficially own Mylan ordinary shares that are traded through the TASE, you may after the Record Date but no later than the Cut-Off Time sign and date, by mail or e-mail, a proxy card in the form filed by us on MAGNA, the distribution site of the Israeli Securities Authority, at www.magna.isa.gov.il, on May 26, 2016. In each case, if your shares are held through and/or in the name of a broker, bank, trust company, or other nominee, please follow the instructions on the voting instruction card furnished by such broker, bank, trust company, or other nominee, or, if your ordinary shares are traded through the TASE, on the proxy card in the form filed by us on MAGNA.

Please note that if you hold shares in different accounts, it is important that you vote the shares represented by each account.

The Mylan Board unanimously recommends that Mylan shareholders vote “FOR” the appointment of each director; “FOR” the adoption of the Dutch annual accounts for fiscal year 2015; “FOR” the ratification of the selection of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for fiscal year 2016; “FOR” the instruction to Deloitte Accountants B.V. for the audit of the Company’s Dutch annual accounts for fiscal year 2016; “FOR” the approval, on an advisory basis, of the compensation of the Named Executive Officers of the Company; “FOR” the re-approval of the performance goals set forth in the Company’s 2003 Long Term Incentive Plan; and “FOR” the authorization of the Mylan Board to acquire ordinary shares and preferred shares in the capital of the Company.

Please note that this Notice of Annual General Meeting does not purport to address all of the information relevant to the meeting or the voting items. The Mylan Board therefore encourages you to read the accompanying proxy statement carefully and in its entirety. If you have any questions concerning the voting items, would like additional copies or need help voting your Mylan shares, please contact Mylan’s proxy solicitor:

Innisfree M&A Incorporated

501 Madison Avenue

New York, NY 10022

+1 (877) 750-9499 (toll free)

+1 (212) 750-5833 (banks and brokers)

 

By Order and on behalf of the Mylan N.V. Board,
LOGO

Joseph F. Haggerty

Corporate Secretary

Mylan N.V.

Important notice regarding the availability of proxy materials for the shareholder meeting to be held on June 24, 2016:

The 2016 Proxy Statement, the 2015 Annual Report on Form 10-K and the amendment thereto, the Mylan Board report for fiscal year 2015 and the Dutch annual accounts for fiscal year 2015 are available at mylan.com/investors.

 

 


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Proxy Statement

 

 

This proxy statement (the “Proxy Statement”) is dated May 25, 2016 and is being furnished (together with the enclosed proxy card) in connection with the solicitation of proxies at the direction of the Board of Directors (the “Mylan Board”) of Mylan N.V. (“Mylan” or the “Company”) for use at the annual general meeting of shareholders of Mylan to be held on June 24, 2016 in connection with the appointment of directors; the adoption of the Dutch annual accounts for fiscal year 2015; ratification of the selection of Deloitte & Touche LLP (“Deloitte”) as the Company’s independent registered public accounting firm for fiscal year 2016; instruction to Deloitte Accountants B.V. for the audit of the Company’s Dutch annual accounts for fiscal year 2016; approval, on an advisory basis, of the compensation of the Named Executive Officers of the Company; re-approval of the performance goals set forth in the Company’s 2003 Long Term Incentive Plan; and authorization of the Mylan Board to acquire ordinary shares and preferred shares in the capital of the Company (each a “Proposal” and together the “Proposals”).

 

 

Forward-Looking Statements

 

 

This Proxy Statement and Shareholder Letter contain “forward-looking statements.” These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may include, without limitation, statements about the proposed acquisition of Meda AB (publ.) (“Meda”) by Mylan (the “Meda Transaction”), Mylan’s related public offer to the shareholders of Meda to acquire all of the outstanding shares of Meda (the “Offer”), Mylan’s acquisition (the “EPD Transaction”) of Mylan Inc. and Abbott Laboratories’ (“Abbott”) non-U.S. developed markets specialty and branded generics business (the “EPD Business”), the benefits and synergies of the EPD Transaction and the Meda Transaction, future opportunities for Mylan, Meda, or the combined company and products, and any other statements regarding Mylan’s, Meda’s, or the combined company’s future operations, anticipated business levels, future earnings, planned activities, anticipated growth, market opportunities, strategies, competition, and other expectations and targets for future periods. These may often be identified by the use of words such as “will,” “may,” “could,” “should,” “would,” “project,” “believe,” “anticipate,” “expect,” “plan,” “estimate,” “forecast,” “potential,” “intend,” “continue,” “target” and variations of these words or comparable words. Because forward-looking statements inherently involve risks and uncertainties, actual future results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: uncertainties related to the Meda Transaction, including as to the timing of the Meda Transaction, uncertainties as to whether Mylan will be able to complete the Meda Transaction, the possibility that competing offers will be made, the possibility that certain conditions to the completion of the Offer will not be satisfied, and the possibility that Mylan will be unable to obtain regulatory approvals for the Meda Transaction or be required, as a condition to obtaining regulatory approvals, to accept conditions that could reduce the anticipated benefits of the Meda Transaction; the ability to meet expectations regarding the accounting and tax treatments of the EPD Transaction and the Meda Transaction; changes in relevant tax and other laws, including but not limited to changes in the U.S. tax code and healthcare and pharmaceutical laws and regulations in the U.S. and abroad; the integration of the EPD Business and Meda being more difficult, time-consuming, or costly than expected; operating costs, customer loss, and business disruption (including, without limitation, difficulties in maintaining relationships with employees, customers, clients, or suppliers) being greater than expected following the EPD Transaction and the Meda Transaction; the retention of certain key employees of the EPD Business and Meda being difficult; the possibility that Mylan may be unable to achieve expected synergies and operating efficiencies in connection with the EPD Transaction and the Meda Transaction within the expected time-frames or at all and to successfully integrate the EPD Business and Meda; expected or targeted future financial and operating performance and results; the capacity to bring new products to market, including but not limited to where Mylan uses its business judgment and decides to manufacture, market, and/or sell products, directly or through third parties, notwithstanding the fact that allegations of patent infringement(s) have not been finally resolved by the courts (i.e., an “at-risk launch”); any regulatory, legal, or other impediments to Mylan’s ability to bring new products to market; success of clinical trials and Mylan’s ability to execute on new product opportunities; any changes in or difficulties with our inventory of, and our ability to manufacture and distribute, the EpiPen® Auto-Injector to meet anticipated demand; the scope, timing, and outcome of any ongoing legal proceedings and the impact of any such proceedings on financial condition, results of operations, and/or cash flows; the ability to protect intellectual property and preserve

 

 


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intellectual property rights; the effect of any changes in customer and supplier relationships and customer purchasing patterns; the ability to attract and retain key personnel; changes in third-party relationships; the impact of competition; changes in the economic and financial conditions of the businesses of Mylan, Meda, or the combined company; the inherent challenges, risks, and costs in identifying, acquiring, and integrating complementary or strategic acquisitions of other companies, products, or assets and in achieving anticipated synergies; uncertainties and matters beyond the control of management; and inherent uncertainties involved in the estimates and judgments used in the preparation of financial statements, and the providing of estimates of financial measures, in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and related standards or on an adjusted basis. For more detailed information on the risks and uncertainties associated with Mylan’s business activities, see the risks described in Mylan N.V.’s Annual Report on Form 10-K for the year ended December 31, 2015, as amended, Mylan N.V.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, and our other filings with the SEC. These risks and uncertainties also include those risks and uncertainties that are discussed in the offer document that has been filed with the Swedish Financial Supervisory Authority (“SFSA”) and will be published by Mylan upon approval by the SFSA (the “Offer Document”), the Registration Statement on Form S-4 filed with the SEC on April 11, 2016 (as amended from time to time, the “Registration Statement”) and the EU Prospectus that has been filed with the Netherlands Authority for the Financial Markets (“AFM”) and will be published by Mylan upon approval by the AFM (the “EU Prospectus”). You can access Mylan’s filings with the SEC through the SEC website at www.sec.gov, and Mylan strongly encourages you to do so. Mylan undertakes no obligation to update any statements herein for revisions or changes after the filing date of this Proxy Statement.

 

 

Additional Information

 

 

In connection with the Offer, the Offer Document has been filed with the SFSA and will be published by Mylan upon approval by the SFSA. In addition, Mylan has filed certain materials with the SEC, including, among other materials, the Registration Statement. The EU Prospectus has been filed with the AFM and will be published by Mylan upon approval by the AFM. This Proxy Statement and Shareholder Letter are not intended to be, and are not, a substitute for such documents or for any other document that Mylan may file with the SFSA, the SEC, the AFM or any other competent EU authority in connection with the Offer. INVESTORS AND SECURITYHOLDERS OF MEDA ARE URGED TO READ ANY DOCUMENTS FILED WITH THE SFSA, THE SEC AND THE AFM OR ANY OTHER COMPETENT EU AUTHORITY CAREFULLY AND IN THEIR ENTIRETY BEFORE MAKING AN INVESTMENT DECISION BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT MYLAN, MEDA AND THE OFFER. Such documents are or upon publication will be available free of charge through the website maintained by the SEC at www.sec.gov, on Mylan’s website at medatransaction.mylan.com or, to the extent filed with the AFM, through the website maintained by the AFM at www.afm.nl, or by directing a request to Mylan at +1 724-514-1813 or investor.relations@mylan.com. Any materials filed by Mylan with the SFSA, the SEC, the AFM or any other competent EU authority that are required to be mailed to Meda shareholders will also be mailed to such shareholders.

 

 

Reconciliation of Non-GAAP Financial Measures

 

 

This Proxy Statement and Shareholder Letter include the presentation and discussion of certain financial information that differs from what is reported under U.S. GAAP. These non-GAAP financial measures, including, but not limited to, adjusted diluted earnings per share, adjusted EBITDA, adjusted free cash flow, total adjusted revenues, constant currency third party net sales, constant currency adjusted third party net sales, adjusted third party net sales, cash return on invested capital excluding goodwill, cash return on operating invested capital, and cash return on invested capital are presented in order to supplement investors’ and other readers’ understanding and assessment of Mylan’s financial performance. Management uses these measures internally for forecasting, budgeting, measuring its operating performance, and incentive-based awards. In addition, primarily due to acquisitions, Mylan believes that an evaluation of its ongoing operations (and comparisons of its current operations with historical and future operations) would be difficult if the disclosure of its financial results were limited to financial measures prepared only in accordance with U.S. GAAP. In addition, Mylan believes that including EBITDA and supplemental adjustments applied in presenting adjusted EBITDA pursuant to our debt

 

 


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agreements is appropriate to provide additional information to investors to demonstrate Mylan’s ability to comply with financial debt covenants (which are calculated using a measure similar to adjusted EBITDA) and assess Mylan’s ability to incur additional indebtedness. We also report sales performance using the non-GAAP financial measure of “constant currency” sales and adjusted sales. This measure provides information on the change in net sales assuming that foreign currency exchange rates had not changed between the prior and current period. The comparisons presented as constant currency rates reflect comparative local currency sales at the prior year’s foreign exchange rates. We routinely evaluate our third party net sales performance at constant currency so that sales results can be viewed without the impact of foreign currency exchange rates, thereby facilitating a period-to-period comparison of our operational activities, and we believe that this presentation also provides useful information to investors for the same reason. Appendix A to this Proxy Statement contains reconciliations of such non-GAAP financial measures to the most directly comparable U.S. GAAP financial measures. Investors and other readers are encouraged to review the related U.S. GAAP financial measures and the reconciliations of the non-GAAP measures to their most directly comparable U.S. GAAP measures set forth in Appendix A, and investors and other readers should consider non-GAAP measures only as supplements to, not as substitutes for or as superior measures to, the measures of financial performance prepared in accordance with U.S. GAAP.

 

 

Explanatory Note

 

 

At a special meeting of shareholders held January 29, 2015, approximately 98% of the votes cast by Mylan Inc.’s shareholders approved the agreement implementing the EPD Transaction by which Mylan N.V. acquired Mylan Inc. and the EPD Business, and on February 27, 2015 (the “Closing Date”), the EPD Transaction closed. Pursuant to the terms of the Amended and Restated Business Transfer Agreement and Plan of Merger, dated as of November 4, 2014, by and among Mylan Inc., Mylan N.V., Moon of PA Inc., and Abbott, on the Closing Date, Mylan N.V. acquired Mylan Inc. and the EPD Business and Moon of PA Inc. merged with and into Mylan Inc., with Mylan Inc. surviving as a wholly owned indirect subsidiary of Mylan N.V. (the “Merger”) and each share of Mylan Inc. common stock issued and outstanding was canceled and automatically converted into and became the right to receive one Mylan N.V. ordinary share. In connection with this transaction, Mylan Inc. and the EPD Business were reorganized under Mylan N.V., a new public company organized in the Netherlands. On February 18, 2015, the Office of Chief Counsel of the Division of Corporation Finance of the Securities and Exchange Commission issued a no-action letter to Mylan Inc. and Mylan N.V. that included its views that the Merger constituted a “succession” for purposes of Rule 12g-3(a) under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), and that Mylan N.V., as successor to Mylan Inc., is deemed a large accelerated filer for purposes of Exchange Act Rule 12b-2. For purposes of this Proxy Statement, references to the Company for periods prior to the Closing Date refer to Mylan Inc. and its consolidated subsidiaries.

 

 


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Proxy Summary

 

 

 

The summary below highlights some of the information that is described in more detail elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider, and we urge you to review the complete document carefully before voting. For additional information regarding the Company’s 2015 performance, please also review Mylan’s Annual Report on Form 10-K for the year ended December 31, 2015.

Continued Excellence in Execution

Our senior leadership team is led by Mr. Coury, Ms. Bresch, and Mr. Malik. Together, they and the Mylan Board have successfully developed and executed on a vision and strategy to position Mylan as a global leader in its industry that consistently delivers value to shareholders. We have done so by building an unmatched global operating and commercial platform; driving outstanding execution and organic growth in Mylan’s core business; identifying and advancing Mylan’s strategic growth drivers; and identifying and executing on strategic acquisitions and partnerships that enhance Mylan’s long-term growth prospects.

We believe that Mylan’s record-setting 2015, and the outstanding long-term growth of Mylan -- including an exceptional 25.4% and 20.7% total shareholder return (“TSR”) over the past three and five years, respectively, each of which significantly exceeded the S&P 500 Index and S&P 500 Pharmaceutical Index results over those periods -- is directly related to the effectiveness and the robustness of our compensation program, as well as the talents of Mylan’s global workforce and the extraordinary vision, commitment, and leadership of Mylan’s senior leadership team, to the benefit of shareholders and other stakeholders.

Outstanding 2015 and Long-Term Financial Performance

2015 represented yet another remarkable year for Mylan on many fronts. In addition to our continued focus on building a long-term sustainable business, we did not take our eye off the ball with regard to the company’s day-to-day core business and short-term execution, as our strong financial results for 2015 clearly demonstrate, resulting in double-digit percentage increases in total adjusted revenues (22%), adjusted EBITDA (27%), and adjusted diluted earnings per share (“adjusted diluted EPS”) (21%) compared to our strong 2014 performance (U.S. GAAP total revenues increased 22%, U.S. GAAP net earnings attributable to Mylan N.V. ordinary shareholders decreased 9%, and U.S. GAAP diluted earnings per share decreased 27% in 2015 compared to 2014).

Financial Results: 2014-2015

 

 

 

 

LOGO

$ in millions except per share amount

*2015 represents Total Adjusted Revenues. See Appendix A for a reconciliation to the most comparable U.S. GAAP measure.

**See Appendix A for a reconciliation to the most comparable U.S. GAAP measures.

For 2015, U.S. GAAP total revenues were $9,429 million. For 2014 and 2015, U.S. GAAP net earnings attributable to Mylan N.V. ordinary shareholders were $929.4 million and $847.6 million, respectively (down 9% year-over-year). For 2014 and 2015, U.S. GAAP diluted earnings per share were $2.34 and $1.70, respectively (down 27% year-over-year).

 

 

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Importantly, these exceptional results were not due to reliance on one product or region, but were the outcome of outstanding performance across all of Mylan’s regions and segments. Highlights include year-over-year constant currency third party net sales increases of 67% in Europe on an adjusted basis, 38% in the Rest of World region, and 16% in North America, as well as the outstanding results of our Specialty business (U.S. GAAP third party net sales for Europe increased 49%, U.S. GAAP third party net sales for Rest of World increased 27%, and U.S. GAAP third party net sales for the U.S. increased 16%).

These outstanding 2015 financial results further complemented our long-term track record of exceptional business execution and performance and delivering superior financial results for our shareholders, as shown in the charts below. In particular, our consistent execution and strong performance in 2015 contributed to a long-term compound annual growth rate (“CAGR”) in adjusted diluted EPS of 27% since 2008.

Financial Results: 2011-2015

 

 

 

LOGO

$ in millions except per share amounts

*2015 represents Total Adjusted Revenues. See Appendix A for a reconciliation to the most comparable U.S. GAAP measure.

** See Appendix A for a reconciliation to the most comparable U.S. GAAP measures.

For 2015, U.S. GAAP total revenues were $9,429 million. U.S. GAAP net earnings attributable to Mylan N.V. ordinary shareholders were $536.8 million in 2011, $640.9 million in 2012, $623.7 million in 2013, $929.4 million in 2014, and $847.6 million in 2015 (12% CAGR). U.S. GAAP diluted earnings per share were $1.22 in 2011, $1.52 in 2012, $1.58 in 2013, $2.34 in 2014, and $1.70 in 2015 (9% CAGR).

 

 

Our track record of excellence in business execution and outstanding performance is further demonstrated by the long-term shareholder value creation that our exceptional team has achieved. As shown below, Mylan’s TSR over the last three and five years has significantly outperformed both the S&P 500 Index and the S&P 500 Pharmaceuticals Index.

 

 

 

 

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* TSR data is from Bloomberg and reflects total return (including price appreciation and reinvested dividends) as of December 31, 2015.

 

 

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Positioning Mylan for Outstanding Long-Term Growth

In 2015, we also continued to position Mylan for long-term growth by further strengthening and expanding our exceptional and differentiated global platform and portfolio and investing in our strategic organic growth drivers, which we complemented by executing on value-creating strategic acquisitions and other business development opportunities.

For instance, we continue to invest strategically in research and development and in strengthening our already-powerful manufacturing and commercial infrastructure, resulting in a 23% CAGR of our annual R&D investment since 2011. We also made significant advances in our strategic organic growth drivers, such as the continued growth of EpiPen® Auto-Injector, expansion and advancement of our biosimilars portfolio, and the development of a leading respiratory franchise. We expect that these growth drivers will help drive continued and sustained business performance and value creation over both short- and long-term periods.

Complementing the execution on our strategic growth drivers in 2015 was our ability to capitalize on strategic inorganic growth opportunities. 2015 was a year of unprecedented activity for Mylan in identifying and executing on significant M&A opportunities, during which we completed or initiated three significant M&A transactions with an aggregate enterprise value of approximately $17 billion. Specifically, we completed the EPD and Famy Care transactions, and announced the planned acquisition of Meda. These transactions serve to increase Mylan’s geographic footprint and infrastructure in key markets, expand our presence and capabilities in key therapeutic franchises, and provide strong financial and strategic benefits that position us well for the future.

Executive Compensation Remained Closely Aligned with Performance

The Mylan Board has structured the company’s executive compensation program to create a maximum “return on executive leadership.” Our compensation program is designed to incentivize the continued development of a robust, sustainable platform, as well as outstanding performance and shareholder value creation over the short- and long-term. Further, we strive to ensure that the program is closely aligned with shareholder and other stakeholder interests. We believe that this approach has demonstrably benefitted shareholders and other stakeholders, as exemplified by the consistent exceptional performance of the Company since 2007.

 

 

 

 

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Adjusted diluted EPS is a non-GAAP financial measure. See Appendix A for reconciliation of adjusted diluted EPS to the most directly comparable U.S. GAAP measure.

*Midpoint of 2016 guidance range

**Stated 2018 target; this is a long-term target only and does not represent company guidance.

U.S. GAAP diluted earnings per share in 2008 were $(1.10), 2009 were $0.30, 2010 were $0.68, 2011 were $1.22, 2012 were $1.52, 2013 were $1.58, 2014 were $2.34, and 2015 were $1.70. The midpoint of forecasted U.S. GAAP diluted earnings per share for 2016 is $2.41.

 

 

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We believe that this record of performance and accomplishment is directly attributable to Mylan’s outstanding leaders and global workforce, and our carefully crafted, robust compensation program. As shown by the following charts and data, our compensation philosophy was clearly successful in 2015 and over the past several years, as compensation has remained closely aligned with the outstanding performance noted above, as well as the continued building of a long-term, sustainable company.

Alignment of CEO Realizable Pay* with TSR Performance

 

 

 

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  * Realizable pay includes cumulative salary and annual incentives paid for the most recent three years, plus current value (as of December 31, 2015) of options (intrinsic value) as well as time-based restricted stock/units granted during the most recent three years, plus the value of performance-based long-term incentive awards earned (which excludes awards granted in connection with the One-Time Special Performance-Based Incentive Program (as defined below), which are still subject to performance-based criteria), plus change in pension value and all other compensation for the most recent three years. TSR data is from the S&P Research Insight Database. Peer companies in this chart reflect the 2015 peer companies listed on page 51 of this Proxy Statement (excluding Hospira Inc., which was acquired in September 2015, and Teva Pharmaceutical Industries Ltd., for whom sufficient information was not publicly available, and including Allergan plc in place of Actavis plc and Allergan, Inc.).  

 

 

 

    Approximately 84% of target compensation for the Named Executive Officers was in the form of annual and long-term incentives and, therefore, linked to Company performance and/or stock performance.

 

 

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    Targets for annual incentive compensation were based on adjusted diluted EPS on a constant currency basis, global regulatory submissions, and adjusted free cash flow. These measures represent key performance indicators of the current and future strength of our business and support the continued strategy to ensure long-term sustainability. As shown in the chart below, Mylan’s 2015 financial and operational performance exceeded the rigorous goals established by the Mylan Board.

 

 

LOGO

* The adjusted diluted EPS amount is calculated from Mylan’s audited financial statements in the same manner as Mylan publicly reports adjusted diluted EPS (which for 2015 is reconciled to the most directly comparable U.S. GAAP measure in Appendix A), but is measured on a constant currency basis. Adjusted free cash flow is calculated from Mylan’s audited financial statements in the same manner as Mylan publicly reports adjusted free cash flow (which for 2015 is reconciled to the most directly comparable U.S. GAAP measure in Appendix A).

 

 

 

    Long-term incentive grants were composed of a mix of performance-based restricted stock units, stock options, and restricted stock units, with a significantly greater emphasis on performance-based restricted stock units, representing 60% of the total value of the long-term incentive grants. The metrics used for the performance-based restricted stock units were return on invested capital and total shareholder return of Mylan’s common stock relative to peer companies, linking these long-term incentives directly to common stock performance and meaningful financial measures.

Continued Execution on a Long-Term Strategy for Growth and Value Creation

The Mylan Board has always demonstrated a commitment to long-term sustainable growth and value creation. In terms of vision, strategy, leadership structure, execution, and compensation, we strive to differentiate Mylan in ways that best serve the interests of shareholders and other stakeholders. We also continually strive to avoid short-sighted focus on non-strategic temporary short-term gains at the expense of long-term, sustainable value creation. And, with the support of shareholders, we have structured the Company and our compensation programs to support these compelling goals.

We remain committed to engaging with shareholders as the Company evolves. We truly welcome your input and appreciate your continued support of the Company.

 

 

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     Page
      

Proxy Summary

  

i

 

Questions and Answers About the Annual General Meeting and Voting

  

1

 

The Annual General Meeting

   6

Overview

   6

Time, Date and Place

   6

Purpose of the Annual General Meeting

   6

Recommendation of the Mylan Board

   7

Record Date; Shareholders Entitled to Vote

   7

Quorum, Abstentions and Non-Votes

   7

Required Vote

   7

Voting in Person

   8

Voting of Proxies

   8

How Proxies Are Counted

   9

Shares Held in Street Name

   9

Revocability of Proxies

   10

Tabulation of Votes

   10

Solicitation of Proxies

   10

Assistance

 

  

10

 

Voting Item 1 –  Appointment of Directors

   11

Meetings of the Mylan Board

   20

Mylan Board Committees

   20

Audit Committee and Audit Committee Financial Expert

   21

Compensation Committee

   21

Compliance Committee

   21

Executive Committee

   21

Finance Committee

   22

Governance and Nominating Committee

   22

Science and Technology Committee

   22

Consideration of Director Nominees

   22

Director Independence

   23

Board Education

   23

Mylan Board Leadership Structure

   24

Board of Directors Risk Oversight

   25

Non-Employee Director Compensation for 2015

   26

Security Ownership of Directors, Nominees, and Executive Officers

   28

Security Ownership of Certain Beneficial Owners

   29

Section 16(a) Beneficial Ownership Reporting Compliance

   29

Executive Officers

   30

 

 


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Voting Item 2 –  Adoption of Dutch Annual Accounts for Fiscal Year 2015

   31

Voting Item 3 –  Ratification of the Selection of Deloitte & Touche LLP as the Company’s Independent Registered Public Accounting Firm for Fiscal Year 2016

   32

Principal Accounting Fees and Services

   32

Audit Committee Pre-Approval Policy

   32

Report of the Audit Committee of the Mylan Board

   33

Voting Item 4 –  Instruction to Deloitte Accountants B.V. for the Audit of the Company’s Dutch Statutory Annual Accounts for Fiscal Year 2016

   34

Executive Compensation for 2015

   35

Compensation Discussion and Analysis

   35

Compensation Committee Report

   57

Summary Compensation Table

   58

Grants of Plan-Based Awards for 2015

   60

Outstanding Equity Awards at the End of 2015

   61

Option Exercises and Stock Vested for 2015

   62

Pension Benefits for 2015

   63

Nonqualified Deferred Compensation

   63

Restoration Plan

   63

Retirement Benefit Agreements

   64

Employment Agreements

   65

Potential Payments Upon Termination or Change in Control

   66

Voting Item 5 –  Approval, on an Advisory Basis, of the Compensation of the Named Executive Officers of the Company

   70

Voting Item 6 –  Re-approval of the Performance Goals set forth in the Company’s 2003 Long-Term Incentive Plan

   71

Voting Item 7 –  Authorization of the Mylan Board to Acquire Ordinary Shares and Preferred Shares in the Capital of the Company

   77
   

Compensation Committee Interlocks and Insider Participation

   78

Certain Relationships and Related Transactions

   78

Communications with Directors

   79

Proposals for the 2017 Annual General Meeting of Shareholders

   80

Other Matters

   80

Householding

   81

2015 Annual Report on Form 10-K

   81

Appendix A –  Reconciliation of Non-GAAP Measures (Unaudited)

   A-1

Appendix B – Amended and Restated 2003 Long-Term Incentive Plan

   B-1

 

 


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Questions and Answers About the Annual General Meeting and Voting

 

 

The following questions and answers are intended to address briefly some questions that you, as a Mylan shareholder, may have regarding the matters to be voted on at the annual general meeting of shareholders (“AGM”). These questions and answers highlight only some of the information contained in this proxy statement. Mylan urges you to read carefully the entire proxy statement because the information in this section does not provide all the important information with respect to these matters.

Unless the context expressly provides otherwise, this proxy statement describes the rights of Mylan ordinary shareholders to attend and, if relevant, vote at the Mylan AGM, including the procedures for convening the AGM and for Mylan ordinary shareholders exercising voting and other rights at such meeting. Generally similar rights apply in respect of Mylan preferred shareholders.

 

 

Q: Why am I receiving this proxy statement?

 

A: You are receiving this proxy statement because you were a Mylan shareholder or beneficial owner of Mylan shares on the Record Date (as defined below) for the AGM. This proxy statement serves as the proxy statement through which the Mylan Board will solicit proxies in connection with the Proposals.

This proxy statement contains important information about the Proposals, and you should read it carefully and in its entirety. The enclosed voting materials allow you, at your option, to vote your shares without attending the AGM.

You may mark, sign, and date your proxy card and return it in the enclosed postage-paid envelope, or vote over the Internet or by telephone, in accordance with the instructions contained in this proxy statement so that your Mylan ordinary shares may be represented and voted at the AGM. For more information, see the question below entitled “How do I vote?”.

 

 

Q: When and where will the AGM be held?

 

A: The AGM will be held at Hotel Okura Amsterdam, Ferdinand Bolstraat 333, 1072 LH Amsterdam, the Netherlands on June 24, 2016 at 2:00 p.m. Central European Time (CET).

 

 

Q: How can I attend the AGM?

 

A: If you wish to attend the AGM in person, please so inform Mylan in writing (such notice to be sent to Mylan’s office address as set forth in the Notice of Annual General Meeting of Shareholders to the attention of Mylan’s Corporate Secretary prior to 5:00 p.m. Central European Time (CET) on June 23, 2016 (the “Cut-Off Time”).

Beneficial owners of Mylan ordinary shares that are not traded through the Tel Aviv Stock Exchange (“TASE”) and held through a broker, bank, trust company or other nominee may not vote the underlying ordinary shares at the Mylan AGM unless they first obtain (where appropriate, through the relevant broker, bank, trust company or other nominee) a signed proxy card from the relevant shareholder who is registered in the Register as the holder on the Record Date of the underlying ordinary shares. In addition, beneficial owners of Mylan ordinary shares must provide proof of ownership, such as a recent account statement or letter from a brokerage firm, bank nominee, or other institution proving ownership on the Record Date.

Beneficial owners of Mylan ordinary shares that are traded through the TASE may not vote the underlying ordinary shares at the Mylan AGM unless they first obtain an ownership certificate from the Tel Aviv Stock Exchange Clearing House Ltd. (the “TASE Clearing House”) member through which the underlying ordinary shares are registered (which you can obtain from your TASE broker) indicating the beneficial ownership of those ordinary shares on the Record Date.

Proper identification, such as a driver’s license or passport, must be presented at the meeting.

 

 

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Q: Who is entitled to vote at the AGM and how many votes do they have?

 

A: Dutch law provides that the record date for the AGM must be 28 days prior to the date of the AGM; thus, the record date is May 27, 2016 (the “Record Date”). Mylan shareholders who on the Record Date are registered in Mylan’s shareholder register (the “Register”) may attend the AGM and, if relevant, vote at such meeting in person or authorize a third party to attend and, if relevant, vote at the meeting on their behalf through the use of a proxy card.

If you are a beneficial owner of Mylan ordinary shares and hold your shares through a bank, broker, trust company, or other nominee (“street name”), the relevant institution will send you instructions describing the procedure for instructing the relevant institution as to how to vote the Mylan ordinary shares you beneficially own.

If you wish to vote the Mylan ordinary shares you beneficially own directly either in person at the AGM or by proxy, you must first obtain a signed “legal proxy” from the bank, broker, trust company or other nominee through which you beneficially own your Mylan ordinary shares, or if you are a beneficial owner of Mylan ordinary shares traded through the TASE, you must obtain a certificate of ownership from the TASE Clearing House member through which your Mylan ordinary shares are registered (which you can obtain from your TASE broker).

As of the close of business on May 16, 2016 (the last practicable date prior to the Record Date and the mailing of the proxy statement), there were 508,367,697 Mylan ordinary shares and no Mylan preferred shares outstanding and entitled to vote. Each Mylan share is entitled to one vote on each matter properly brought before the AGM. Shareholders do not have cumulative voting rights.

Unless the context otherwise requires, references to (a) “Mylan ordinary shareholders” refer to both (i) shareholders who on the Record Date are registered in the Register as holders of Mylan ordinary shares and (ii) others with meeting rights under Dutch law with respect to Mylan ordinary shares, who on the Record Date are registered as such in the Register, (b) “Mylan preferred shareholders” refer to both (i) shareholders who on the Record Date are registered in the Register as holders of Mylan preferred shares and (ii) others with meeting rights under Dutch law with respect to Mylan preferred shares who, on the Record Date, are registered as such in the Register, and (c) “Mylan shareholders” refer to Mylan ordinary shareholders and Mylan preferred shareholders. The invitation to attend and vote at the AGM is being extended to such persons. Beneficial owners of Mylan ordinary shares are invited to attend the AGM and, if they obtain a “legal proxy”, or if you are a beneficial owner of Mylan ordinary shares traded through the TASE, a certificate of ownership, as described above, to vote at the AGM.

 

 

Q: What vote is required to adopt each of the Proposals?

 

A: Consistent with established Dutch law and the Company’s articles of association, executive directors and non-executive directors are appointed by the general meeting from a binding nomination proposed by the Mylan Board. The proposed candidate specified in a binding nomination shall be appointed provided that the requisite quorum is present or represented at the general meeting, unless the nomination is overruled by the general meeting voting against the appointment of the candidate by a resolution adopted with a majority of at least two-thirds of the votes cast, representing more than half of the issued share capital. In such event, the Mylan Board may draw up a new binding nomination to be submitted at a subsequent general meeting.

Other than for the appointment of directors, each Proposal requires the affirmative vote of an absolute majority of the valid votes cast at the AGM. A quorum of at least one-third of the issued share capital is separately required for the adoption of each Proposal. If a quorum of at least one-third of the issued share capital is not present or represented with respect to any Proposal, such Proposal cannot be validly adopted at the AGM.

 

 

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Q: How does the Mylan Board recommend that I vote?

 

A: The Mylan Board unanimously recommends that the Mylan shareholders vote FOR the appointment of each director; FOR the adoption of the Dutch annual accounts for fiscal year 2015; FOR ratification of the selection of Deloitte as the Company’s independent registered public accounting firm for fiscal year 2016; FOR instruction to Deloitte Accountants B.V. for the audit of the Company’s Dutch annual accounts for fiscal year 2016; FOR approval, on an advisory basis, of the compensation of the Named Executive Officers of the Company; FOR re-approval of the performance goals set forth in the Company’s 2003 Long Term Incentive Plan; and FOR authorization of the Mylan Board to acquire ordinary shares and preferred shares in the capital of the Company.

 

 

Q: How do I vote?

 

A: Mylan shareholders may cast their votes at the meeting, over the Internet, by submitting a proxy card, or by calling a toll-free number in accordance with the instructions contained in this proxy statement.

If the ownership of your Mylan ordinary shares is reflected directly on the Register as of the Record Date and you vote by proxy, the individuals named on the enclosed proxy card will vote your Mylan ordinary shares in the manner you indicate. If you do not specify voting instructions, then the proxy will be voted in accordance with the recommendation of the Mylan Board, as described in this proxy statement.

If you are a beneficial owner of Mylan ordinary shares and hold your shares in street name through a bank, broker, trust company, or other nominee, the relevant institution will send you instructions describing the procedure for instructing the relevant institution as to how to vote the Mylan ordinary shares you beneficially own.

 

 

Q: If my shares are held in street name by my broker, will my broker automatically vote my shares for me?

 

A: If you hold your shares in street name, your broker, bank, trust company or other nominee cannot vote your shares on non-routine matters without instructions from you. Each of the Proposals is considered a non-routine matter, other than the ratification of the selection of Deloitte as Mylan’s independent registered public accounting firm for fiscal year 2016 (which is considered a routine matter). You should instruct your broker, bank, trust company or other nominee as to how to vote your Mylan ordinary shares, following the directions from your broker, bank, trust company or other nominee provided to you. Please check the voting form used by your broker, bank, trust company or other nominee.

If you do not give instructions to your broker, bank, trust company or other nominee, the broker, bank, trust company or other nominee will nevertheless be entitled to vote your ordinary shares in its discretion on routine matters and may give or authorize the giving of a proxy to vote the ordinary shares in its discretion on such matters. In such an instance, your shares will be counted for purposes of determining the presence of a quorum with respect to such Proposal. If you do not provide your broker, bank, trust company or other nominee with instructions and your broker, bank, trust company or other nominee submits an unvoted proxy with respect to a Proposal (either because it is non-routine or such broker, bank, trust company or other nominee does not give its discretion with respect to a routine Proposal), your shares will not be counted for purposes of determining the presence of a quorum with respect to that Proposal.

Beneficial owners of Mylan ordinary shares held through a broker, bank, trust company or other nominee may not vote the underlying ordinary shares at the Mylan AGM, unless they first obtain (where appropriate, through the relevant broker, bank, trust company or other nominee) a signed proxy card from the relevant shareholder who is registered in the Register as the holder on the Record Date of the underlying ordinary shares, or if you are a beneficial owner of Mylan ordinary shares traded through the TASE, unless you obtain a certificate of ownership from the TASE Clearing House member through which your Mylan ordinary shares are registered (which you can obtain from your TASE broker).

 

 

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Q: What will happen if I fail to vote or I abstain from voting?

 

A: If you do not exercise your vote because you do not submit a properly executed proxy card to Mylan, and do not vote over the Internet or by calling the toll-free number we have provided, in accordance with the instructions contained in this proxy statement in a timely fashion or by failing to attend the AGM to vote in person or fail to instruct your broker, bank, trust company or other nominee how to vote on a non-routine matter (a “failure to vote”), it will have no effect on the Proposal. If you mark your proxy or voting instructions expressly to abstain or to cast a “blank vote” for any Proposal, it will also have no effect on such Proposal. If you do not give instructions to your broker, bank, trust company or other nominee, the broker, bank, trust company or other nominee will nevertheless be entitled to vote your ordinary shares in its discretion on routine matters and may give or authorize the giving of a proxy to vote the ordinary shares in its discretion on such matters. For the avoidance of doubt, if a Mylan shareholder returns a properly executed proxy card in a timely fashion without indicating how to vote on one or more of the Proposals (and without indicating expressly to abstain or to cast a “blank vote”), the Mylan ordinary shares represented by such proxy will count for the purposes of determining the presence of a quorum with respect to such Proposal(s), will be voted in favor of the/each such Proposal in accordance with the recommendation of the Mylan Board, and it will not be considered a failure to vote.

 

 

Q: What constitutes a quorum?

 

A: At least one-third of the issued Mylan shares must be separately represented at the AGM with respect to a Proposal to constitute a quorum with respect to that Proposal. Abstentions, “blank votes” and invalid votes will be counted for purposes of determining the presence of a quorum (although they are considered to be votes that were not cast). If you do not give instructions to your broker, bank, trust company or other nominee, the broker, bank, trust company or other nominee will nevertheless be entitled to vote your ordinary shares in its discretion on routine matters and may give or authorize the giving of a proxy to vote the ordinary shares in its discretion on such matters. In such an instance, your shares will be counted for purposes of determining the presence of a quorum with respect to such Proposal. If your broker, bank, trust company or other nominee does not vote your ordinary shares in its discretion on routine matters, your shares will not be counted for purposes of determining the presence of a quorum with respect to such Proposal. Failures to vote (which, as described above, includes instances where you fail to instruct your broker, bank, trust company or other nominee to vote on a non-routine matter) on a Proposal will not be counted for purposes of determining the presence of a quorum with respect to that Proposal.

 

 

Q: What will happen if I return my proxy card without indicating how to vote?

 

A: If you return your properly executed proxy card in a timely fashion without indicating how to vote on any one or more of the Proposals (and without indicating expressly to abstain or to cast a “blank vote”), the Mylan ordinary shares represented by such proxy will count for the purposes of determining the presence of a quorum with respect to such Proposal(s), will be voted in favor of each such Proposal in accordance with the recommendation of the Mylan Board, and it will not be considered a failure to vote with respect to such Proposal(s).

 

 

Q: Can I change my vote after I have returned a proxy card?

 

A: Yes. You can change your vote of your Mylan shares as indicated on your proxy card or revoke your proxy at any time prior to the Cut-Off Time. You can do this by (a) voting again by telephone or the Internet or (b) submitting another properly executed proxy card, dated as of a later date (but prior to the Cut-Off Time), in writing (to be sent to Mylan’s office address as set forth in the Notice of Annual General Meeting of Shareholders to the attention of Mylan’s Corporate Secretary). Alternatively, you may give notice of your attendance at the meeting (prior to the Cut-Off Time in the manner described above) and vote in person.

If your shares are held through and/or in street name by your broker, bank, trust company, other nominee, you should contact your broker, bank, trust company or other nominee to change your vote or revoke your voting instructions.

 

 

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Q: What happens if I transfer my Mylan ordinary shares before the AGM?

 

A: The Record Date for the AGM is earlier than the date of the AGM. If you transfer your Mylan ordinary shares after the Record Date, you will retain your right to attend and vote at the AGM.

 

 

Q: Where can I find the voting results of the AGM?

 

A: Mylan expects to announce the preliminary voting results at the AGM. In addition, within four business days following certification of the final voting results, Mylan intends to file the final voting results of the AGM with the Securities and Exchange Commission (the “SEC”) in a Current Report on Form 8-K.

 

 

Q: What do I need to do now?

 

A: Carefully read and consider the information contained in this proxy statement and vote your shares either in person or by telephone, the Internet or the use of a proxy card, as described in this proxy statement.

If you are a Mylan ordinary shareholder who on the Record Date is registered in the Register, in order for your ordinary shares to be represented at the AGM, you can:

 

    attend the AGM in person;

 

    vote through the Internet or by telephone in accordance with the instructions contained in this proxy statement; or

 

    indicate on the enclosed proxy card how you would like to vote and return the proxy card in the accompanying pre-addressed postage paid envelope as described in this proxy statement.

If you are a beneficial owner of Mylan ordinary shares and hold your shares in street name through a bank, broker, trust company or other nominee, the relevant institution will send you instructions describing the procedure for instructing the relevant institution as to how to vote the Mylan ordinary shares you beneficially own.

If you wish to vote the Mylan ordinary shares you beneficially own directly either in person at the AGM or by proxy, you must first obtain a signed “legal proxy” from the bank, broker, trust company or other nominee through which you beneficially own your Mylan ordinary shares (or if you are a beneficial owner of Mylan ordinary shares traded through the TASE, you instead must obtain a certificate of ownership).

 

 

Q: Who can help answer my questions?

 

A: If you have questions about the Proposals to be voted on at the AGM or if you desire additional copies of this proxy statement or additional proxy cards, you should contact:

Innisfree M&A Incorporated

501 Madison Avenue

New York, NY 10022

+1 (877) 750-9499 (toll free)

+1 (212) 750-5833 (banks and brokers)

 

 

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The Annual General Meeting

 

 

 

 

Overview

 

 

This proxy statement is part of a solicitation of proxies by the Mylan Board for use at the annual general meeting of shareholders of Mylan and is being furnished to Mylan shareholders and beneficial owners of Mylan ordinary shares on or about May 25, 2016. This proxy statement provides Mylan shareholders with information relating to their decisions to vote, grant a proxy to vote, attend and, if relevant, instruct their vote to be cast at the annual general meeting.

Unless the context expressly provides otherwise, this proxy statement describes the rights of Mylan ordinary shareholders to attend and, if relevant, vote at the Mylan annual general meeting of shareholders, including the procedures for convening the annual general meeting and for Mylan ordinary shareholders exercising voting and other rights at such meeting. Generally similar rights apply in respect of Mylan preferred shareholders.

 

 

Time, Date and Place

 

 

The annual general meeting of shareholders of Mylan will be held at Hotel Okura Amsterdam, Ferdinand Bolstraat 333, 1072 LH Amsterdam, the Netherlands on June 24, 2016 at 2:00 p.m. Central European Time (CET).

 

Purpose of the Annual General Meeting

 

 

The annual general meeting is being held for shareholders to vote on and/or discuss the following items:

 

1. To appoint two executive directors and 11 non-executive directors (voting items)

 

2. Explanation of remuneration policy for the Mylan Board (discussion item)

 

3. Mylan Board report for fiscal year 2015 (discussion item)

 

4. To adopt the Dutch annual accounts for fiscal year 2015 (voting item)

 

5. To ratify the selection of Deloitte as the Company’s independent registered public accounting firm for fiscal year 2016 (voting item)

 

6. To instruct Deloitte Accountants B.V. for the audit of the Company’s Dutch annual accounts for fiscal year 2016 (voting item)

 

7. To approve, on an advisory basis, the compensation of the Named Executive Officers of the Company (voting item)

 

8. To re-approve the performance goals set forth in the Company’s 2003 Long Term Incentive Plan (voting item)

 

9. To authorize the Mylan Board to acquire ordinary shares and preferred shares in the capital of the Company (voting item)
 

 

 

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Recommendation of the Mylan Board

 

 

The Mylan Board unanimously recommends that the Mylan shareholders vote FOR the appointment of each director; FOR the adoption of the Dutch annual accounts for fiscal year 2015; FOR ratification of the selection of Deloitte as the Company’s independent registered public accounting firm for fiscal year 2016; FOR instruction to Deloitte Accountants B.V. for the audit of the Company’s Dutch annual accounts for fiscal year 2016; FOR approval, on an advisory basis, of the compensation of the Named Executive Officers of the Company; FOR re-approval of the performance goals set forth in the Company’s 2003 Long Term Incentive Plan; and FOR authorization of the Mylan Board to acquire ordinary shares and preferred shares in the capital of the Company.

 

 

Record Date; Shareholders Entitled to Vote

 

 

The record date for the annual general meeting is May 27, 2016. Mylan shareholders who on the Record Date are registered in Mylan’s Register may attend the annual general meeting of shareholders and, if relevant, vote at such meeting in person or authorize a third party to attend and, if relevant, vote at the meeting on their behalf through the use of a proxy card.

Mylan ordinary shareholders who are not registered in the Register may request, if eligible for registration, to be registered in the Register no later than the Record Date by means of a request sent to Mylan in writing (such notice to be sent to Mylan’s office address as set forth in the Notice of Annual General Meeting of Shareholders to the attention of Mylan’s Corporate Secretary) or by sending an e-mail to corporatesecretary@mylan.com.

If you are a beneficial owner of Mylan ordinary shares and hold your ordinary shares through a bank, broker, trust company, or other nominee (“street name”), the relevant institution will send you instructions describing the procedure for instructing the relevant institution as to how to vote the Mylan ordinary shares you beneficially own.

If you wish to vote the Mylan ordinary shares you beneficially own directly either in person at the annual general meeting of shareholders or by proxy, you must first obtain a signed “legal proxy” from the bank,

broker, trust company or other nominee through which you beneficially own your Mylan ordinary shares, or if you are a beneficial owner of Mylan ordinary shares traded through the TASE, you must first obtain a certificate of ownership from the TASE Clearing House member through which your Mylan ordinary shares are registered (which you can obtain from your TASE broker).

As of the close of business on May 16, 2016 (the last practicable date prior to the Record Date and the mailing of the proxy statement), there were 508,367,697 Mylan ordinary shares and no Mylan preferred shares outstanding and entitled to vote. Each Mylan share is entitled to one vote on each matter properly brought before the annual general meeting. Shareholders do not have cumulative voting rights.

 

 

Quorum, Abstentions and Non-Votes

 

 

A quorum of at least one-third of the issued share capital is separately required for the adoption of each Proposal. Abstentions, “blank votes” and invalid votes will be counted for purposes of determining the presence of a quorum (although they are considered to be votes that were not cast). If you do not give instructions to your broker, bank, trust company or other nominee, the broker, bank, trust company or other nominee will nevertheless be entitled to vote your ordinary shares in its discretion on routine matters and may give or authorize the giving of a proxy to vote the ordinary shares in its discretion on such matters. In such an instance, your shares will be counted for purposes of determining the quorum at the annual general meeting with respect to such Proposal. If you do not provide your broker, bank, trust company or other nominee with instructions and your broker, bank, trust company or other nominee submits an unvoted proxy with respect to a Proposal (either because it is non-routine or such broker, bank, trust company or other nominee does not give its discretion with respect to a routine Proposal), your shares will not be counted for purposes of determining a quorum at the annual general meeting with respect to each such Proposal.

 

 

Required Vote

 

 

Consistent with established Dutch law and the Company’s articles of association, executive directors and non-executive directors are appointed by the general meeting from a binding nomination proposed by the Mylan Board. The proposed candidate specified

 

 

 

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in a binding nomination shall be appointed provided that the requisite quorum is present or represented at the general meeting, unless the nomination is overruled by the general meeting (which would result if a majority of at least two-thirds of the votes cast, representing more than half of the issued share capital, vote “against” the appointment of such director, with abstentions, “blank votes” and invalid votes not considered votes cast), in which case he or she will not be appointed. In such event, the Mylan Board may propose a new binding nomination to be submitted at a subsequent general meeting. If appointed, each director’s term begins at the general meeting at which he or she is appointed and, unless such director resigns or is suspended or dismissed at an earlier date, his or her term of office lapses immediately after the next annual general meeting held after his or her appointment.

Adoption of each of the other Proposals requires the affirmative vote of an absolute majority of the valid votes cast on that Proposal at the annual general meeting at which a quorum is present. If a quorum of at least one-third of the issued share capital is not present or represented with respect to any Proposal, such Proposal cannot be validly adopted at the annual general meeting.

Abstentions and failures to vote (as described above) are not considered to be votes cast for purposes of determining if a Proposal has been adopted.

Mylan shareholders may cast their votes in person at the annual general meeting or by proxy as explained below under “Voting of Proxies”.

 

 

Voting in Person

 

 

If you plan to attend the annual general meeting and wish to vote in person, you will be given a ballot at the annual general meeting. Please note, however, that if your shares are held in “street name” (other than through a TASE Clearing House member or TASE member, as the case may be) and you wish to vote at the annual general meeting, you must bring to the annual general meeting a legal proxy executed in your favor from the relevant shareholder who is registered in the Register as the holder on the Record Date of the underlying shares (through your broker, bank, trust company or other nominee) authorizing you to vote at the annual general meeting.

In addition, if you plan to attend the annual general meeting, please be prepared to provide proper identification, such as a driver’s license or passport. If you hold your shares in street name, you must provide proof of ownership, such as a recent account statement or letter from your brokerage firm, bank nominee, or other institution proving ownership on the Record Date, along with proper identification and the legal proxy described above.

If you beneficially own ordinary shares that are traded through the TASE, you may vote your ordinary shares in person by casting your vote at the annual general meeting. If you choose to vote in person at the annual general meeting, you need to bring an ownership certificate from the TASE Clearing House through which your ordinary shares are registered (which you can obtain from your TASE broker) indicating that you were the beneficial owner of those ordinary shares on the Record Date.

Persons attending the annual general meeting will not be allowed to use cameras, recording devices, and other similar electronic devices at the meeting.

Mylan ordinary shareholders who wish to exercise their rights at the annual general meeting of shareholders in person must notify Mylan thereof no later than on the Cut-Off Time in writing (such notice to be sent to Mylan’s office address as set forth in the Notice of Annual General Meeting of Shareholders to the attention of Mylan’s Corporate Secretary).

 

 

Voting of Proxies

 

 

In addition to voting at the annual general meeting, Mylan ordinary shareholders may cast their votes, after the Record Date but no later than the Cut-Off Time, over the Internet, by submitting a proxy card, or by calling a toll-free number in accordance with the instructions contained in this proxy statement.

Mylan requests that you mark, sign, and date the accompanying proxy card and return it promptly in the enclosed postage-paid envelope. When the accompanying proxy is returned properly executed no later than at the Cut-Off Time, the Mylan ordinary shares represented by it will be voted at the annual general meeting in accordance with the instructions contained in the proxy. If the proxy is returned without an indication as to how the Mylan ordinary shares

 

 

 

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represented are to be voted with regard to a Proposal (and without expressly indicating to abstain or to cast a “blank vote”), the Mylan ordinary shares represented by the proxy will be voted in accordance with the recommendation of the Mylan Board, as described in this proxy statement.

If you hold your shares in street name, see “Shares Held in Street Name” below.

You may submit your proxy for your ordinary shares after the Record Date but no later than the Cut-Off Time by telephone, over the Internet, or by marking, signing, dating, and returning the enclosed proxy card in accordance with the instructions contained in this proxy statement if you do not plan to attend the annual general meeting in person.

 

 

How Proxies Are Counted

 

 

All ordinary shares represented by properly executed proxies received no later than the Cut-Off Time will be voted at the meeting in the manner specified by the Mylan ordinary shareholder giving those proxies. If the proxy is returned without an indication as to how the Mylan ordinary shares represented are to be voted with regard to a Proposal (and without expressly indicating to abstain or to cast a “blank vote”), the Mylan ordinary shares represented by the proxy will be voted in accordance with the recommendation of the Mylan Board, as described in this proxy statement.

 

 

Shares Held in Street Name

 

 

If you are a beneficial owner of Mylan ordinary shares and hold your shares in street name, your broker, bank, trust company or other nominee cannot vote your shares on non-routine matters without instructions from you. Each of the Proposals, other than the ratification of the selection of Deloitte as Mylan’s independent registered public accounting firm

for fiscal year 2016 (which is considered a routine matter), is considered a non-routine matter. You should instruct your broker, bank, trust company or other nominee as to how to vote your Mylan ordinary shares, following the directions from your broker, bank, trust company or other nominee provided to you. Please check the voting form used by your broker, bank, trust company or other nominee. If you do not give instructions to your broker, bank, trust company or other nominee, the broker, bank, trust company or other nominee will nevertheless be entitled to vote your ordinary shares in its discretion on routine matters and may give or authorize the giving of a proxy to vote the ordinary shares in its discretion on such matters. In such an instance, your shares will be counted for purposes of determining the presence of a quorum with respect to such Proposal. If you do not provide your broker, bank, trust company or other nominee with instructions and your broker, bank, trust company or other nominee submits an unvoted proxy with respect to a Proposal (either because it is non-routine or such broker, bank, trust company or other nominee does not give its discretion with respect to a routine Proposal), your shares will not be counted for purposes of determining the presence of a quorum with respect to that Proposal.

Beneficial owners of Mylan ordinary shares held through a broker, bank, trust company or other nominee may not vote the underlying ordinary shares at the Mylan annual general meeting of shareholders, unless they first obtain (where appropriate, through the relevant broker, bank, trust company or other nominee) a signed proxy card from the relevant shareholder who is registered in the Register as the holder on the Record Date of the underlying ordinary shares, or if you are a beneficial owner of Mylan ordinary shares traded through the TASE, unless you obtain a certificate of ownership from the TASE Clearing House member through which your Mylan ordinary shares are registered (which you can obtain from your TASE broker).

 

 

 

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Revocability of Proxies

 

 

You can change your vote of your ordinary shares as indicated on your proxy card at any time prior to the Cut-Off Time or revoke your proxy for your ordinary shares at any time prior to the Cut-Off Time. You can do this by (a) voting again by telephone or the Internet or (b) submitting another properly executed proxy card, dated as of a later date (but prior to the Cut-Off Time), in writing (to be sent to Mylan’s office address as set forth in the Notice of Annual General Meeting of Shareholders to the attention of Mylan’s Corporate Secretary). Alternatively, you may give notice of your attendance at the meeting (prior to the Cut-Off Time in the manner described above) and vote in person.

If your shares are held through and/or in street name by your broker, bank, trust company or other nominee, you should contact your broker, bank, trust company or other nominee to change or revoke your voting instructions.

 

 

Tabulation of Votes

 

 

The inspector of election will, among other matters, determine the number of shares represented at the annual general meeting to confirm the presence of a quorum, determine the validity of all proxies and ballots, and certify the results of voting on the Proposals.

 

Solicitation of Proxies

 

 

Mylan will bear the cost of soliciting proxies from its shareholders, including the costs associated with the filing, printing, and publication of this proxy statement. In addition to the use of the mail, proxies may be solicited by officers and directors and regular employees of Mylan, some of whom may be considered participants in the solicitation, without additional remuneration, by personal interview, telephone, facsimile or otherwise. Mylan will also request brokerage firms, bank nominees, and other institutions to forward proxy materials to the beneficial owners of shares held of record on the Record Date and will provide customary reimbursement to such institutions for the cost of forwarding these materials. Mylan has retained Innisfree M&A Incorporated to assist in its solicitation of proxies and has agreed to pay them a fee of approximately $20,000, plus reasonable expenses, for these services.

 

 

Assistance

 

 

If you need assistance in completing your proxy card or have questions regarding the annual general meeting, please contact:

Innisfree M&A Incorporated

501 Madison Avenue

New York, NY 10022

(877) 750-9499 (toll free)

(212) 750-5833 (banks and brokers)

 

 

 

 

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Voting Item 1 – Appointment of Directors

 

 

 

The Mylan Board consists of 13 directors, each of whom is either an executive director or a non-executive director pursuant to applicable Dutch law. Executive directors are responsible for the daily management and operation of the Company and non-executive directors are responsible for overseeing and monitoring the performance of the executive directors.

Consistent with established Dutch law and the Company’s articles of association, executive directors and non-executive directors are appointed by the general meeting from a binding nomination proposed by the Mylan Board. The proposed candidate specified in a binding nomination shall be appointed provided that the requisite quorum is present or represented at the general meeting, unless the nomination is overruled by the general meeting (which would result if a majority of at least two-thirds of the votes cast, representing more than half of the issued share capital, vote “against” the appointment of such director, with abstentions, “blank votes” and invalid votes not considered votes cast), in which case he or she will not be appointed. In such event, the Mylan Board may propose a new binding nomination to be submitted at a subsequent general meeting. If appointed, each director’s term begins at the general meeting at which he or she is appointed and, unless such director resigns or is suspended or dismissed at an earlier date, his or her term of office lapses immediately after the next annual general meeting held after his or her appointment. In accordance with the recommendation of the Company’s Governance and Nominating Committee, the Mylan Board has unanimously adopted resolutions to make the following binding nominations:

 

1. The Mylan Board has nominated Heather Bresch and Rajiv Malik to serve as executive directors for a term ending immediately after the next annual general meeting held after their appointment.

 

2. The Mylan Board has nominated Wendy Cameron, Hon. Robert J. Cindrich, Robert J. Coury, JoEllen Lyons Dillon, Neil Dimick, Melina Higgins, Douglas J. Leech, Joseph C. Maroon, M.D., Mark W. Parrish, Rodney L. Piatt, and Randall L. (Pete) Vanderveen, Ph.D, R.Ph to serve as non-executive directors for a term ending immediately after the next annual general meeting held after their appointment.

The Mylan Board and the Governance and Nominating Committee have carefully considered the structure, culture, operation, interactions, collaboration, and performance of the current Mylan Board; the talents, expertise, and contributions of individual directors; the massive growth and creation of shareholder and other stakeholder value under the current Mylan Board’s leadership; the continued outstanding performance of the Company; the anticipated future challenges and opportunities facing the Company; and the Mylan Board’s ongoing commitment to ensuring the long-term sustainability of the Company to the benefit of shareholders and other stakeholders. Based on these considerations, among others, the Mylan Board recommends a vote “FOR” the appointment of each director.

Each of the proposed appointments is considered a separate voting item under Dutch law. Information concerning each of the 13 nominated directors is set forth below. Each nominee is currently on the Mylan Board and each has consented to act as a director of Mylan if appointed at the annual general meeting. This Voting Item 1 comprises the “explanatory notes” to the agenda of the annual general meeting as referred to in Section 8.02(d) of Mylan’s articles of association.

 

 

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Name, Age, and Year

First Became a Director**

  

Principal Occupation and Business Experience;

Other Directorships and Qualifications

 

Heather Bresch^

46

2011

 

LOGO

  

 

Chief Executive Officer

 

Ms. Bresch has served as Mylan’s Chief Executive Officer (“CEO”) since January 1, 2012. Throughout her 24-year career with Mylan, Ms. Bresch has held roles of increasing responsibility in more than 15 functional areas. Prior to becoming CEO, Ms. Bresch was Mylan’s President commencing in July 2009 and was responsible for the day-to-day operations of the Company. Before that, she served as Mylan’s Chief Operating Officer and Chief Integration Officer from October 2007 to July 2009, leading the successful integration of two transformational international acquisitions – Matrix Laboratories Limited (n/k/a Mylan Laboratories Limited) and Merck KGaA’s generics and specialty pharmaceuticals businesses. Under Ms. Bresch’s leadership, Mylan has continued to expand its portfolio and geographic reach, acquiring Abbott Laboratories’ non-U.S. developed markets specialty and branded generics business, the female healthcare business of Famy Care Ltd., and India-based Agila Specialties, a global leader in injectable products and an innovative respiratory technology platform; partnering on portfolios of biologic and insulin products; entering new commercial markets such as India and Brazil; and expanding its leadership in the treatment of HIV/AIDS through the distribution of novel testing devices. During her career, Ms. Bresch has championed initiatives aimed at improving product quality and removing barriers to patient access to medicine. Ms. Bresch’s qualifications to serve on the Mylan Board include, among others, her extensive industry, policy, and leadership experience and abilities, as well as her strategic vision, judgment and unique and in-depth knowledge about the Company.

 

 

Wendy Cameron

56

2002

 

LOGO

  

 

Director and Co-Owner, Cam Land LLC

 

Ms. Cameron has served as Co-Owner and Director of Cam Land LLC, a harness racing business in Washington, Pennsylvania, since January 2003. From 1981 to 1998, she was Vice President, Divisional Sales & Governmental Affairs, Cameron Coca-Cola Bottling Company, Inc. Ms. Cameron served as Chairman of the Washington Hospital Board of Trustees and of the Washington Hospital Executive Committee until she stepped down in 2012. She was a member of the hospital’s Board of Trustees from 1997 through 2012 and a member of the Washington Hospital Foundation Board from 1993 through 2012. In addition to being a business owner and having held an executive position with one of the nation’s largest bottlers for nearly 20 years, Ms. Cameron has invaluable experience and knowledge regarding the business, platforms, strategies, challenges, opportunities, and management of the Company, among other matters. Ms. Cameron’s qualifications to serve on the Mylan Board include, among others, this experience, as well as her independence, business experience, leadership, and judgment.

 

 

 

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Director Nominees (continued)

 

 

Name, Age, and Year

First Became a Director**

  

Principal Occupation and Business Experience;

Other Directorships and Qualifications

 

Hon. Robert J. Cindrich

72

2011

 

LOGO

  

 

President, Cindrich Consulting; Counsel, Schnader Harrison Segal & Lewis

 

Since February 2011, Judge Cindrich has been serving as the President of Cindrich Consulting, LLC, a business and healthcare consulting company that advises clients on corporate governance, compliance, and business strategies, and from October 1, 2013 through January 31, 2014 he served as Interim General Counsel for United States Steel Corporation (NYSE: X). Judge Cindrich joined Schnader Harrison Segal & Lewis (“Schnader”), a law firm, as legal counsel in April 2013 and took a temporary leave of absence on October 1, 2013 to join United States Steel as Interim General Counsel, returning to Schnader after his time at United States Steel. In May 2012, he joined the Board of Directors of Allscripts Healthcare Solutions, Inc. (NASDAQ: MDRX), which provides healthcare information technology solutions, where he served until April 2015. From 2011 through 2012, Judge Cindrich served as a senior advisor to the Office of the President of the University of Pittsburgh Medical Center (“UPMC”), an integrated global health enterprise. From 2004 through 2010, Judge Cindrich was a Senior Vice President and the Chief Legal Officer of UPMC. From 1994 through January 2004, Judge Cindrich served as a judge on the United States District Court for the Western District of Pennsylvania. Prior to that appointment, he was active as an attorney in both government and private practice, including positions as the U.S. Attorney for the Western District of Pennsylvania and as the Allegheny County Assistant Public Defender and Assistant District Attorney. Judge Cindrich’s qualifications to serve on the Mylan Board include, among others, his extensive legal and leadership experience and judgment, as well as his independence, and in-depth knowledge of the healthcare industry.

 

 

 

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Director Nominees (continued)

 

 

Name, Age, and Year

First Became a Director**

  

Principal Occupation and Business Experience;

Other Directorships and Qualifications

 

Robert J. Coury

55

2002

 

LOGO

  

 

Executive Chairman

 

Robert J. Coury has been the Executive Chairman of Mylan and the Mylan Board since January 2012. Under his visionary leadership, Mylan transformed from the third largest generics pharmaceutical company in the U.S. into one of the largest pharmaceutical companies in the world, earning spots in both the S&P 500 and, prior to the Company’s reincorporation outside of the U.S. in 2015, the Fortune 500. Mr. Coury was first elected to the Mylan Board in February 2002, having served since 1995 as a strategic advisor to the Company. He became the Mylan Board’s Vice Chairman shortly after his election and served as CEO of the Company from September 2002 until January 2012.

 

Since 2007, Mr. Coury has led the Company through a series of transactions totaling approximately $15 billion, which transformed the Company into a global powerhouse within the highly competitive pharmaceutical industry. In 2007, Mylan purchased India-based Matrix Laboratories, a major producer of active pharmaceutical ingredients, and the generics business of Europe-based Merck KGaA. Subsequent acquisitions under Mr. Coury’s leadership further expanded the Company into new therapeutic categories and greatly enhanced its geographic and commercial footprint. For instance, in 2010, Mylan acquired Bioniche Pharma, an injectables business in Ireland, and in 2012, Mylan acquired India-based Agila Specialties, a global injectables company. Most recently, the Company completed its acquisition of Abbott Laboratories’ non-U.S. developed markets specialty and branded generics business.

 

As a result of this period of expansion, the Company now has in place a high quality foundation supporting Mylan’s mission of providing the world’s 7 billion people with access to high quality medicine.

 

Before assuming his current role in 2012, Mr. Coury also executed a successful executive leadership transition after cultivating and developing a powerful leadership team. Grooming executive talent from within and recruiting dynamic leaders from outside the Company were both key components of the Company’s past, current and future growth strategies.

 

Prior to Mylan, Mr. Coury was the principal of Coury Consulting, a boutique business advisory firm he formed in 1989, and The Coury Financial Group, a successful financial and estate planning firm, which he founded in 1984. Mr. Coury earned a Bachelor of Science degree in industrial engineering from the University of Pittsburgh. He has served as a member of the University of Southern California President’s Leadership Council since 2014.

 

Mr. Coury’s qualifications to serve on the Mylan Board include, among others, his prior business experience, his in-depth knowledge of the industry, the Company, its businesses, and management, and his leadership experience as the Company’s CEO, as well as his judgment, strategic vision, and service and leadership as Vice Chairman and then Chairman of the Mylan Board for more than ten years – the most transformational and successful time in the Company’s history.

 

 

 

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Director Nominees (continued)

 

Name, Age, and Year

First Became a Director**

  

Principal Occupation and Business Experience;

Other Directorships and Qualifications

 

JoEllen Lyons Dillon

52

2014

 

LOGO

  

 

Executive Vice President, Chief Legal Officer,

and Corporate Secretary, The ExOne Company

 

Ms. Dillon has served as Chief Legal Officer and Corporate Secretary of The ExOne Company (NASDAQ: XONE), a global provider of three-dimensional printing machines, since March 2013, and as Executive Vice President since December 2014. Previously, she was a legal consultant on ExOne’s initial public offering. Prior to that experience, Ms. Dillon was a partner with Reed Smith LLP, a law firm, from 2002 until 2011. She had previously been at the law firm Buchanan Ingersoll & Rooney PC from 1988 until 2002, where she became a partner in 1997. Ms. Dillon is the former Chair, and currently serves as the Audit Committee Chair of, the Allegheny District chapter of the National Multiple Sclerosis Society. Ms. Dillon’s qualifications to serve on the Mylan Board include, among others, this experience, as well as her independence, judgment, and substantial legal and leadership experience.

 

 

Neil Dimick, C.P.A.*

66

2005

 

LOGO

  

 

Retired Executive Vice President and Chief Financial Officer,

AmerisourceBergen Corporation

 

Currently retired, Mr. Dimick previously served as Executive Vice President and Chief Financial Officer of AmerisourceBergen Corporation (NYSE: ABC), a wholesale distributor of pharmaceuticals, from 2001 to 2002. From 1992 to 2001, he was Senior Executive Vice President and Chief Financial Officer of Bergen Brunswig Corporation, a wholesale drug distributor. Prior to that experience, Mr. Dimick served as a partner with Deloitte for eight years. Mr. Dimick also serves on the Boards of Directors of WebMD Health Corp. (NASDAQ: WBMD), Alliance HealthCare Services, Inc. (NASDAQ: AIQ), and Resources Connection, Inc. (NASDAQ: RECN). Mr. Dimick also served on the Boards of Directors of Thoratec Corporation from 2003 to October 2015, at which time it was purchased by St. Jude Medical, Inc., and HLTH Corporation from 2002 to 2009, at which time it was merged into WebMD Health Corp. Mr. Dimick has invaluable experience and knowledge regarding the business, platforms, strategies, challenges, opportunities, and management of the Company, among other matters. Mr. Dimick’s qualifications to serve on the Mylan Board include, among others, this experience, as well as his independence, substantial industry experience, judgment, business and accounting background, and judgment.

 

 

 

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Director Nominees (continued)

 

 

Name, Age, and Year

First Became a Director**

  

Principal Occupation and Business Experience;

Other Directorships and Qualifications

 

Melina Higgins

48

2013

 

LOGO

  

 

Retired Partner and Managing Director, Goldman Sachs

 

Currently retired, Ms. Higgins held senior roles of increasing responsibility at The Goldman Sachs Group, Inc. (NYSE: GS), including Partner and Managing Director, during her nearly 20-year career at the firm from 1989 to 1992 and 1994 to 2010. During her tenure at Goldman Sachs, Ms. Higgins served as a member of the Investment Committee of the Principal Investment Area, which oversaw and approved global private equity and private debt investments and was one of the largest alternative asset managers in the world. She also served as head of the Americas and as co-chairperson of the Investment Advisory Committee for the GS Mezzanine Partners funds, which managed over $30 billion of assets and were global leaders in their industry. Ms. Higgins also serves on the Women’s Leadership Board of Harvard University’s John F. Kennedy School of Government. In September 2013, Ms. Higgins joined the Board of Directors of Genworth Financial Inc. (NYSE: GNW), an insurance company. In January 2016, Ms. Higgins became non-executive Chairman of Antares Midco Inc., a private company that provides financing solutions for middle-market, private equity-backed transactions. Ms. Higgins’ qualifications to serve on the Mylan Board include, among others, her independence, broad experience in finance, and judgment.

 

 

Douglas J. Leech, C.P.A.*

61

2000

 

LOGO

  

 

Founder and Principal, DLJ Advisors

 

Mr. Leech is the founder and principal of DLJ Advisors. From 1999 to 2011, he was Founder, Chairman, President and Chief Executive Officer of Centra Bank, Inc. and Centra Financial Holdings, Inc., prior to which he was Chief Executive Officer, President of the southeast region, and Chief Operating Officer of Huntington National Bank. Mr. Leech also served on the Board of Directors of United Bankshares, Inc. (NASDAQ: UBSI) from 2011 to 2015. Mr. Leech’s public accounting, audit, and professional experience has provided him financial and business expertise and leadership experience. In addition, Mr. Leech has invaluable experience and knowledge regarding the business, platforms, strategies, challenges, opportunities, and management of the Company, among other matters. Mr. Leech’s qualifications to serve on the Mylan Board include, among others, this experience, as well as his independence, years of business experience, and judgment.

 

 

 

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Director Nominees (continued)

 

 

Name, Age, and Year

First Became a Director**

  

Principal Occupation and Business Experience;

Other Directorships and Qualifications

 

Rajiv Malik^

55

2013

 

LOGO

  

 

President

 

Mr. Malik has served as Mylan’s President since January 1, 2012. Previously, Mr. Malik held various senior roles at Mylan, including Executive Vice President and Chief Operating Officer from July 2009 to December 2012, and Head of Global Technical Operations from January 2007 to July 2009. In addition to his oversight of day-to-day operations of the Company as President, Mr. Malik has been instrumental in identifying, evaluating, and executing on significant business development opportunities, expanding and optimizing Mylan’s product portfolio, and leveraging Mylan’s global research and development capabilities, among other important contributions. Previously, he served as Chief Executive Officer of Matrix Laboratories Limited (n/k/a Mylan Laboratories Limited) from July 2005 to June 2008. Prior to joining Matrix, he served as Head of Global Development and Registrations for Sandoz GmbH from September 2003 to July 2005. Prior to joining Sandoz, Mr. Malik was Head of Global Regulatory Affairs and Head of Pharma Research for Ranbaxy from October 1999 to September 2003. Mr. Malik’s qualifications to serve on the Mylan Board include, among others, his extensive industry and leadership experience, his understanding of the Asia-Pacific region and other growth markets, and his knowledge about the Company and judgment.

 

 

Joseph C. Maroon, M.D.

75

2003

 

LOGO

  

 

Professor, Heindl Scholar in Neuroscience, and Vice Chairman of the Department of Neurosurgery for the University of Pittsburgh Medical Center; Neurosurgeon for the Pittsburgh Steelers

 

Dr. Maroon is Professor, Heindl Scholar in Neuroscience and Vice Chairman of the Department of Neurosurgery, UPMC, and has held other positions at UPMC since 1998. He also has served as the team neurosurgeon for the Pittsburgh Steelers since 1981. From 1995 to 1998, Dr. Maroon was Professor and Chairman of the Department of Surgery at Allegheny General Hospital, and from 1984 to 1999 he was Professor and Chairman of the Department of Neurosurgery at Allegheny General Hospital. Dr. Maroon has earned numerous awards for his contributions to neurosurgery from various national and international neurological societies throughout his career, and patients travel from all over the world to seek his care. In addition, Dr. Maroon has invaluable experience and knowledge regarding the business, platforms, strategies, challenges, opportunities, and management of the Company, among other matters. Dr. Maroon’s qualifications to serve on the Mylan Board include, among others, this experience, as well as his independence, exceptional medical and leadership experience, and judgment.

 

 

 

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Director Nominees (continued)

 

 

Name, Age, and Year

First Became a Director**

  

Principal Occupation and Business Experience;

Other Directorships and Qualifications

 

Mark W. Parrish

60

2009

 

LOGO

  

 

Chairman and Chief Executive Officer, Trident USA Health Services

 

Mr. Parrish has served as Chairman and Chief Executive Officer of TridentUSA Health Services, a provider of mobile X-ray and laboratory services to the long-term care industry, since 2008. Since January 2013, Mr. Parrish has also served on the Board of Directors of Omnicell, Inc. (NASDAQ: OMCL), a company that specializes in healthcare technology. Mr. Parrish also serves on the Boards of Directors of Silvergate Pharmaceuticals, a private company that develops and commercializes pediatric medications, and GSMS, a private company that specializes in meeting unique labeling and sizing needs for its customers and pharmaceutical packaging, serialization, and distribution. From 2001 to 2007, Mr. Parrish held management roles of increasing responsibility with Cardinal Health Inc. (NYSE: CAH) and its affiliates, including Chief Executive Officer of Healthcare Supply Chain Services for Cardinal Health from 2006 to 2007. Mr. Parrish also serves as President of the International Federation of Pharmaceutical Wholesalers, an association of pharmaceutical wholesalers and pharmaceutical supply chain service companies, and senior adviser to Frazier Healthcare Ventures, a healthcare oriented growth equity firm. Mr. Parrish’s qualifications to serve on the Mylan Board include, among others, his independence, extensive industry, business, and leadership experience, knowledge of the healthcare industry, and judgment.

 

 

Rodney L. Piatt, C.P.A.*

63

2004

 

LOGO

  

 

Lead Independent Director and Vice Chairman; President and Owner, Horizon Properties Group, LLC; CEO, Lincoln Manufacturing Inc.

 

Mr. Piatt is the Lead Independent Director and has served as Vice Chairman of the Mylan Board since May 2009. Since 1996, he has also been President and owner of Horizon Properties Group, LLC, a real estate and development company. Since 2003, Mr. Piatt has also served as Chief Executive Officer and Director of Lincoln Manufacturing Inc., a steel and coal manufacturing company. Mr. Piatt is also on the Board of Directors of AccuTrex Products, Inc., a private company that manufactures a wide range of custom products for diverse and demanding industries throughout the world. Mr. Piatt brings extensive experience to the Mylan Board as an auditor and a successful business owner. In addition, Mr. Piatt has invaluable experience and knowledge regarding the business, platforms, strategies, challenges, opportunities, and management of the Company, among other matters. Mr. Piatt’s qualifications to serve on the Mylan Board include, among others, this experience, as well as his independence, financial and business expertise, leadership experience, and judgment.

 

 

 

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Director Nominees (continued)

 

 

Name, Age, and Year

First Became a Director**

  

Principal Occupation and Business Experience;

Other Directorships and Qualifications

 

Randall L. (Pete) Vanderveen, Ph.D., R.Ph.

65

2002

 

LOGO

  

 

Professor of Pharmaceutical Policy and Economics, Senior Adviser to the Leonard D. Schaeffer Center of Health Policy and Economics, Director of the Margaret and John Biles Center for Leadership, and Senior Adviser to the Dean for Advancement, School of Pharmacy, University of Southern California

 

Dr. Vanderveen is currently Professor of Pharmaceutical Policy and Economics, Senior Adviser to the Leonard D. Schaeffer Center of Health Policy and Economics, Director of the Margaret and John Biles Center for Leadership, and Senior Adviser to the Dean for Advancement at the School of Pharmacy, University of Southern California in Los Angeles, California. Dr. Vanderveen previously served as Dean, Professor and John Stauffer Decanal Chair of the USC School of Pharmacy from 2005 to 2015 where he was named “Outstanding Pharmacy Dean in the Nation” in 2013 by the American Pharmacist Association. From 1998 to 2005, he served as Dean and Professor of Pharmacy of the School of Pharmacy and the Graduate School of Pharmaceutical Sciences at Duquesne University, before which he was Assistant Dean at Oregon State University from 1988 to 1998. Dr. Vanderveen has an extensive pharmaceutical and academic background. In addition, Dr. Vanderveen has invaluable experience and knowledge regarding the business, platforms, strategies, challenges, opportunities, and management of the Company, among other matters. Dr. Vanderveen’s qualifications to serve on the Mylan Board include, among others, this experience, as well as his independence, pharmaceutical and leadership experience, and judgment.

 

Ages as of May 25, 2016.

^ Refers to an executive director. All other directors listed above are non-executive directors.
* C.P.A. distinctions refer to “inactive” status.
** Includes service as director of Mylan Inc. and Mylan N.V. Each director listed above was a director of Mylan Inc. on the Closing Date and became a director of Mylan N.V. on such date in connection with the EPD Transaction.

THE MYLAN BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE APPOINTMENT OF MS. BRESCH AND MR. MALIK AS EXECUTIVE DIRECTORS AND EACH OF THE OTHER NOMINEES DISCUSSED ABOVE AS NON-EXECUTIVE DIRECTORS.

 

 

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Meetings of the Mylan Board

 

 

The Mylan Board met seven times in 2015, including three meetings of Mylan N.V. (after the Closing Date) and four meetings of Mylan Inc. (prior to the Closing Date). In addition to meetings of the Mylan Board, directors attended meetings of individual Mylan Board committees of which they were members. Each of the directors attended at least 75% of the Mylan Board meetings and meetings of Mylan Board committees of which they were a member during the periods for which they served. Directors are expected to attend the annual general meeting of shareholders of Mylan where practicable. Twelve members of the Mylan Board attended Mylan’s extraordinary general meeting on August 28, 2015, which constituted the Company’s 2015 annual meeting of shareholders for the purposes of compliance with NASDAQ listing standards.

Non-management members of the Mylan Board met in executive session from time to time during 2015. As

noted, Rodney L. Piatt, the Vice Chairman of the Mylan Board, is the Lead Independent Director and presides at such executive sessions.

 

 

Mylan Board Committees

 

 

The standing committees of the Mylan Board include the Audit Committee, the Compensation Committee, the Compliance Committee, the Executive Committee, the Finance Committee, the Governance and Nominating Committee, and the Science and Technology Committee. Each committee operates pursuant to a written charter.

The table below provides the current membership and 2015 meeting information for the noted Mylan Board committees of Mylan. The 2015 meeting information includes meetings of Mylan N.V. (after the Closing Date) and meetings of Mylan Inc. (prior to the Closing Date).

 

 

Director

 

 

Audit

 

 

Compensation

 

 

Compliance

 

 

Executive

 

 

Finance

 

 

Governance

and Nominating

 

 

Science and

Technology

 

Heather Bresch

              X

Wendy Cameron(1)

    C         X  

Hon. Robert J. Cindrich

      X       X   X

Robert J. Coury

        C      

JoEllen Lyons Dillon

      X        

Neil Dimick

  C   X     X   X    

Melina Higgins

  X         C    

Douglas J. Leech

  X         X   C  

Rajiv Malik

              X

Joseph C. Maroon, M.D.

      X       X   C

Mark W. Parrish

    X   C     X    

Rodney L. Piatt(1)

  X       X   X   X  

Randall L. (Pete) Vanderveen, Ph.D., R.Ph.

      X         X

Meetings during 2015

  5   7   4   7   2   3   1

 

(1) Mr. Piatt served as the Chair of the Compensation Committee until October 27, 2015, at which time Ms. Cameron was appointed Chair of the Compensation Committee.

C = Chair

X = Member

Copies of the committee charters of Mylan are available on Mylan’s website at http://www.mylan.com/company/corporate-governance or in print to shareholders upon request, addressed to Mylan N.V.’s Corporate Secretary at Building 4, Trident Place, Mosquito Way, Hatfield, Hertfordshire, AL10 9UL, England.

 

 

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Audit Committee and Audit Committee Financial Expert

 

 

The Audit Committee’s responsibilities include, among others: the appointment (other than the independent auditor of annual accounts prepared in accordance with Dutch law), compensation, retention, oversight, and replacement of the Company’s independent registered public accounting firm; approving the scope, procedures and fees for the proposed audit for the current year and reviewing the scope, conduct and findings of any financial or internal control-related audit performed by the independent registered public accounting firm; reviewing the organization, responsibilities, plans and resources of the internal audit function; reviewing with management both the Company’s financial statements and management’s assessment of the Company’s internal control over financial reporting; reviewing, including reviewing and discussing with management (including the Company’s internal audit function) and the independent registered public accounting firm, as appropriate, the Company’s processes and procedures with respect to risk assessment and risk management; and reviewing, approving, ratifying or rejecting “transactions” between the Company and “related persons” (each as defined in Item 404 of Regulation S-K). All of the members of the Audit Committee are independent directors, as required by and as defined in the audit committee independence standards of the SEC and the applicable NASDAQ listing standards. The Mylan Board has determined that each of the Audit Committee members – Mr. Dimick, Ms. Higgins, Mr. Leech, and Mr. Piatt – is an “audit committee financial expert,” as that term is defined in the rules of the SEC. The Mylan Board has also approved Mr. Dimick’s concurrent service on the audit committees of more than two other public companies.

 

 

Compensation Committee

 

 

The Compensation Committee’s responsibilities include, among others: reviewing and recommending to the non-executive, independent (in accordance with the NASDAQ listing standards) members of the Mylan Board corporate goals and objectives relevant to the Executive Chairman’s, CEO’s, and other executive directors’ compensation, evaluating such individual’s performance, and determining (with respect to the CEO’s and other executive directors’ compensation) and providing recommendations to the non-executive,

independent members of the Mylan Board with respect to such individual’s compensation based on these evaluations. In making such recommendations, the Compensation Committee may consider pay for performance, alignment with long-term shareholder interests, promotion of Company strategic goals, maintenance of the appropriate level of fixed and at-risk compensation, remaining competitive with companies within the Company’s peer group, internal pay equity, an executive’s leadership and mentoring skills and contributions, talent management, the executive’s contributions to establishment or execution of corporate strategy, retention, and recognition of individual performance and contributions, and/or any other factors determined by the Mylan Board or the Compensation Committee to be in the interests of the Company. The Compensation Committee also exercises oversight of, and provides recommendations to the Mylan Board as appropriate regarding, the compensation of the other executive officers of the Company and applicable compensation programs and incentive compensation plans, as well as the compensation of independent directors. All of the members of the Compensation Committee are independent directors as defined in the applicable NASDAQ listing standards.

 

 

Compliance Committee

 

 

The Compliance Committee oversees the Chief Compliance Officer’s implementation of the Company’s Corporate Compliance Program and, as appropriate, makes recommendations to the Mylan Board with respect to the formulation or re-formulation of, and the implementation, maintenance, and monitoring of, the Company’s Corporate Compliance Program and Code of Business Conduct and Ethics as may be modified, supplemented or replaced from time to time, designed to support and promote compliance with corporate policies and legal rules and regulations. All of the members of the Compliance Committee are independent directors as defined in the NASDAQ listing standards.

 

 

Executive Committee

 

 

The Executive Committee exercises those powers of the Mylan Board not otherwise limited by a resolution of the Mylan Board or by law.

 

 

 

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Finance Committee

 

 

The Finance Committee advises the Mylan Board with respect to, and by discharging the duties and responsibilities delegated to it by the Mylan Board in respect of, material financial matters and transactions of the Company including, but not limited to: reviewing and overseeing material mergers, acquisitions, and combinations with other companies; swaps and other derivatives transactions; the establishment of credit facilities; potential financings with commercial lenders; and the issuance and repurchase of the Company’s debt, equity, hybrid or other securities. All of the members of the Finance Committee are independent directors as defined in the applicable NASDAQ listing standards.

 

 

Governance and Nominating Committee

 

 

The Governance and Nominating Committee advises the Mylan Board with respect to corporate governance matters as well as the nomination or re-nomination of director candidates and its responsibilities also include overseeing both the Mylan Board’s review and consideration of shareholder recommendations for director candidates and the Mylan Board’s annual self-evaluation. Additionally, the Governance and Nominating Committee oversees director orientation and Mylan Board continuing education programs and makes recommendations to the Mylan Board with respect to the annual evaluation of independence of each director and, as needed, the appointment of directors to committees of the Mylan Board and the appointment of a chair of each committee. All of the members of the Governance and Nominating Committee are independent directors as defined in the applicable NASDAQ listing standards.

 

 

Science and Technology Committee

 

 

The Science and Technology Committee serves as a sounding board as requested by management and, at the Mylan Board’s request, reviews the Company’s research and development strategy and portfolio from time to time from a scientific and technological perspective.

 

 

Consideration of Director Nominees

 

 

For purposes of identifying individuals qualified to become members of the Mylan Board, and consistent

with Mylan’s Corporate Governance Principles, the Governance and Nominating Committee considers the following general criteria, among others, for nomination by the Mylan Board of director candidates in accordance with Mylan’s articles of association. These criteria, among others, reflect the traits, abilities, and experience that the Mylan Board looks for in determining candidates for election to the Mylan Board:

 

    Directors shall be of the highest ethical character and share the values of the Company.

 

    Directors shall have personal and/or professional reputations that are consistent with the image and reputation of the Company.

 

    Directors shall have relevant expertise and experience and be able to offer advice and guidance to the Chief Executive Officer based on that expertise and experience.

 

    Directors shall have the ability to exercise sound business judgment.

 

    Unless otherwise approved by the Mylan Board, directors shall not be a member of the board of directors or an officer or employee of a competitor (or an affiliate of a competitor) of the Company.

In addition to the criteria set forth above and any others the Governance and Nominating Committee or Mylan Board may consider, a majority of the members of the Mylan Board must be “independent,” as that term may be defined from time to time by NASDAQ listing standards, including that an independent director must be free of any relationships which, in the opinion of the Mylan Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

Although the Governance and Nominating Committee has not set specific targets with respect to diversity, the Governance and Nominating Committee and the Mylan Board as a whole believe that it is important for Mylan Board members to represent diverse viewpoints and further that the personal backgrounds and qualifications of the directors, considered as a group, should provide a significant composite mix of experience, knowledge and abilities. The Mylan Board also seeks to combine the skills and experience of its long-standing board members with the fresh perspectives, insights, skills, and experiences of new members.

 

 

 

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As needed, the Governance and Nominating Committee may identify new potential director nominees by, among other things, asking current directors and executive officers and external advisors to notify the Governance and Nominating Committee if they become aware of persons meeting the criteria described above who would be suitable candidates for service on the Mylan Board. The Governance and Nominating Committee also may, as needed, engage firms that specialize in identifying director candidates.

The Governance and Nominating Committee will consider for nomination by the Mylan Board potential director candidates properly recommended by shareholders, subject to the discretion of the Mylan Board and to Mylan’s articles of association. In considering candidates recommended by shareholders, the Governance and Nominating Committee will take into consideration, among other matters, the needs of the Mylan Board and Mylan and the qualifications of the candidate, including, among other things, those traits, abilities, and experiences described above. Any submission to the Governance and Nominating Committee of a recommended candidate for consideration must include, among other information, the name of the recommending shareholder and evidence of such person’s ownership of Mylan shares, and the name of the recommended candidate, his or her resume or a statement of his or her principal occupation or employment, and the recommended candidate’s signed consent to be named as a director if recommended by the Governance and Nominating Committee and nominated by the Mylan Board. Any shareholder recommendations for director must be sent to Mylan’s Corporate Secretary at Building 4, Trident Place, Mosquito Way, Hatfield, Hertfordshire, AL10 9UL, England, not later than 120 days prior to the anniversary date of Mylan’s most recent annual general meeting of shareholders.

As appropriate, the Governance and Nominating Committee will review publicly available information regarding a potential candidate, request information from the candidate, review the candidate’s experience and qualifications, including in light of any other candidates that the Governance and Nominating Committee might be considering, and conduct together with other members of the Mylan Board one or more interviews with the candidate. Governance and Nominating Committee members may also contact one or more references provided by the

candidate or may contact other members of the business community or other persons that may have first-hand knowledge of the candidate’s talents and experience. The Governance and Nominating Committee’s evaluation process does not vary based on whether or not a candidate is recommended by a shareholder.

 

 

Director Independence

 

 

The Mylan Board has determined that Ms. Cameron, Judge Cindrich, Ms. Dillon, Mr. Dimick, Ms. Higgins, Mr. Leech, Dr. Maroon, Mr. Parrish, Mr. Piatt, and Dr. Vanderveen are independent directors under the applicable NASDAQ listing standards. In making these determinations, the Mylan Board considered, with respect to Dr. Maroon’s independence, that his daughter has worked for Mylan during one or more of the past several years. With respect to Mr. Piatt’s independence, the Mylan Board considered that in 2015 and earlier years, Mylan paid minimal membership costs for several employees and sponsored events at a facility indirectly owned, in part, by Mr. Piatt. The Mylan Board also considered that Mr. Piatt is a prominent member of the Southpointe community, in which Mylan’s headquarters is located, and that he has, and has had in the past, ownership interests in certain properties in the Southpointe community; Mr. Piatt has also been involved in the development of Southpointe and in various routine matters related to the upkeep and maintenance of the neighborhood and associated utilities, as has Mylan. With regard to both Dr. Maroon and Mr. Piatt, the Mylan Board determined that any such arrangements, transactions, or relationships do not interfere with the exercise of independent judgment by these directors in carrying out their responsibilities as a director of Mylan. Mr. Coury, Ms. Bresch, and Mr. Malik are not independent directors due to their current service as Mylan’s Executive Chairman, CEO, and President, respectively. A majority of the Mylan Board is also independent within the meaning of best practice provision III.2.2 of the Dutch Corporate Governance Code.

 

 

Board Education

 

 

From time-to-time, the Mylan Board or individual Mylan Board members participate in director educational programs.

 

 

 

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Mylan Board Leadership Structure

 

 

The Mylan Board elects one of its own members as the Chairman of the Mylan Board. Mr. Coury has served as the Chairman of the Board of Mylan Inc. and now Mylan N.V. since being elected in May 2009. Based on significant interaction and experience with Mr. Coury, the independent directors on the Mylan Board continue to believe that Mr. Coury’s highly collaborative relationship with the independent directors, including the Lead Independent Director, his extensive knowledge of the industry, Mylan’s management, businesses and global platform, and the opportunities and challenges anticipated in the future, as well as his proven leadership abilities, vision, and insight, and the continued outstanding performance of the Company, make him the ideal person to lead the Mylan Board. Mr. Coury previously served as CEO of the Company from September 2002 to January 2012.

In his capacity as Executive Chairman, Mr. Coury’s primary responsibilities include providing overall leadership and strategic direction of the Company; providing guidance to the CEO and senior management; coordinating the activities of the Mylan Board; overseeing talent management; communicating with shareholders and other stakeholders; strategic business development; and mergers and acquisitions.

Effective January 1, 2012, the Mylan Board implemented an enhanced management structure, again electing Mr. Coury as Executive Chairman of the Mylan Board (as described above) and appointing Ms. Bresch as CEO and Mr. Malik as President, among other changes described in previous public filings.

In connection with this enhanced management structure implemented in 2012, the Mylan Board also appointed Mr. Piatt as Lead Independent Director based on, among other factors, Mr. Piatt’s independence, outstanding contributions as a director of the Company, excellent business judgment, and recognized leadership abilities. The Mylan Board believes that this appointment only further enhanced the Mylan Board’s already strong independent oversight of the Company. As Lead Independent Director, Mr. Piatt presides at executive sessions of the independent directors, and he has the authority to call meetings of the independent directors. He also serves on the Executive Committee of the Mylan Board. In addition, the Chairman, in consultation with the Lead Independent Director, as applicable,

determines the information sent to the Mylan Board, the meeting agendas, and meeting schedules to assure that there is sufficient time for discussion of agenda items. The Lead Independent Director in turn is charged with separately approving information sent to the Mylan Board, its meeting agendas, and its meeting schedules. He also serves as the contact person for stakeholders wishing to communicate with the Mylan Board and as a liaison between the Chairman and independent directors.

As of 2012, in her role as CEO, Ms. Bresch’s primary responsibilities include the day-to-day running and oversight of the Company’s global operations, business, and functions; executing on and overseeing implementation of strategies developed or approved by the Mylan Board; continued oversight of process and operational enhancements; and continued implementation of a blueprint for an organizational design to help ensure the sustainability of our success into the future.

The Mylan Board strongly believes, and the Company’s short- and long-term performance demonstrates, that the current Mylan Board and management structures continue to prove to be ideal for Mylan, and that it has produced outstanding results for shareholders and has benefited the interests of other stakeholders, as illustrated on pages 35 to 44 of this Proxy Statement. We believe that the Company and its stakeholders have benefited, and continue to benefit, from the respective leadership, judgment, vision, experience – and performance – of the existing Mylan Board and management structure, and that the Executive Chairman, Mr. Coury, the CEO, Ms. Bresch, and the President, Mr. Malik, all share a vision for the Company that is consistent with the Mylan Board’s philosophy.

This determination is based on, among other factors, senior management’s demonstrated leadership abilities; the performance of the Company; the Mylan Board’s deep and unique knowledge of the complexity, size, and dramatic growth of the Company, the Company’s businesses, operations, vision, and strategies; the respective talents and capabilities of our fellow directors and management; and the opportunities and challenges anticipated in the future.

 

 

 

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Our governance structure also provides effective independent oversight by the Mylan Board in the following additional ways:

 

    ten of the thirteen members of the Mylan Board are independent;

 

    the Mylan Board has established robust Corporate Governance Principles;

 

    the Audit, Compensation, Compliance, Finance and Governance and Nominating Committees are all composed entirely of independent directors (as defined in the applicable NASDAQ listing standards);

 

    the independent directors on the Mylan Board and its committees receive extensive information and input from management and external advisors, engage in detailed discussion and analysis regarding matters brought before them (including in executive session), and consistently and actively engage in the development and approval of significant corporate strategies;

 

    the Mylan Board and its committees have unrestricted access to management;

 

    the Mylan Board and its committees (other than the Science and Technology Committee) can retain, at their discretion and at Company expense, any advisors they deem necessary with respect to any matter brought before the Mylan Board or any of its committees (the Science and Technology Committee retains advisors in consultation with the Executive Chairman and the Lead Independent Director);

 

    the Mylan Board and its committees are intimately familiar with the business and management of the Company and collectively met 36 times in 2015, including 24 times after the Closing Date; and

 

    in 2015, the Mylan Board held five executive sessions of non-management members while its committees collectively held 16 executive sessions.

 

Board of Directors Risk Oversight

 

 

The Mylan Board’s Audit Committee is primarily responsible for overseeing the Company’s risk management processes on behalf of the full Mylan Board. The Audit Committee focuses on financial reporting risk and oversight of the internal audit function. It receives reports from management at least quarterly regarding, among other matters, the Company’s assessment of risks and the adequacy and effectiveness of internal controls. The Audit Committee also receives reports from management addressing risks impacting the day-to-day operations of the Company. Mylan’s internal audit function meets with the Audit Committee on at least a quarterly basis to discuss potential risk or control issues. The Audit Committee reports regularly to the full Mylan Board, which also considers the Company’s risk profile. The full Mylan Board focuses on the most significant risks facing the Company and the Company’s general risk management strategy, and also seeks to ensure that risks undertaken by the Company are consistent with the Mylan Board’s risk management expectations. While the Mylan Board oversees the Company’s overall risk management strategy, management is responsible for the day-to-day risk management processes. We believe this division of responsibility continues to remain a highly effective approach for addressing the risks facing the Company and that the Mylan Board’s leadership structure supports this approach.

In addition, the Compensation Committee is responsible for overseeing the Company’s compensation risks as discussed further beginning on page 51 of this Proxy Statement under “Consideration of Risk in Company Compensation Policies.”

Also, the Compliance Committee is responsible for overseeing the Company’s corporate compliance program and related policies and controls.

 

 

 

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Non-Employee Director Compensation for 2015

 

 

The following table sets forth information concerning the compensation earned by the Directors who are not employees of the Company or Mylan Inc. (the “Non-Employee Directors”) for 2015. Directors who are employees of Mylan Inc. do not receive any consideration for their service on the Mylan Board. A discussion of the elements of Non-Employee Director compensation follows the table.

 

Name

   Fees Earned or Paid
in Cash ($)
   RSUs ($)(1)    Option Awards
($)(1)
   All Other
Compensation ($)(2)
   Total ($)

Wendy Cameron

   121,167    165,050    50,014    21,453    357,684

Hon. Robert J. Cindrich

   120,000    165,050    50,014    21,453    356,517

JoEllen Lyons Dillon

   110,000    165,050    50,014    21,946    347,010

Neil Dimick

   175,000    165,050    50,014    21,679    411,743

Melina Higgins

   132,000    165,050    50,014    23,067    370,131

Douglas J. Leech

   125,000    165,050    50,014    22,055    362,119

Joseph C. Maroon, M.D.

   127,000    165,050    50,014    21,453    363,517

Mark W. Parrish

   145,000    165,050    50,014    20,515    380,579

Rodney L. Piatt

   232,833    165,050    50,014    21,453    469,350

Randall L. (Pete) Vanderveen, Ph.D., R.Ph.

   113,000    165,050    50,014    23,934    351,998

 

 

(1) Represents the grant date fair value of the specific award granted to the Non-Employee Director. Option awards and restricted stock unit (“RSU”) awards granted in 2015 vest on May 1, 2016. For information regarding assumptions used in determining the amounts reflected in the table above, please refer to Note 11 to the Company’s Consolidated Financial Statements contained in the Form 10-K for the year ended December 31, 2015. The aggregate number of ordinary shares subject to stock options held by the Non-Employee Directors as of December 31, 2015 were as follows: Ms. Cameron, 5,577; Judge Cindrich, 5,577; Ms. Dillon, 5,577; Mr. Dimick, 5,577; Ms. Higgins, 12,200; Mr. Leech, 5,577; Dr. Maroon, 5,577; Mr. Parrish, 5,577; Mr. Piatt, 82,128; and Dr. Vanderveen, 5,577. The number of unvested RSUs held by each of the non-employee Directors, as of December 31, 2015, was 3,258.
(2) Represents the tax reimbursement payment from Mylan with respect to the Transaction-Related Excise Tax (as defined below) imposed on stock options granted in 2014, so that, on a net after-tax basis, the Non-Employee Director would be in the same position as if the Transaction-Related Excise Tax had not been imposed.

 

Non-Employee Directors receive $100,000 per year in cash compensation for their service on the Mylan Board. Non-Employee Directors are also reimbursed for actual expenses relating to meeting attendance.

In addition:

 

    The Chair of the Audit Committee receives an additional fee of $30,000 per year;

 

    The Chair of the Compensation Committee receives an additional fee of $25,000 per year;

 

    The Chair of the Compliance Committee receives an additional fee of $30,000 per year;

 

    The Chair of the Finance Committee receives an additional fee of $20,000 per year;

 

    The Chair of the Governance and Nominating Committee receives an additional fee of $10,000 per year;

 

    The Chair of the Science and Technology Committee receives an additional fee of $10,000 per year;

 

    Each member of the Executive Committee who is a Non-Employee Director receives an additional fee of $30,000 per year;

 

    Each member of the Audit Committee and Compensation Committee receives an additional fee of $12,000 per year;
    Each member of the Compliance Committee receives an additional fee of $10,000 per year;

 

    Each member of the Governance and Nominating Committee receives an additional fee of $7,000 per year;

 

    Each member of the Finance Committee and the Science and Technology Committee receives an additional fee of $3,000 per year; and

 

    Mr. Piatt, as the Lead Independent Director, receives an additional fee of $60,000 per year.

Non-Employee Directors are eligible to receive stock options or other grants under the Company’s Amended and Restated 2003 Long-Term Incentive Plan (the “Amended 2003 Plan”). In November 2015, each Non-Employee Director was granted an option to purchase 2,603 ordinary shares, at an exercise price of $50.66 per share, the closing price per share of the Company’s ordinary shares on the date of grant, which option vests on May 1, 2016, and 3,258 RSUs, also vesting on May 1, 2016. Non-Employee Directors will also receive tax equalization payments for incremental tax liabilities, if any, incurred as a result of attendance at board meetings in the United Kingdom.

 

 

 

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Stock Ownership Requirements

In February 2013, the Board of Mylan Inc. adopted stock ownership requirements for Non-Employee Directors, requiring Non-Employee Directors to hold shares valued at three times their annual retainer as long as they remain on the Mylan Board, and the Board of Mylan Inc. increased this ownership requirement to four times the annual retainer in April 2014. Mylan N.V. adopted the Mylan Inc. stock ownership requirement. Non-Employee Directors who were members of the Board of Mylan Inc. when this policy was initially adopted have until January 1, 2018

to comply, while each other Non-Employee Director has five years from his or her initial election to the Mylan Board or the Board of Mylan Inc., as applicable, to achieve this requirement. The policy was adopted to further demonstrate the alignment of Directors’ interests with shareholders for the duration of their service. As of May 16, 2016, all Non-Employee Directors, except for Ms. Lyons Dillon, satisfied the ownership requirement. Ms. Lyons Dillon joined the Mylan Board in April 2014 and has until April 2019 to satisfy this ownership requirement.

 

 

 

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Security Ownership of Directors, Nominees, and Executive Officers

 

 

The following table sets forth information regarding the beneficial ownership of ordinary shares of Mylan N.V. as of May 16, 2016 by (i) Mylan N.V.’s directors and NEOs, and (ii) all directors and executive officers of Mylan N.V. as a group (based on 508,367,697 ordinary shares of Mylan N.V. outstanding as of such date). For purposes of this table, and in accordance with the rules of the SEC, shares are considered “beneficially owned” if the person, directly or indirectly, has sole or shared voting or investment power over such shares. A person is also considered to beneficially own shares that he or she has the right to acquire within 60 days of May 16, 2016. To Mylan N.V.’s knowledge, the persons in the following table have sole voting and investment power, either directly or through one or more entities controlled by such person, with respect to all of the shares shown as beneficially owned by them, unless otherwise indicated in the footnotes below.

 

Name of Beneficial Owner

  Amount and Nature of            
Beneficial Ownership
  Options Exercisable and
Restricted Shares Vesting
within 60 days
 

Percent of            

Class

Heather Bresch

  929,675(1)(6)   92,332   *

Wendy Cameron

  68,549   5,577   *

Hon. Robert J. Cindrich

  12,194   5,577   *

Robert J. Coury

  1,339,263(2)(6)   86,491   *

JoEllen Lyons Dillon

  5,481   5,577   *

Neil Dimick

  40,459   5,577   *

Melina Higgins

  75,872(3)   12,200   *

Douglas J. Leech

  44,252   5,577   *

Rajiv Malik

  816,846(6)   36,805   *

Joseph C. Maroon, M.D.

  17,996   5,577   *

Anthony Mauro

  152,440(4)(6)   25,687   *

Mark W. Parrish

  33,237   5,577   *

Rodney L. Piatt

  36,393   82,128   *

John D. Sheehan, C.P.A.(5)

  126,220   38,038   *

Randall L. (Pete) Vanderveen, Ph.D., R.Ph.

  37,659   5,577   *

All directors and executive officers as a group
(14 persons, but not including Mr. Sheehan(5))

  3,610,316(7)   380,259   *

 

 

* Less than 1%.
(1) Includes 1,157 shares held in Ms. Bresch’s 401(k) account and 200,000 shares held in a grantor retained annuity trust of which Ms. Bresch is the sole trustee.
(2) Includes 4,957 shares held in Mr. Coury’s 401(k) account and 1,000,000 shares held in a grantor retained annuity trust of which Mr. Coury is the sole trustee.
(3) Includes 74,000 shares held by Ms. Higgins’ spouse.
(4) Includes 5,574 shares held in Mr. Mauro’s 401(k) account.
(5) Mr. Sheehan retired from Mylan effective April 1, 2016.
(6) Includes restricted ordinary shares issued on June 10, 2015 upon conversion of stock appreciation rights (“SARs”) pursuant to the terms of Mylan’s One-Time Special Performance-Based Incentive Program (as defined below) implemented in 2014 (as described in detail in “Executive Compensation for 2015”). The restricted ordinary shares remain subject to forfeiture and additional vesting conditions, including achievement of adjusted diluted earnings per share of $6.00 and continued service, and the other terms and conditions of the program.
(7) Includes 11,688 shares held in the executive officers’ 401(k) accounts.

 

 

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Security Ownership of Certain Beneficial Owners

 

 

The following table lists the names and addresses of the shareholders known to management to own beneficially more than five percent of the ordinary shares of Mylan N.V. as of May 16, 2016 (based on 508,367,697 ordinary shares of Mylan N.V. outstanding as of such date):

 

Name and Address of Beneficial Owner

   Amount and Nature of Beneficial
Ownership
  Percent of Class

Subsidiaries of Abbott Laboratories(1)
c/o Abbott Laboratories, 100 Abbott Park Road, Abbott Park,
IL 60064-6092

   69,750,000(2)   13.7%

Wellington Management Company LLP and affiliates,
280 Congress Street, Boston, MA 02210

   44,793,344(3)   8.8%

BlackRock, Inc.
55 East 52nd Street, New York, NY 10055

   33,735,289(4)   6.6%

 

 

(1) Abbott and its subsidiaries that own ordinary shares of Mylan N.V. are subject to the terms of the Shareholder Agreement (the “Shareholder Agreement”), dated February 27, 2015, by and among Mylan N.V., Abbott, Laboratoires Fournier S.A.S. (“Abbott France”), Abbott Established Products Holdings (Gibraltar) Limited (“Abbott Gibraltar”), and Abbott Investments Luxembourg S.à.r.l. (“Abbott Luxembourg” and, together with Abbott France and Abbott Gibraltar, the “Abbott Subsidiaries”). According to Item 4 of the Schedule 13D/A filed by Abbott on August 10, 2015, Abbott Gibraltar distributed 62,782,018 Mylan ordinary shares to Abbott Products on July 28, 2015 (the “Distribution”). Contemporaneously with the Distribution, Abbott Products became a party to the Shareholder Agreement by executing a joinder agreement thereto. As a result of the Distribution, Abbott Gibraltar no longer beneficially owns any Mylan ordinary shares. The Shareholder Agreement will terminate when Abbott no longer beneficially owns any of the ordinary shares of Mylan N.V. issued to it in connection with the EPD Transaction. So long as Abbott beneficially owns at least five percent of the ordinary shares of Mylan N.V., Abbott is required to vote each Mylan N.V. voting security (a) in favor of all those persons nominated and recommended to serve as directors of the Mylan Board or any applicable committee thereof and (b) with respect to any other action, proposal, or matter to be voted on by the shareholders of Mylan N.V. (including through action by written consent), in accordance with the recommendation of the Mylan Board or any applicable committee thereof. However, Abbott is free to vote at its discretion in connection with any proposal submitted for a vote of the Mylan N.V. shareholders in respect of (a) the issuance of equity securities in connection with any merger, consolidation, or business combination of Mylan N.V., (b) any merger, consolidation, or business combination of Mylan N.V., or (c) the sale of all or substantially all the assets of Mylan N.V., except where such proposal has not been approved or recommended by the Mylan Board, in which event Abbott must vote against the proposal.
(2) Based on Schedule 13D/A filed by Abbott, Abbott Luxembourg and Abbott Products with the SEC on August 10, 2015 (the “Schedule 13D/A”), Abbott has sole voting power over 0 shares, shared voting power over 69,750,000 shares, sole dispositive power over 0 shares, and shared dispositive power over 69,750,000 shares; Abbott France has sole voting power, shared voting power, sole dispositive power and shared dispositive power over 0 shares; Abbott Luxembourg has sole voting power over 0 shares, shared voting power over 6,967,982 shares, sole dispositive power over 0 shares, and shared dispositive power over 6,967,982 shares; and Abbott Products has sole voting power over 0 shares, shared voting power over 62,782,018 shares, sole dispositive power over 0 shares and shared dispositive power over 62,782,018 shares.
(3) Based on Schedule 13G/A filed by Wellington Management Group LLP, Wellington Group Holdings LLP, Wellington Investment Advisors Holdings LLP and Wellington Management Company LLP with the SEC on February 11, 2016, Wellington Management Group LLP has sole voting power over 0 shares, shared voting power over 13,546,750 shares, sole dispositive power over 0 shares, and shared dispositive power over 44,793,344 shares; Wellington Group Holdings LLP has sole voting power over 0 shares, shared voting power over 13,546,750 shares, sole dispositive power over 0 shares, and shared dispositive power over 44,793,344 shares; Wellington Investment Advisors Holdings LLP has sole voting power over 0 shares, shared voting power over 13,546,750 shares, sole dispositive power over 0 shares, and shared dispositive power over 44,793,344 shares; and Wellington Management Company LLP has sole voting power over 0 shares, shared voting power over 12,489,471 shares, sole dispositive power over 0 shares, and shared dispositive power over 42,867,413 shares. Based on the Schedule 13G/A, the securities as to which the Schedule 13G/A was filed are owned of record by clients of one or more investment advisers identified therein directly or indirectly owned by Wellington Management Group LLP. Those clients have the right to receive, or the power to direct the receipt of, dividends from, or the proceeds from the sale of, such securities. No such client is known to have such right or power with respect to more than five percent of this class of securities.
(4) Based on Schedule 13G filed by BlackRock, Inc. with the SEC on February 9, 2016, BlackRock, Inc. has sole voting power over 30,656,253 shares, shared voting power over 0 shares, sole dispositive power over 33,735,289 shares, and shared dispositive power over 0 shares.

 

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

 

Section 16(a) of the Exchange Act requires all directors and certain executive officers and persons who own more than 10% of a registered class of Mylan’s equity securities to file with the SEC within specified due dates reports of ownership and reports of changes of ownership of Mylan ordinary shares and our other equity securities. These persons are required by SEC regulations to furnish us with copies of all Section 16(a) reports they file. Based on reports and written representations furnished to us by these persons, we believe that all Mylan directors and relevant executive officers complied with these filing requirements during 2015.

 

 

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Executive Officers

 

 

The names, ages, and positions of Mylan’s executive officers as of May 25, 2016, are as follows:

 

Heather Bresch

   46    Chief Executive Officer (principal executive officer)

Rajiv Malik

   55    President

Anthony Mauro

   43    Chief Commercial Officer

Robert J. Coury

   55    Executive Chairman

 

Each executive officer listed above was an executive officer of Mylan Inc. on the Closing Date and became an executive officer of Mylan N.V. on such date in connection with the EPD Transaction.

Ms. Bresch and Messrs. Coury and Malik are all also members of the Mylan Board and a discussion of their respective business experience and other relevant biographical information is provided under “Voting Item 1 – Appointment of Directors” above.

Mr. Mauro has served as Chief Commercial Officer since January 4, 2016. Prior to that date, Mr. Mauro served as President, North America of Mylan since January 1, 2012. He served as President of Mylan Pharmaceuticals Inc. from 2009 through February 2013. In his 20 years at Mylan, Mr. Mauro has held roles of increasing responsibility, including Chief Operating Officer for Mylan Pharmaceuticals ULC in Canada and Vice President of Strategic Development, North America, and Vice President of Sales, North America for Mylan.

Pursuant to Mylan’s Rules for the Board of Directors of Mylan N.V. (the “Board Rules”), the Mylan Board appoints the Chief Executive Officer and may appoint, or delegate authority to the Chairman or the Chief Executive Officer to appoint, a President, a Chief Financial Officer, a Chief Legal Officer, a Secretary, and any other officers of Mylan as the Mylan Board, the Chairman, or the Chief Executive Officer may desire. Each officer appointed by the Mylan Board, or appointed by the Chairman or the Chief Executive Officer, holds office until his or her successor shall have been appointed, or until his or her death, resignation, or removal. Officers of Mylan who are appointed by the Mylan Board can be removed by the Mylan Board, and the Mylan Board may delegate to the Chairman or the Chief Executive Officer the right to remove any officer the Chairman or the Chief Executive Officer has appointed (but not any officer directly appointed by the Mylan Board). A copy of the Board Rules is available on Mylan’s website at http://www.mylan.com/company/corporate-governance or in print to shareholders upon request, addressed to Mylan N.V.’s Corporate Secretary at Building 4, Trident Place, Mosquito Way, Hatfield, Hertfordshire, AL10 9UL, England.

 

 

 

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Voting Item 2 – Adoption of Dutch Annual Accounts for Fiscal Year 2015

 

 

At the annual general meeting, shareholders will be asked to adopt the Company’s Dutch statutory annual accounts for the fiscal year ended December 31, 2015, which are prepared in accordance with International Financial Reporting Standards as adopted by the European Union (“IFRS”).

As a public limited liability company incorporated under the laws of the Netherlands, Mylan is required by Dutch law to prepare the Dutch statutory annual accounts and submit them to shareholders for adoption. The Company’s Dutch statutory annual accounts are different from the consolidated financial statements contained in our annual report on Form 10-K for the year ended December 31, 2015 that were prepared in accordance with U.S. GAAP and filed with the SEC.

A copy of the Dutch statutory annual accounts is available free of charge on our website at http://www.mylan.com/en/company/corporate-governance and at our office address at Building 4, Trident Place, Mosquito Way, Hatfield, Hertfordshire, AL10 9UL England.

A representative of Deloitte Accountants B.V. is expected to be present at the annual general meeting and will be available to respond to appropriate questions from shareholders, and will be given an opportunity to make a statement if he or she desires to do so.

THE MYLAN BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ADOPTION OF OUR DUTCH STATUTORY ANNUAL ACCOUNTS FOR FISCAL YEAR 2015.

 

 

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Voting Item 3 – Ratification of the Selection of Deloitte & Touche LLP as the Company’s Independent Registered Public Accounting Firm for Fiscal Year 2016

 

 

The Audit Committee has approved Deloitte as the Company’s independent registered public accounting firm to audit the Company’s U.S. GAAP consolidated financial statements for the fiscal year ending December 31, 2016, and has directed that management submit the selection of Deloitte as the independent registered public accounting firm for ratification by the shareholders at the annual general meeting. A representative of Deloitte is expected to be present at the annual general meeting and will be available to respond to appropriate questions from shareholders, and will be given an opportunity to make a statement if he or she desires to do so.

Shareholder ratification of the selection of Deloitte as the Company’s independent registered public accounting firm is not required by Mylan’s articles of association or otherwise. However, if shareholders fail to ratify the selection, the Audit Committee will reconsider whether or not to retain that firm. Even if the selection is ratified, the Audit Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its shareholders.

THE MYLAN BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” RATIFICATION OF THE SELECTION OF DELOITTE AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 2016.

 

 

Principal Accounting Fees and Services

 

 

Deloitte served as Mylan’s independent registered public accounting firm during 2015 and 2014, and no relationship exists other than the usual relationship between independent registered public accounting firm and client. Details about the nature of the services

provided by, and the fees the Company paid to,

Deloitte and affiliated firms for such services during 2015 and 2014 are set forth below.

 

    Dollars in Millions  
    2015     2014  

Audit Fees(1)

  $ 8.5      $ 5.8   

Audit-Related Fees(2)

    0.5        0.4   

Tax Fees(3)

    0.1        0.3   

All Other Fees(4)

    0.1          
 

 

 

   

 

 

 

Total Fees

  $ 9.2      $ 6.5   

 

 

(1) Represents fees for professional services provided for the audit of the Company’s annual consolidated financial statements and Dutch Annual Accounts, the audit of the Company’s internal control over financial reporting as required by Section 404 of the Sarbanes-Oxley Act of 2002, reviews of the Company’s quarterly condensed consolidated financial statements, audit services provided in connection with other statutory or regulatory filings, and accounting, reporting and disclosure matters.
(2) Represents fees for assurance services related to the audit of the Company’s annual consolidated financial statements, including the audit of the Company’s employee benefit plans, comfort letters, certain SEC filings and other agreed upon procedures.
(3) Represents fees related primarily to tax return preparation, tax planning and tax compliance support services.
(4) Represents fees related primarily to advisory services.

 

 

Audit Committee Pre-Approval Policy

 

 

The Audit Committee has a policy regarding pre-approval of audit, audit-related, tax, and other services that the independent registered public accounting firm may perform for the Company. Under the policy, the Audit Committee must pre-approve on an individual basis any requests for audit, audit-related, tax, and other services not covered by certain services that are pre-approved annually by the Audit Committee. The policy also prohibits the engagement of the independent registered public accounting firm for non-audit related financial information systems design and implementation, for certain other services considered to have an impact on independence, and for all services prohibited by the Sarbanes-Oxley Act of 2002. All services performed by Deloitte during 2015 and 2014 were pre-approved by the Audit Committee in accordance with its policy.

 

 

 

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Report of the Audit Committee of the Mylan Board

 

 

The following Report of the Audit Committee of the Mylan Board does not constitute soliciting material and shall not be deemed filed or incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent the Company specifically incorporates such information by reference.

February 5, 2016

The Audit Committee is currently comprised of four directors, each of whom is independent as required by and as defined in the audit committee independence standards of the SEC and the applicable NASDAQ listing standards. The Audit Committee operates under a written charter adopted by the Board, a copy of which is available on the Company’s website at mylan.com/company/corporate-policy.

Management is responsible for the preparation and integrity of the Company’s financial statements. Management is also responsible for implementing and maintaining appropriate accounting and financial reporting policies, procedures, and internal controls designed to ensure compliance with applicable accounting standards and laws and regulations. The independent registered public accounting firm (the “independent auditor”) is responsible for auditing and reviewing the Company’s financial statements and auditing the Company’s internal control over financial reporting, in accordance with standards of the Public Company Accounting Oversight Board (“PCAOB”), and to issue their reports thereon. One of the Audit Committee’s responsibilities is to oversee these processes.

In this context, the Audit Committee met a total of 4 times between February 27, 2015 (which is the date on which Mylan N.V. became a publicly traded company) and December 31, 2015 (and, between January 1, 2015 and February 27, 2015, the Audit Committee of Mylan Inc. (the entity to which Mylan N.V. is successor) met once), and has reviewed and discussed with management, including Mylan’s internal auditor, and with the independent auditor Mylan’s audited consolidated financial statements and its internal control over financial reporting. These discussions covered the quality, as well as the acceptability, of Mylan’s financial reporting practices and the completeness and clarity of the related financial disclosures as well as the effectiveness of Mylan’s internal control over financial reporting and its disclosure controls and procedures. Management represented to the Audit Committee that Mylan’s consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States, and the Audit Committee has reviewed and discussed the consolidated financial statements with management and the independent auditor. The Audit Committee discussed with the independent auditor the matters required to be discussed by Auditing Standard No. 16 (as codified, AS 1301).

Mylan’s independent auditor also provided to the Audit Committee the written disclosures and letter required by the applicable requirements of the PCAOB’s Rule 3526 regarding the independent auditor’s communications with the Audit Committee concerning the independent auditor’s independence, and the Audit Committee discussed these matters with the independent auditor. The Audit Committee has also considered whether the independent auditor’s provision of non-audit services to Mylan is compatible with the firm’s independence. Deloitte & Touche LLP, Mylan’s independent auditor, stated in the written disclosures that in their judgment they are, in fact, independent. The Audit Committee concurred in that judgment of independence.

Based upon the review and discussions referred to above, the Audit Committee recommended to the Board that the audited consolidated financial statements be included in Mylan’s Annual Report on Form 10-K for 2015, which will be filed with the Securities and Exchange Commission.

BY THE AUDIT COMMITTEE:

Neil Dimick, C.P.A., Chairman

Melina Higgins

Douglas J. Leech, C.P.A.

Rodney L. Piatt, C.P.A.

 

 

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Voting Item 4 – Instruction to Deloitte Accountants B.V. for the Audit of the Company’s Dutch Statutory Annual Accounts for Fiscal Year 2016

 

 

Pursuant to Dutch law, the general meeting is authorized to appoint an auditor to audit the Company’s Dutch statutory accounts, which are presented pursuant to IFRS. Based on the recommendation of the Audit Committee of the Mylan Board, the Mylan Board proposes to the general meeting that Deloitte Accountants B.V. be instructed to serve as the auditor who will audit our Dutch statutory annual accounts as required by Dutch law for the year ending December 31, 2016.

THE MYLAN BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE INSTRUCTION TO DELOITTE ACCOUNTANTS B.V. FOR THE AUDIT OF THE COMPANY’S DUTCH STATUTORY ANNUAL ACCOUNTS FOR FISCAL YEAR 2016.

 

 

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Executive Compensation for 2015

 

 

 

 

Compensation Discussion and Analysis

 

 

Executive Summary

The Mylan Board has structured Mylan’s executive compensation programs to create a maximum “return on executive leadership.” Our compensation program is designed to incentivize continued excellence in execution against our long-stated strategy to create a leading, robust, sustainable company, as well as deliver outstanding performance and shareholder value creation over the short- and long-term, and align compensation with performance and shareholder and other stakeholder interests.

As outlined below, Mylan has successfully executed on its clearly articulated strategy, delivering superior long-term shareholder value and continuing to invest in initiatives designed to continue this track record of long-term growth and value creation in the future, all while also meeting and exceeding annual financial and performance targets.

Mylan has long believed that development of, and consistent execution against, a clear and coherent long-term strategy approved by the Mylan Board and executed by senior management is critical to the Company’s success and its ability to consistently create value for shareholders and other stakeholders. Mylan has developed an exceptional global operating and commercial platform and industry-leading product portfolio; attracted and retained highly-talented and motivated leaders to the organization; identified strategic drivers of organic growth and effectively executed against these key growth drivers; and identified exciting external opportunities to further enhance the business and accelerate the Company’s long-term growth trajectory. In pursuing external opportunities, we seek to differentiate the Company by acquiring assets that deliver not only short-term financial benefit, but which also will deliver sustainable long-term value for our business, shareholders and other stakeholders.

Since the beginning of 2015, we have had extensive discussions with holders of over 80% of Mylan’s ordinary shares on a variety of topics. As part of

Mylan’s shareholder outreach and engagement, shareholders have consistently communicated to the Mylan Board and senior management that they too believe in the critical importance of focusing on sustainable long-term value creation.

The Mylan Board believes that the success of Mylan’s long-term strategy and the Company’s exceptional financial and operational performance over the past decade clearly reflects the dedication and talents of our employees around the world — and demonstrates the effectiveness of our compensation programs in incentivizing performance and aligning compensation with shareholder and other stakeholder interests.

The Mylan Board also believes that the outstanding long-term growth of Mylan — including the exceptional 25.4% and 20.7% total shareholder return (“TSR”) over the past three and five years, respectively, each of which significantly exceeded the S&P 500 Index and S&P 500 Pharmaceutical Index results over those periods — is directly related to the effectiveness and the robustness of our compensation program, as well as the talents of Mylan’s global workforce and the extraordinary vision, commitment, and leadership of Mylan’s senior management team.

And the Company’s performance in 2015 again set records to the benefit of shareholders and other stakeholders, with a record high in adjusted diluted EPS of $4.30, total adjusted revenues of $9.45 billion, and adjusted EBITDA of $3.01 billion (U.S. GAAP diluted earnings per share were $1.70, U.S. GAAP total revenues were $9.43 billion, and U.S. GAAP net earnings attributable to Mylan N.V. ordinary shareholders were $847.6 million in 2015).

Our senior leadership team is led by Mr. Coury, Ms. Bresch, and Mr. Malik. Together, Mr. Coury, Ms. Bresch, Mr. Malik, and the Mylan Board have successfully developed and executed on a vision and strategy to position Mylan as a global leader in its industry and significantly enhance Mylan’s long-term growth prospects.

 

 

 

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In addition to creating extraordinary long-term shareholder value over the last three and five years (and longer), Mylan has also delivered exceptional results for other stakeholders, including customers, patients, employees, and the broader community.

Named Executive Officers for 2015

Mylan’s named executive officers (“NEOs”) for 2015 were:

 

Heather Bresch   Chief Executive Officer

John D. Sheehan,

C.P.A.(1)

  Former EVP and Chief Financial Officer
Rajiv Malik   President
Anthony Mauro   Chief Commercial Officer
Robert J. Coury   Executive Chairman

 

 

(1) Mr. Sheehan retired effective April 1, 2016.

Outstanding 2015 and Long-Term Financial and Operational Performance

2015 represented yet another remarkable year for Mylan on many fronts, not the least of which was our continued outstanding execution on the Mylan Board’s long-standing strategy and vision. We made progress against the key pillars of this strategy by further strengthening our exceptional and differentiated global operating platform; continuing to diversify our product

portfolio, which is already one of the industry’s broadest; and further building out our powerful commercial infrastructure. We also continued to position the company for long-term growth through significant investment in our organic growth drivers, which we complemented by executing on value-creating, strategic acquisitions and other business development opportunities.

Outstanding 2015 Financial Results

In addition to our continued focus on building a long-term sustainable business, we did not take our eye off the ball with regard to the Company’s day-to-day core business and short-term execution, as our financial results for 2015 clearly demonstrate.

In 2015, we delivered total adjusted revenues of nearly $9.45 billion, adjusted EBITDA of $3.01 billion, and adjusted diluted EPS of $4.30, an increase of 22%, 27%, and 21%, respectively, compared to our very strong performance in 2014 (U.S. GAAP total revenues were $9.43 billion, U.S. GAAP net earnings attributable to Mylan N.V. ordinary shareholders were $847.6 million, and U.S. GAAP diluted earnings per share were $1.70 in 2015, an increase of 22%, decrease of 9%, and decrease of 27%, respectively). All of our regions and businesses contributed to this strong growth, and we achieved it despite strong foreign-currency headwinds.

 

 

Financial Results: 2014–2015

 

 

 

 

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$ in millions except per share amount

 

*2015 represents Total Adjusted Revenues. See Appendix A for a reconciliation to the most comparable U.S. GAAP measure.

 

**See Appendix A for a reconciliation to the most comparable U.S. GAAP measures.

 

For 2015, U.S. GAAP total revenues were $9,429 million. For 2014 and 2015, U.S. GAAP net earnings attributable to Mylan N.V. ordinary shareholders were $929.4 million and $847.6 million, respectively (down 9% year-over-year). For 2014 and 2015, U.S. GAAP diluted earnings per share were $2.34 and $1.70, respectively (down 27% year-over-year).

 

 

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Continued Outstanding Performance in Regions and Segments. In our North America generics segment, third party net sales totaled $3.9 billion, a 16% increase compared to 2014. Growth came mainly from sales of new products, and to a lesser extent, from the EPD Business. Also contributing were higher volumes on existing products, partially offset by lower pricing.

In Europe, adjusted third party net sales totaled $2.2 billion in 2015, a year-over-year constant currency increase of 67% on an adjusted basis (U.S. GAAP third party net sales for Europe totaled $2.2 billion, a year-over-year increase of 49%). Growth came primarily from sales generated by the EPD Business and, to a lesser extent, from new products. Higher volumes on existing products, mainly in France and Italy, were offset by lower pricing throughout the region.

In the Rest of World, third party net sales totaled $2.1 billion, a year-over-year increase of 38% on a constant currency basis (a year-over-year increase of 27% for U.S. GAAP third party net sales). The growth came from the EPD Business; new product launches primarily in Australia and Japan; and higher volumes in India – predominately of antiretroviral medications. Increases were offset somewhat by lower pricing in the region.

 

Our Specialty business delivered revenues of $1.2 billion in 2015, an increase of 1% compared to 2014, driven by the continued strong performance of EpiPen® Auto-Injector, as well as strong sales of Perforomist and ULTIVA, which increased by double-digit percentage points from the prior year.

It is noteworthy that our EPD Business grew 2% year over year on a constant currency basis, demonstrating again our ability to take a declining business and drive growth ahead of our expectations.

This strong performance and continued dedication to operational excellence and execution allowed us to deliver a record year with respect to adjusted free cash flow, which more than doubled over the prior year (U.S. GAAP net cash provided by operating activities increased 98%). Specifically, we realized approximately $1.85 billion of adjusted free cash flow in 2015.

In addition, continuing our commitment to strong balance sheet management, the Company maintained its investment grade rating from Standard & Poor’s and Moody’s, the two principal ratings agencies. As a result of maintaining a strong balance sheet and having an investment grade rating, we were able to reduce our cost of borrowing in 2015, providing additional financial flexibility.

 

 

 

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Outstanding Long-Term Financial Results

As shown in the tables below, our consistent execution and strong performance in 2015 continued a long-term track record of exceptional business execution, delivering superior financial results for shareholders, and contributing to a long-term compound annual growth rate (“CAGR”) in adjusted diluted EPS of 27% since 2008.

 

 

 

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Adjusted diluted EPS is a non-GAAP financial measure. See Appendix for reconciliation of adjusted diluted EPS to the most directly comparable GAAP measure.

 

*Midpoint of 2016 guidance range

 

**Stated 2018 target; this is a long-term target only and does not represent company guidance.

 

U.S. GAAP diluted earnings per share in 2008 were $(1.10), 2009 were $0.30, 2010 were $0.68, 2011 were $1.22, 2012 were $1.52, 2013 were $1.58, 2014 were $2.34, and 2015 were $1.70. The midpoint of forecasted U.S. GAAP diluted earnings per share for 2016 is $2.41.

 

 

Financial Results: 2011–2015

 

 

 

 

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$ in millions except per share amounts

 

*2015 represents Total Adjusted Revenues. See Appendix A for a reconciliation to the most comparable GAAP measure.

 

** See Appendix A for a reconciliation to the most comparable GAAP measures.

 

For 2015, U.S. GAAP total revenues were $9,429 million. U.S. GAAP net earnings attributable to Mylan N.V. ordinary shareholders were $536.8 million in 2011, $640.9 million in 2012, $623.7 million in 2013, $929.4 million in 2014, and $847.6 million in 2015 (12% CAGR). U.S. GAAP diluted earnings per share were $1.22 in 2011, $1.52 in 2012, $1.58 in 2013, $2.34 in 2014, and $1.70 in 2015 (9% CAGR).

 

 

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Our track record of excellence in business execution and outstanding performance is further demonstrated by the long-term shareholder value creation that our exceptional team has achieved. As shown below, Mylan’s TSR over the last three and five years has significantly outperformed both the S&P 500 Index and the S&P 500 Pharmaceuticals Index.

 

 

 

 

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* TSR data is from Bloomberg and reflects total return (including price appreciation and reinvested dividends) as of December 31, 2015.

 

 

In addition to outstanding long-term shareholder value creation, we have also generated exceptional returns on our invested capital. In 2015, cash return on operating invested capital, cash return on invested capital excluding goodwill, and cash return on total invested capital were 52%, 22%, and 15%, respectively, continuing our outstanding long-term performance in those areas as well (see Appendix A for a reconciliation to the most directly comparable U.S. GAAP measure).

Strengthening and Expanding our Exceptional and Differentiated Global Platform and Portfolio

Mylan has earned a well-deserved reputation for innovation within the generics and specialty pharmaceuticals spaces. Our executive leadership team, together with Mylan’s outstanding workforce, has a track record of successfully developing and bringing to market products that are difficult to formulate or manufacture – to which the many innovative companies that have made Mylan a partner of choice can attest. To remain at the industry’s forefront, we continue to invest heavily in research and development and in strengthening our already-powerful manufacturing and commercial infrastructure.

Mylan invests in future growth

 

 

 

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As a result of this R&D investment, in 2015, we submitted 167 regulatory applications to bring new high-quality medicines to market around the world. Currently, we have 270 new drug applications pending U.S. Food and Drug Administration approval, representing $101.6 billion in annual brand sales, according to IMS Health. Fifty of these pending Abbreviated New Drug Applications are potential first-to-file opportunities, representing $35.8 billion in annual brand sales for the twelve months ending June 30, 2015, according to IMS Health. Globally, we have more than 4,100 new product submissions pending regulatory approval around the world, up from 2,100 just two and a half years ago.

Commercially, our portfolio of marketed products rose from more than 1,300 to more than 1,400 and our commercial footprint expanded from approximately 140 countries and territories to approximately 165.

Advancement of Strategic Organic Growth Drivers

In addition to the continued expansion of our global portfolio, operating platform, and commercial footprint, the Mylan Board and management have carefully identified several key strategic opportunities for growth within our sector and focused resources on these exciting and powerful growth drivers, which we expect will result in continued and sustained business performance and value creation over both short- and long-term periods.

During 2015, Mylan continued to execute on several of these growth drivers:

Continued Growth of EpiPen® Auto-Injector Franchise. EpiPen® Auto-Injector continues to be an important and growing product and remains the number one dispensed epinephrine auto-injector. As a global franchise, EpiPen® Auto-Injector reached $1 billion in annual net sales for the second year in a row in 2015.

During the year, we continued to advocate for legislation to increase access to “stock,” or undesignated, epinephrine auto-injectors in schools

and other public places to ensure availability of this life-saving treatment for severe allergic reactions, or anaphylaxis.

We also continued to invest in our EpiPen4Schools® program, which provides free EpiPen® and EpiPen Jr® Auto-Injectors to qualified schools. To date, more than the 63,000 U.S. schools are participating in the program, and Mylan has distributed more than 500,000 free EpiPen® and EpiPen Jr® Auto-Injectors.

The Allergy & Asthma Network recognized Mylan in May 2015 with its “Most Outstanding Partner in Advocacy” award for our leadership in advocating for stock epinephrine. Food Allergy Research & Education (“FARE”) recognized the Company in June 2014 with its “FARE Vision Award” for working to make the world safer for people with food allergies and supporting FARE in its mission.

In addition, in 2015, Mylan continued a multi-year strategic alliance agreement with Walt Disney Parks and Resorts to help increase awareness of anaphylaxis. Maps in Disney’s domestic theme parks and on its cruise ships, as well as signage in the parks, highlight locations with EpiPen® and EpiPen Jr® Auto-Injectors help to ensure visitor access to these products.

Through Mylan’s new “On Location” program, which we will begin piloting next year with EpiPen®, we hope to provide enhanced access to this product in more public places around the U.S.

We also remain committed to continuing to invest in education and building awareness about the need for access to these life-saving treatments for anaphylaxis.

Advances in the Treatment of Infectious Diseases. Throughout 2015, we also worked with a variety of stakeholders in our continued fight against HIV/AIDS and other infectious diseases. We announced, for example, that we expect to be the first to launch TLE400, an antiretroviral medication we developed in partnership with the Clinton Health Access Initiative, for $99 per patient, per year.

 

 

 

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Today more than 50% of patients in the developing world receiving treatment for HIV/AIDS rely on a Mylan product.

We expanded our Hepatitis C licensing agreement with Gilead Sciences, a valued partner since 2006. As Gilead’s exclusive branded-medicine distribution partner in India, we launched its Solvaldi® product there in 2015, as well as introducing MyHepTM, the generic form of Solvaldi®, in India and other emerging markets. Early this year, we announced the launch of MyHep LVIRTM, the generic form of Harvoni®, in India.

Creating a Leading Respiratory Franchise. Toward the end of 2015, we filed an Abbreviated New Drug Application with the U.S. Food and Drug Administration for generic Advair Diskus® and on February 19, 2016, Mylan announced that its application had been accepted for filing, putting Mylan in a position to potentially become the first company to bring generic Advair® to the U.S. market in 2017.

We announced a partnership with Theravance Biopharma whose goal is to develop and commercialize Revefenacin, a once-daily nebulized product used to treat chronic obstructive pulmonary disease, or COPD, and other respiratory diseases.

Through our partnership with Prosonix, we continued work on our generic Flovent® program for the United States. The product’s counterpart in Europe, generic Flixotide®, is on track to be approved this year. In addition, we launched SirduplaTM, the generic version of Seretide® Evohaler®, in the United Kingdom.

Creating a World Leader in Biosimilars and Insulin Analogs. In partnership with Biocon, we progressed our biologics and insulin-analogs programs and expect this year to submit in the United States and Europe three biosimilar applications – Pegfilgrastim, Trastuzumab, and Adalimumab – and an interchangeable glargine application.

Some of the key milestones in these programs in 2015 include:

 

    Completed enrollment for Phase III study of trastuzumab; launched Hertraz™ in 10 countries with multiple new launches planned in 2016, building on our successful commercialization over the past two years;
    Completed Phase I clinical trial & enrollment in Phase III trials for pegfilgrastim;

 

    Completed Phase I clinical trial & initiated Phase III for Adalimumab; and

 

    Completed enrollment for two Phase III clinical trials for an insulin analog to Lantus®; continued to pursue interchangeability discussions with the U.S. Food and Drug Administration. We also completed and qualified a state-of-the-art manufacturing facility in Malaysia.

In addition, in early 2016 we announced an exclusive global agreement with Momenta that expands our portfolio of biologics with up to six additional products and broadens the scope and scale of our capability. We believe this collaboration with Momenta, which is highly complementary to our partnership with Biocon, will position us to become a world leader in biosimilars, with a broad portfolio of 15 biosimilar/insulin analog generic products in development.

Capitalizing on Strategic Inorganic Growth Opportunities

Mylan for many years has been a strategic participant in the consolidation occurring in the industry. We seek to differentiate the Company by acquiring assets that deliver not only short-term financial benefit, but also long-term value for the business, shareholders, and other stakeholders. We look beyond what targeted assets have achieved on their own to how we can leverage them using our exceptional platform and excellence in execution. Our approach to acquisitions has delivered time and again, and we are confident that the transactions we completed or initiated in 2015 represent excellent new examples of Mylan’s commitment to long-term value creation.

In that regard, 2015 was a year of unprecedented activity for Mylan in identifying and executing on significant M&A opportunities. In 2015, we completed or initiated three significant M&A transactions with an aggregate enterprise value of approximately $17 billion. Each of these strategic transactions represents yet another step in the long-term strategy of the Mylan Board to create an unparalleled worldwide leader in our industry and continues our track record of pursuing high-quality businesses and assets in a disciplined and focused manner to accomplish that goal. We believe that each of the three transactions described below will

 

 

 

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create long-term shareholder value and further extend Mylan’s product portfolio and geographic footprint.

EPD Transaction. In February 2015, we consummated the acquisition of the EPD Business via the EPD Transaction. The EPD Transaction accomplished a number of important strategic and financial objectives for Mylan.

 

    Increased Mylan’s geographic footprint and infrastructure in key markets

     The EPD Transaction significantly increased the Company’s presence and revenues in some of our largest markets outside of the United States, including Italy, the United Kingdom, Germany, France, Spain, Portugal, Canada, Japan, Australia, and New Zealand, and provided Mylan with entry into new markets in Central and Eastern Europe.

 

    Extended and strengthened Mylan’s product portfolio

     The EPD Business provided the Company with a portfolio of more than 100 specialty, branded generic and over-the-counter (“OTC”) pharmaceutical products in five major therapeutic areas (cardio/metabolic, gastrointestinal, anti-infective/respiratory, CNS/pain, and women’s and men’s health). The portfolio includes several patent-protected, novel, and/or hard-to-manufacture products with durable growth potential. Key products include Creon®, Influvac®, Brufen®, Amitiza®, and Androgel®, among others.

 

    Significantly expanded commercial and manufacturing platform and capabilities

     The EPD Business provided Mylan with an active sales organization of approximately 2,000 representatives serving more than 40 non-U.S. markets. The EPD Business’s strong sales force in key developed markets enhanced the Company’s reach with physicians and patients and complemented our existing strength in pharmacies. This platform provided Mylan with the enhanced infrastructure and expertise to even more effectively execute on existing growth opportunities that require access to the physician

channel, such as the anticipated launch of biologics and respiratory products, including generic Seretide® and generic Advair®. The EPD Business also included two high-quality manufacturing facilities in France and Japan.

 

    Provided additional financial flexibility and related strategic benefits

     The EPD Transaction provided Mylan with a number of important financial and other strategic benefits, including increased revenues, liquidity, and an optimized tax structure. Notably, the EPD Transaction provided us with over $1.4 billion of revenue in a 100% stock transaction and without the incurrence of additional debt, which further strengthened Mylan’s balance sheet. These benefits will enable us to invest further in our business in the future.

The integration of the EPD Business to date has gone well, and the EPD Business’s performance has exceeded our own expectations. As noted earlier, we reversed a decline in the business and grew the business by 2% year over year in 2015 on a constant currency basis, demonstrating again our ability to take an underappreciated asset and drive expansion within our platform.

Famy Care Transaction. In November 2015, we acquired certain female healthcare businesses from Famy Care, a valued partner since 2008. The transaction brought Mylan a broad portfolio of products (primarily oral contraceptives), strong technical capabilities, and dedicated hormone manufacturing. By combining these assets with the Company’s global commercial footprint and supply chain infrastructure, we look forward to creating a leading women’s healthcare franchise and providing enhanced access to these products around the world.

Recently Announced Meda Transaction. In early 2016, we took the next step in executing on our vision by announcing that Mylan would acquire Meda, a leading international specialty pharmaceutical company, which has served as our marketing and distribution partner for EpiPen® in Europe since 2011.

 

 

 

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The combination will create a global pharmaceutical leader with 2015 combined revenues of nearly $12 billion2 a diversified portfolio of more than 2,000 products, and critical mass across all commercial channels, including a $1 billion OTC business. Geographically, we gain a more balanced and expanded global footprint with an even stronger presence across Europe; a leading U.S. specialty business; and an expanded presence in emerging markets, including several new and attractive ones such as China, Southeast Asia, Russia, the Middle East, and Mexico. We also will become a leader in the global respiratory/allergy market and achieve scale in many other therapeutic areas, including dermatology and pain, providing even greater opportunities for growth in these therapeutic franchises.

Completion of the Meda Transaction is subject to a public offer to the shareholders of Meda to acquire all of Meda’s outstanding shares and other customary closing conditions. We expect to complete the transaction by the end of the third quarter in 2016.

Investing in Our People

Achievement of our goals relies on Mylan’s dedicated global workforce, which now numbers nearly 35,000 talented individuals. We consider them to be Mylan’s most important asset.

As Mylan continues to grow in scope and scale, the Mylan Board has tasked management with investing

further in retaining, recruiting, and motivating our workforce and in developing individuals for key management roles in Mylan’s increasingly global platform. During 2015 and early 2016, Mylan had several important developments in this regard. As just one example, in early 2016, Mylan promoted Anthony Mauro to the role of Chief Commercial Officer. Over his 20 years at Mylan, Mr. Mauro has led several important business units, functions, and geographies. In his new role, Mr. Mauro will be responsible for overseeing global sales excellence and operations of all commercial markets around the world. Mylan’s commitment to employees can also be seen in its focus on employee safety and employee wellness initiatives. For example, five Mylan sites in India have been certified as meeting the internationally recognized benchmark, BS OHSAS 18001, for superior performance in occupational health and safety management systems. In addition, in the last year, Mylan has offered its U.S.-based employees more innovative options to cover them and their families’ healthcare needs, including incentives for weight loss, regular exercise, and preventative medicine.

In order to continue to execute against our mission, strategy, and financial objectives, our employees must be incentivized to deliver against both our short-term goals and priorities, as well as our long-term vision and mission. To this end, we focused throughout 2015 on driving even greater focus, accountability, and alignment across our leadership and entire workforce.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2 Combined company figures represent an aggregation of Mylan figures derived from financial information prepared in accordance with U.S. GAAP and Meda figures derived from financial information prepared in accordance with International Financial Reporting Standards as adopted by the European Union and do not reflect pro forma adjustments (including no elimination of transactions between Mylan and Meda).

 

 

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Continued Strong Alignment of CEO Pay with Company Performance

As discussed above, Mylan’s compensation philosophy is designed to reward employees for delivering against our short- and long-term performance goals. As demonstrated below, this philosophy was clearly successful in 2015 and over the past several years, as compensation has remained closely aligned with the outstanding performance noted above.

 

    Outstanding performance against goals:

     The Company exceeded each of the rigorous performance-based goals set by the

Compensation Committee relating to adjusted diluted EPS, global regulatory submissions, and adjusted free cash flow in 2015. As a result, the NEOs received maximum payouts of annual incentive awards for 2015. These achievements are discussed in more detail on pages 46 to 47 of this Proxy Statement.

 

    Continued strong alignment between realizable pay and performance relative to peers.

     The total compensation realizable by Mylan’s CEO over a three-year period is fully aligned with Mylan’s TSR relative to the Company’s peer group, as shown below.

 

 

Alignment of CEO Realizable Pay* with TSR Performance

 

 

 

 

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  * Realizable pay includes cumulative salary and annual incentives paid for the most recent three years, plus current value (as of December 31, 2015) of options (intrinsic value) as well as time-based restricted stock/units granted during the most recent three years, plus the value of performance-based long-term incentive awards earned (which excludes awards granted in connection with the One-Time Special Performance-Based Incentive Program (as defined below), which are still subject to performance-based criteria), plus change in pension value and all other compensation for the most recent three years. TSR data is from the S&P Research Insight Database. Peer companies in this chart reflect the 2015 peer companies listed on page 51 of this Proxy Statement (excluding Hospira Inc., which was acquired in September 2015, and Teva Pharmaceutical Industries Ltd., for whom sufficient information was not publicly available, and including Allergan plc in place of Actavis plc and Allergan, Inc.).  

 

 

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2015 Elements of Compensation and Certain Compensation Policies

Our 2015 compensation performance-related metrics helped drive yet another outstanding year of operational and financial performance. The Compensation Committee continues to aim to align executive compensation with Company performance and, in 2015, we delivered on that goal — as demonstrated by the close correlation between Mylan’s TSR performance and CEO realizable pay relative to our peer group, as well as the Company’s record adjusted diluted EPS, total adjusted revenues and adjusted EBITDA. For the remainder of this Compensation Discussion and Analysis and for the compensation tables and related narratives that follow,

references to Mylan will include Mylan and its subsidiaries and affiliates, including Mylan Inc.

In 2015, the NEOs were compensated through base salary, an annual incentive, a long-term incentive, employee benefits, and perquisites. Approximately 84% of annual NEO target compensation was tied to Mylan’s ordinary share price or the achievement of key financial and operational performance goals, thereby closely aligning compensation with both the success of Mylan’s business strategy and objectives, as well as the value realized by shareholders. The following graphs show the relative weight of the base salary, target annual incentive, and target long-term incentive (based on grant date fair value) components:

 

 

 

 

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Base Salary Compensation

The Compensation Committee considers a variety of factors in deciding base salary, including, among others: individual performance, responsibilities, and expected future performance; Company performance; management structure; marketplace practices; internal equity considerations; and the executive’s experience, tenure, and leadership. The Compensation Committee also considers what the marketplace would require in terms of the replacement costs to hire a qualified individual to replace an executive, as well as the fact that a new executive would lack the critical knowledge

base regarding Mylan as compared to the executive he or she would be replacing.

For 2015, the base salaries of Ms. Bresch and Mr. Malik increased 8.3% and 11.1%, respectively, reflecting their continued growth and experience in the roles that they assumed in 2012, as well as their performance and leadership, among other factors. For 2015, the base salary of Mr. Mauro increased 13.6%, reflecting his performance and increased role, among other factors. The base salaries of the other NEOs were not changed in 2015.

 

 

        2014      2015     Change in Base Salary

Heather Bresch

  Chief Executive Officer     $1,200,000         $1,300,000      8.3%

John D. Sheehan

  Former EVP and Chief Financial Officer     650,000         650,000      0%

Rajiv Malik

  President     900,000         1,000,000      11.1%

Anthony Mauro

  Chief Commercial Officer     550,000         625,000      13.6%

Robert J. Coury

  Executive Chairman     1,350,000         1,350,000      0%

Total

        $4,650,000         $4,925,000      5.9%

The base salary earned by each of the NEOs for 2015 is set forth in the column entitled “Salary” in the Summary Compensation Table on page 58 of this Proxy Statement.

 

 

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Annual Incentive Compensation

Mylan’s annual incentive compensation for executive officers consists of performance-based annual cash awards that are intended to align the interests of executives and investors by providing incentives based on a set of operational and financial measures identified by the Mylan Board, as discussed above, as critical to the successful execution of Mylan’s business strategy — and which are expected to impact shareholder value and the interest of other stakeholders.

Performance Measures. For 2015, annual incentives were based on adjusted diluted EPS, global regulatory submissions, and adjusted free cash flow. These measures represent key performance indicators of the current and future strength of our business.

 

    Adjusted diluted EPS is an important metric for Mylan and its shareholders because earnings are expected to have a direct relationship to the price of Mylan’s ordinary shares.

 

    The global regulatory submissions metric measures the number of filings submitted to global regulatory agencies for new products. This
   

is also an important metric because approval and commercialization of new products yield new revenue sources, are essential for Mylan to remain competitive in a constantly evolving industry, and are therefore fundamental to our short- and long-term strategy for growth.

 

    Adjusted free cash flow also is an important metric because it captures the potential impact of all types of business transactions on the generation of adjusted operating cash flow, not merely changes in working capital. Adjusted free cash flow is defined as adjusted operating cash flow less net capital expenditures.

The Compensation Committee set adjusted diluted EPS and adjusted free cash flow targets at double digit percentage increases over prior year performance, and also took into account Mylan’s increased size following the EPD Transaction. The Compensation Committee set the global regulatory submissions target based on total submissions in our portfolio as of year-end 2014. The following tables show the 2015 threshold, target, and maximum goals and the relative weightings of each metric:

 

 

Goal

  Weighting    Threshold    Target    Maximum

Adjusted diluted EPS

  50%    $4.00    $4.15    $4.30

Global regulatory submissions

  25%    135    150    165

Adjusted free cash flow (millions)

  25%    $1,050    $1,150    $1,250

No annual incentives are paid if threshold performance is not achieved.

Potential Opportunities Subject to Performance. Set forth below are the 2015 threshold, target, and maximum award opportunities for the NEOs:

 

   

Threshold

(% of Salary)

 

Target

(% of Salary)

 

Maximum

(% of Salary)

Heather Bresch

  75.0%   150%   300%

John D. Sheehan

  50.0%   100%   200%

Rajiv Malik

  62.5%   125%   250%

Anthony Mauro

  57.5%   115%   230%

Robert J. Coury

  62.5%   125%   250%

 

 

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Incentive payouts. The annual incentives earned for 2015 were determined based on the annual performance criteria, relative weightings, and Company results set forth in the table below. The Company exceeded each of the rigorous performance-based goals set by the Compensation Committee relating to adjusted diluted EPS, global regulatory submissions, and adjusted free cash flow in 2015. As a result, the NEOs received maximum payouts of annual incentive awards for 2015.

 

Goal

  Weighting   Outcome   Weighted
Score

Adjusted diluted EPS*

  50%   $4.41   100%

Global regulatory submissions

  25%   167   50%

Adjusted free cash flow (millions)

  25%   $1,854   50%

2015 Company Performance Score

      200%

 

 

* The adjusted diluted EPS amount is calculated from Mylan’s audited financial statements in the same manner as Mylan publicly reports adjusted diluted EPS (which for 2015 is reconciled to the most directly comparable U.S. GAAP measure in Appendix A), but is measured on a constant currency basis. Adjusted free cash flow is calculated from Mylan’s audited financial statements in the same manner as Mylan publicly reports adjusted free cash flow (which for 2015 is reconciled to the most directly comparable U.S. GAAP measure in Appendix A).

 

The annual incentive compensation earned by each of the NEOs for 2015 is set forth in the column entitled “Non-Equity Incentive Plan Compensation” in the Summary Compensation Table on page 58 of this Proxy Statement.

The Compensation Committee has committed to not using its discretion to upwardly adjust annual incentive award amounts generated by the performance metrics.

Long-Term Incentive Compensation

The Compensation Committee believes that the value of long-term incentives should be directly related to the performance of Mylan’s ordinary shares, as well as other operational and financial measures associated with the growth and success of Mylan. The long-term equity grants awarded to the NEOs in 2015 under the Amended 2003 Plan included:

 

    Performance-based RSUs (“PRSUs”) that cliff-vest after the end of the applicable performance period, assuming specified performance criteria are met and provided that the NEO remains continually employed by Mylan;
    Stock options with an exercise price equal to the closing price of Mylan’s ordinary shares on the date of grant, which vest in three equal installments, provided that the NEO remains continually employed by Mylan; and

 

    RSUs that vest in three equal installments, provided that the NEO remains continually employed by Mylan.

Timing of Equity Award Grants. The Compensation Committee has historically approved annual equity grants in the first quarter of the fiscal year, which grants were made following the release of year-end audited financial results, with exceptions for new hires, promotions, and other special awards, grants, or circumstances, although there is no exact date for the making of these equity grants each year. In 2015, equity grants for Mylan employees other than the NEOs were made in the first quarter of the fiscal year, consistent with past practice. The Compensation Committee seeks the advice of external experts in executive compensation and reviews its equity grant practices from time to time with respect to corporate best practices.

 

 

 

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Performance Metrics. Again consistent with comments received during investor outreach over the past several years, the Compensation Committee utilizes performance metrics for the long-term incentive program that compare the Company’s performance against that of its peers. Since 2013, the Compensation Committee has used the TSR of Mylan’s ordinary shares relative to that of peer companies as one of the metrics to which the PRSUs are subject. The other metric designated by the Compensation Committee for periods through

December 31, 2015 was Cash Return on Operating Invested Capital, excluding goodwill and intangibles (“ROIC”). TSR and ROIC are each weighted 50% in the determination of the percentage of PRSUs that can be earned. The Compensation Committee believes that the use of these two metrics provides balance by rewarding the NEOs both for our performance relative to peer companies and for the returns generated by investments in our business. The following table shows the 2015 threshold, target, and maximum goals and relative weightings.

 

 

Metric

  Weighting   Threshold   Target   Maximum

ROIC*

  50%   34%   38%   42%

Relative TSR**

  50%   25th Percentile of Peer Group   50th Percentile of Peer Group   75th Percentile of Peer Group

Opportunity

  N/A   50%   100%   150%

 

 

* ROIC is calculated from Mylan’s audited financial statements in the same manner as set forth in the reconciliations provided in Appendix A.
** Relative TSR is calculated by comparing the difference between Mylan’s 30-day trailing average closing ordinary share price at the beginning of the performance period and the end of the performance period plus any dividends paid during the performance period against the same metric for each company in our life sciences peer group.

 

2015 Long-Term Incentive Awards. Consistent with comments from shareholders during outreach to investors over the past several years, the Compensation Committee again maintained an increased percentage of performance-based equity awards compared to the percentage of time-based equity awards. In 2015, each NEO received a grant of long-term equity awards with a targeted value at grant equal to a percentage of their base salary. The allocation of the award among PRSUs, stock options, and RSUs for each NEO was 60%, 20%, and 20%, respectively, of the NEO’s total long-term incentive award. The Compensation Committee believes that maintaining a higher percentage of the total NEO’s award that is specifically performance based further supports alignment between the Company’s performance, shareholder interests, and executive compensation.

Each PRSU entitles the recipient to a number of ordinary shares equal to between 50% and 150% of the target award, depending on actual achievement of the performance metrics outlined above over a two-year period. Achievement of threshold goals results in delivery of ordinary shares with respect to 50% of PRSUs granted, achievement of target goals results in delivery of ordinary shares with respect to 100% of PRSUs granted, and achievement of maximum goals results in delivery of ordinary shares with respect to 150% of PRSUs granted.

Other Benefits and Agreements

Mylan provides additional benefits to the NEOs in the form of:

 

    Perquisites

 

    Retirement Benefits

Perquisites. Perquisites include the following:

 

    Each NEO receives the use of a Company car or a car allowance. The NEOs are responsible for paying any taxes incurred relating to this perquisite.

 

   

Our senior executives take an extraordinarily active approach to overseeing and managing our global operations, which necessitates a significant amount of domestic and international travel time due to our diverse set of business centers, manufacturing and other facilities, and many client and vendor locations around the world. Mylan provides management access to corporate aircraft to assist in the management of Mylan’s global platform by providing a more efficient and secure traveling environment, including where sensitive business issues may be discussed or reviewed, as well as maximum flexibility to our executives in the conduct of Company business. For reasons of business efficiency and continued security-related concerns (including personal security, especially given the global nature of

 

 

 

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Mylan’s business, as well as privacy of business information and communications), we require Mr. Coury and Ms. Bresch to use Mylan aircraft for business and personal purposes. During 2015, other executives from time to time also were authorized to have personal use of the corporate aircraft for similar reasons. The Compensation Committee monitors business and personal aircraft usage on a periodic basis. To the extent any travel on the corporate aircraft results in imputed taxable income to a NEO, Mylan does not provide gross-up payments to cover the NEO’s personal income tax obligation due to such imputed income. For a summary of how this perquisite is calculated, see footnote (b) to the Summary Compensation Table on page 59 of this Proxy Statement.

 

    Executives will also receive tax equalization payments for incremental tax liabilities, if any, incurred as a result of attendance at board meetings in the United Kingdom.

Retirement Benefits. Mylan has entered into RBAs (as defined below) with four of the NEOs – Ms. Bresch and Messrs. Coury, Sheehan, and Malik – in recognition of their service to Mylan, to encourage their retention and to provide a supplemental form of retirement and death benefit. For a detailed description of the RBAs, see the section below entitled “Retirement Benefit Agreements” beginning on page 64 of this Proxy Statement. Mylan also maintains a 401(k) Restoration Plan (the “Restoration Plan”) and an Income Deferral Plan permitting senior level employees to elect to defer the receipt of a portion of their compensation and, in the case of the Restoration Plan, providing matching contributions to employees that make such an election; however, effective April 1, 2013, Mylan modified the Restoration Plan so that U.S. employees with an RBA would no longer receive matching contributions under the Restoration Plan.

The Compensation Committee approved an amendment to Mr. Coury’s RBA in October 2011, in connection with his retention and the enhanced management transition, to provide a retention incentive in his newly created role as Executive Chairman of the Mylan Board. Mr. Coury’s RBA vested in full on January 1, 2014. On February 24, 2014, the Compensation Committee approved an additional amendment to Mr. Coury’s RBA to provide a fixed

discount rate to be used for purposes of determining the present value of the retirement benefits provided to Mr. Coury pursuant to the RBA, so that Mylan’s obligation would no longer be subject to variations in the appropriate discount rate.

When Mr. Malik joined Mylan in January 2007, Mylan established a nonqualified deferred compensation plan on his behalf. Although Mylan no longer contributes to the account, the plan account will be distributed to him upon Mylan’s termination of Mr. Malik’s employment, or upon other qualifying distribution events, such as his retirement, disability, or death, or Mylan’s termination of the plan.

The Summary Compensation Table includes changes in pension values calculated based on certain actuarial assumptions regarding discount rates. As discussed above, Mr. Coury’s RBA was amended to fix the discount rate used in determining his pension value. In computing these amounts, we used the same assumptions that were used to determine the expense amounts recognized in our 2015 financial statements. In 2015, the impact of a decrease in the applicable discount rates led to an increase in the present value of accumulated benefits of approximately $129,954 for Ms. Bresch, approximately $13,091 for Mr. Sheehan, and approximately $37,751 for Mr. Malik.

Each of the relevant NEOs executed a one-time waiver providing that the EPD Transaction did not constitute a change in control for purposes of the RBAs.

Employment Agreements. We believe it is important to have employment agreements with our executive officers and other key employees. These agreements memorialize certain key terms of employment, including termination rights and obligations, non-competition and other restrictive covenants, and compensation and perquisites, and we believe thereby enhance the stability and continuity of our employment relationships. Each of the NEOs is party to an Executive Employment Agreement with Mylan. For a detailed description, see the section below entitled “Employment Agreements” beginning on page 65 of this Proxy Statement. See also page 56 of this Proxy Statement for a discussion of the 2015 and 2016 extensions of the Executive Employment Agreement for Mr. Mauro.

 

 

 

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Transition and Succession Agreements. Mylan is party to separate Transition and Succession Agreements with each NEO with an aim to assuring that Mylan will have the NEO’s full attention and dedication to Mylan during the pendency of a possible change in control transaction that might optimize shareholder value, and to provide the officer with compensation and benefits in connection with a change in control. These agreements are independent of each such NEO’s employment agreement. Subsequent to the execution of these agreements, Mylan adopted a policy that no new Transition and Succession Agreements will provide for an excise tax gross–up for golden parachute payments. For legal and other considerations, the Transition and Succession Agreements currently in effect and executed prior to the new policy are not subject to that policy. Mylan does not have the right to unilaterally abrogate pre-existing binding contracts with its executives, and does not believe it would be in shareholders’ best interests to expend funds to “buy out” the executives from these rights. Since implementation of the new policy, no new or amended Transition and Succession Agreements with excise tax gross-up provisions have been executed and several have expired as executives have retired from Mylan (as was the case with the retirements of Hal Korman and John Sheehan over the last several years).

For a detailed description of these Transition and Succession Agreements, see below, under “Termination Under Transition and Succession Agreements (Change in Control)” beginning on page 68 of this Proxy Statement.

Each of the relevant executive officers executed a one-time waiver providing that the EPD Transaction did not constitute a change in control for purposes of the Transition and Succession Agreements.

Compensation Committee Considerations in Evaluating Compensation

Our culture and our success continue to depend on our ability to attract and retain talented people in critical roles. The independent Directors believe that the remarkable growth and performance of Mylan during the past decade is directly related to the unique leadership of Mr. Coury, Ms. Bresch, and Mr. Malik, and the talents of Mylan’s other senior executives, as well as Mylan’s outstanding workforce around the world.

The decisions of the Compensation Committee and the independent Directors relating to executive compensation each year reflect a variety of subjective considerations, in addition to raw metrics. Our determinations reflect our individual and collective experience and business judgment, and are based on our extensive interactions with, and observations of, management, and our assessment of some or all of the following factors, among others:

 

    Company performance (relative to peers and budget);

 

    Value realized by shareholders;

 

    Individual performance and contributions to the success of Mylan;

 

    Responsibilities of, and future expectations for, the individual;

 

    Short-, medium-, and long-term personnel needs of Mylan;

 

    The need to reward and retain our uniquely talented NEOs and other key employees;

 

    Other qualitative contributions of each executive, including, among others, the actual and potential value and impact of his or her leadership style, strategic vision and execution, talent development, and ability to adapt to and drive the change necessary to our success; and

 

    Peer group pay levels and published survey data.

We consider these and other qualitative and quantitative factors from time-to-time in assessing our compensation philosophy and approach, in addition to using these factors to make individual compensation decisions. The Compensation Committee and the independent Directors believe that, while peer groups may be helpful reference points, they do not substitute for the individual and collective judgment and experience of independent Directors who are intimately familiar with, among other matters that the Mylan Board oversees and opines on, Mylan, its business, its strategies, its challenges, its opportunities, and the unique respective talents, contributions, leadership, responsibilities, and future expectations of the executives who drive performance and long-term sustainability.

 

 

 

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Peer Group. While the competitive market for our executives is one factor the Compensation Committee considers when making compensation decisions, the Compensation Committee does not target compensation of NEOs within a specific percentile of any set of peer companies. As noted, we use peer groups as one of many factors considered when determining compensation.

After review and consideration of these factors and consultation with experts in executive compensation, we developed the peer group listed below for 2015. The Compensation Committee refers to the peer group as a reference point when evaluating executive

pay and performance. As was the case previously, pay is not formulaically tied to a particular percentile of the peer group. Instead, this group is considered as part of the overall mix of subjective, qualitative, and quantitative information considered by the Compensation Committee.

This group consists of companies with revenues ranging from approximately 0.5x-2.5x Mylan’s revenue. Because the generic pharmaceutical market is limited, we include companies in the following GICS industries – Pharmaceuticals, Health Care Equipment & Supplies, Biotechnology, and Life Sciences Tools & Services:

 

 

  AbbVie Inc.   Boston Scientific Corp.   Perrigo Company plc  
  Actavis plc*   Bristol-Myers Squibb Company   St. Jude Medical Inc.  
  Agilent Technologies Inc.   Celgene Corp.   Stryker Corp.  
  Allergan, Inc.*   Eli Lilly and Company   Teva Pharmaceutical Industries Ltd.  
  Amgen Inc.   Endo International plc   Thermo Fisher Scientific Inc.  
  Baxter International Inc.   Gilead Sciences, Inc.   Zimmer Biomet Holdings, Inc.  
  Becton Dickinson & Co.   Hospira Inc.*    
 

Biogen Inc.

 

 

Medtronic plc

 

   

 

* Hospira Inc. has since been acquired and Actavis plc acquired Allergan, Inc. and became Allergan plc.

 

Role of Compensation Committee, Consultants, and Management. In 2015, the Compensation Committee retained Meridian Compensation Partners, LLC (“Meridian”) to provide advice and information regarding the design and implementation of Mylan’s executive compensation programs. Meridian also provided information to the Compensation Committee regarding regulatory and other technical developments that may be relevant to Mylan’s executive compensation programs. In addition, Meridian provided the Compensation Committee with competitive market information, analyses, and trends on executive base salary, annual incentives, long-term incentives, benefits, and perquisites.

The Compensation Committee and management also receive advice from outside counsel including, but not limited to, Cravath, Swaine & Moore LLP.

The Compensation Committee also receives input from management; however, decisions on these

matters are made solely by the Compensation Committee and/or the independent Directors.

The Compensation Committee performs an annual review of the independence of its outside advisors, consistent with NASDAQ requirements and the Compensation Committee charter.

Consideration of Risk in Company Compensation Policies. Management and the Compensation Committee have considered and discussed the risks inherent in our business and the design of our compensation plans, policies, and programs that are intended to drive the achievement of our business objectives. We believe that the nature of our business, and the material risks we face, are such that the compensation plans, policies, and programs we have put in place are not reasonably likely to give rise to risks that would have a material adverse effect on our business. We believe that the mix and design of the elements of executive compensation do not encourage

 

 

 

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management to assume excessive risks. In addition, the Chairmen of the Audit and Compliance Committees serve on the Compensation Committee, giving Mylan the benefit of the breadth of their perspective regarding the impact of compensation-related decisions on the Company. Finally, as described in this Compensation Discussion and Analysis, our compensation programs and decisions include qualitative factors which we believe restrain the influence that an overly formulaic approach may have on excessive risk-taking by management.

Deductibility Cap on Executive Compensation. Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), restricts the deductibility for federal income tax purposes of the compensation paid to the CEO and each of the other NEOs (other than our Chief Financial Officer) for any fiscal year to the extent that such compensation for such executive exceeds one million dollars and does not qualify as “performance-based” compensation as defined under Section 162(m) of the Code. The Compensation Committee generally takes available opportunities to be able to deduct compensation paid to NEOs for federal income tax purposes. The Compensation Committee, however, reserves the right to grant compensation to our executives that is not deductible, including but not limited to when necessary to comply with contractual commitments, or to maintain the flexibility needed to attract talent, promote retention, or recognize and reward desired performance.

Clawback Policy. The Mylan Board has approved a clawback policy relating to incentive compensation programs. The provisions of the policy allow Mylan to recoup certain bonus and equity-based incentive compensation gains resulting from specified misconduct that causes Mylan to materially restate its financial statements. The Mylan Board intends to review and consider updates to this policy from time to time. In addition, to the extent that the SEC adopts rules for clawback policies that require changes to our policy, we will revise our policy accordingly.

Anti-Hedging and Pledging Policy. The Mylan Board has approved a securities trading policy that prohibits Directors and certain executive officers from engaging in any transaction designed to limit or eliminate economic risks associated with the ownership of our equity or debt securities by trading in

certain types of hedging instruments relating to any of our securities. Hedging instruments include prepaid variable forward contracts, equity swaps, collars, exchange funds, insurance contracts, short sales, options, puts, calls, or other instruments designed to hedge or offset movements in the price of our stock or debt. The policy also prohibits Directors and certain executive officers from entering into transactions that involve the holding of Mylan securities in margin accounts (other than the “cashless exercise” of stock options) or the pledging of Mylan equity or debt securities as collateral for loans, with certain exceptions approved by the Compensation Committee if the executive demonstrates that he or she has the continuing financial capacity to repay any underlying loan or potential margin call without resorting to Mylan equity or debt securities. To the extent that the SEC adopts rules for anti-hedging and pledging policies that require changes to our policy, we will revise our policy accordingly.

Ordinary Share Ownership Requirements for NEOs. The ownership requirements are expressed as a multiple of base salary as follows:

 

Position

    

Ownership

Requirement

(multiple of

base salary)

Executive Chairman

     6x

CEO

     6x

President

     4x

Other NEOs

     3x

In addition to the NEOs, Mylan’s ordinary share ownership policy covers approximately 150 of the most senior executives at Mylan to promote an ownership culture and stronger alignment with the interests of shareholders among the broader leadership team. Each executive generally has five years from the adoption of the policy to achieve the minimum ownership requirement. Ordinary shares actually owned by the executive (including ordinary shares held by the executive in Mylan’s 401(k) and Profit Sharing Plan), as well as restricted ordinary shares and unvested RSUs and PRSUs count toward compliance with these requirements.

As of December 31, 2015, all of the NEOs were in compliance with these requirements.

 

 

 

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Significant Recent Compensation Actions and Strong Shareholder Support and Approval for These Actions

Mylan implemented several important compensation actions in 2014 and 2015. Among these were the implementation of the One-Time Special Performance-Based Five-Year Realizable Value Incentive Program (the “One-Time Special Performance-Based Incentive Program”), described in further detail in the Form 10-K/A for Mylan Inc.’s fiscal year ended December 31, 2014 and certain actions taken in connection with the EPD Transaction, as described below. Consistent with Mylan’s robust shareholder outreach program over the past few years, Mylan approached each of these actions with a view toward the best interests of shareholders, and Mylan Inc.’s shareholders were strongly supportive of these actions. The One-Time Special Performance-Based Incentive Program was described in extensive detail in the Proxy Statement for Mylan Inc.’s 2014 Annual Meeting of Shareholders. At that meeting the advisory proposal on compensation matters received the strong support and approval of Mylan’s shareholders. In addition, the compensation actions taken in connection with the EPD Transaction were described in extensive detail in the Proxy Statement for Mylan Inc.’s Special Meeting of Shareholders regarding the EPD Transaction. At that meeting the advisory proposal on compensation matters relating to the EPD Transaction received the overwhelming support and approval by over 80% of Mylan’s shareholders.

Treatment of Equity-Based Awards in Connection with the EPD Transaction

The compensation actions described below, which were taken in connection with the EPD Transaction, were extensively described in the Proxy Statement for Mylan Inc.’s Special Meeting of Shareholders regarding the EPD Transaction. At that meeting the advisory proposal on compensation matters received the overwhelming support and approval of Mylan’s shareholders.

As explained in the Form 10-K/A for Mylan Inc.’s fiscal year ending December 31, 2014, the EPD Transaction had certain implications under Mylan’s compensation plans and programs and individual arrangements with certain employees of Mylan (including the NEOs) and also implicated the excise tax under Section 4985 of the Code on the value of certain equity-based awards held by the Directors and NEOs (the “Transaction-

Related Excise Tax”). Section 4985 of the Code imposes the Transaction-Related Excise Tax (15% in 2014 and 2015) on the value of certain equity-based compensation held at any time during the six months before and six months after the closing of certain inversion transactions by individuals who were and/or are directors or executive officers of the parties to the transactions and subject to the reporting requirements of Section 16 of the Exchange Act during the same period. The Transaction-Related Excise Tax applies to all payments (or rights to payment) granted to such persons by the party to the transaction to which the individual provides services and its affiliates in connection with the performance of such services if the value of such payment or right is based on (or determined by reference to) the value (or change in value) of stock in the applicable entity or its affiliates (excluding incentive stock options (“ISOs”) and holdings in tax-qualified plans), which would include any outstanding (i) unexercised vested or unvested nonqualified stock options or SARs, (ii) unvested restricted stock awards, (iii) RSUs and PRSUs, and (iv) other equity compensation, in each case, held by such directors and executive officers during this twelve-month period. However, the Transaction-Related Excise Tax does not apply to (i) any stock option or SAR that is exercised prior to the closing of the inversion transaction if income is recognized under Section 83 of the Code on or before such date with respect to the shares acquired as a result of such exercise and (ii) any other specified equity-based compensation that is exercised, sold, exchanged, distributed, cashed out, or otherwise paid prior to the closing in a transaction in which income, gain, or loss is recognized in full.

As explained in the Form 10-K/A for Mylan Inc.’s fiscal year ending December 31, 2014, the Board of Mylan Inc. carefully reviewed the two primary approaches taken by other issuers in transactions similar to the EPD Transaction with respect to the Transaction-Related Excise Tax: (i) accelerating the vesting of equity-based awards such that stock options may be exercised, and other equity-based awards are settled, prior to the transaction so that the Transaction-Related Excise Tax does not apply to them or (ii) providing Directors and NEOs with a tax reimbursement payment for the cost of the Transaction-Related Excise Tax. After such review, including consultation with external experts, the Board of Mylan Inc. determined that neither approach alone would be in the interests of Mylan nor accomplish and

 

 

 

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appropriately balance the objectives of minimizing costs, maintaining proper incentives, and not diminishing the retentive and motivating effect of the Directors’ and NEOs’ equity awards by depriving them of a substantial portion of the value. In particular, the Board of Mylan Inc. determined that, given the unique terms and structure of the EPD Transaction, it would be an inefficient use of shareholder resources to provide the Directors and NEOs with a tax reimbursement payment covering all outstanding equity-based awards, especially when some of the covered awards were already vested or would vest in the ordinary course in a relatively short period following the EPD Transaction. As a result, the Board of Mylan Inc. determined to utilize a hybrid of these two approaches, which took into account a variety of factors, including the purpose of the types of equity-based awards held by the Directors and NEOs and the remaining vesting period of the applicable awards.

In reaching this determination, the Board of Mylan Inc. carefully considered the appropriate manner in which to treat the equity-based awards of the Directors and NEOs in connection with the EPD Transaction and determined that the overall treatment described below served to: (i) minimize cost to Mylan; (ii) maintain proper incentives for the affected individuals to remain with Mylan and to continue achieving exceptional operating performance, long-term financial objectives, and the creation of shareholder value as they have consistently done in the past; and (iii) ensure that the Directors and NEOs did not bear the burden of the Transaction-Related Excise Tax, which did not apply to other Mylan shareholders and would have deprived them of a substantial portion of the value of their equity-based awards, when they were critically important to Mylan’s past success and in negotiating the transformative opportunity for Mylan represented by the EPD Transaction and continue to be critically important to its successful implementation and execution, and our future strategy and performance.

Ordinary Course Annual Equity-Based Awards Other than Stock Options Granted in 2014. The Board of Mylan Inc. determined that the vesting of all unvested stock options, RSUs, and PRSUs granted to Directors and NEOs as part of Mylan’s ordinary course annual equity compensation program, other than ISOs (which are not subject to the Transaction-Related Excise Tax) and the stock options granted in 2014 (because of their recent grant and, therefore, strong incentive for retention and shareholder value creation),

would be accelerated prior to the closing of the EPD Transaction. The Board of Mylan Inc. believed that this approach was advisable and in the best interests of Mylan because it avoided the expense to Mylan of providing a tax reimbursement payment for the Transaction-Related Excise Tax with respect to these awards, which the Board of Mylan Inc. believed the Directors and NEOs would likely have eventually received even absent the EPD Transaction given Mylan’s expected future performance.

One-Time Special Performance-Based Incentive Program and 2014 Stock Option Grants. As discussed in further detail in the Form 10-K/A for Mylan Inc.’s fiscal year ended December 31, 2014, in March 2014, the Board of Mylan Inc. granted awards under the One-Time Special Performance-Based Incentive Program to retain and further align more than 100 key employees with long-term shareholder interests and further motivate them to achieve Mylan’s ambitious goals of achieving at least $6.00 of adjusted diluted EPS by the end of 2018 and deliver significant additional shareholder value over that period. In addition, because of their recent grant and, therefore, strong incentive for retention and shareholder value creation, the vesting of awards granted under the One-Time Special Performance-Based Incentive Program and the stock options granted in 2014 were not accelerated in connection with the EPD Transaction. Instead, the Board of Mylan Inc. determined that the Directors and NEOs would receive a tax reimbursement payment from Mylan with respect to the Transaction-Related Excise Tax imposed on awards granted under the One-Time Special Performance-Based Incentive Program and the stock options granted in 2014, so that, on a net after-tax basis, they would be in the same position as if the Transaction-Related Excise Tax had not been imposed. The Board of Mylan Inc. believed that the exceptional and unique nature of this program and the strong incentives inherent in the stock options granted in 2014 warranted the limited cost of the tax reimbursement payment, particularly when viewed in relation to both the anticipated benefits of the EPD Transaction and, with respect to the awards under the One-Time Special Performance-Based Incentive Program, the shareholder value that is expected to be created if the goal of achieving adjusted diluted EPS of at least $6.00 by the end of 2018 is achieved. Payment of the tax reimbursement resulted in no unique benefit to the Directors and NEOs but only placed them in the same position as other equity-

 

 

 

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based award holders after the EPD Transaction. The Board of Mylan Inc. determined that no director or NEO would receive a tax reimbursement payment for any Transaction-Related Excise Tax imposed on stock options granted prior to 2014 that such director or NEO was able to but chose not to exercise prior to the closing of the EPD Transaction.

Update on One-Time Special Performance-Based Five-Year Realizable Value Incentive Program

As described in the Proxy Statement for Mylan Inc.’s 2014 Annual Meeting of Shareholders, in February 2014 Mylan adopted the One-Time Special Performance-Based Incentive Program to retain more than 100 key employees and to incentivize them toward the achievement of Mylan’s ambitious long-term objective of achieving adjusted diluted EPS of at least $6.00 by the end of 2018, which the Mylan Board believed and continues to believe will lead to the corresponding creation of significant shareholder value. This innovative, new, wholly performance-based program was a continuation of Mylan’s robust pay-for-performance philosophy. At Mylan Inc.’s 2014 Annual Meeting of Shareholders, shareholders strongly supported the advisory vote on compensation, which included the One-Time Special Performance-Based Incentive Program.

As demonstrated above, Mylan has made great progress toward the achievement of its long-term objective of achieving adjusted diluted EPS of at least $6.00 by the end of 2018, which the Mylan Board believes is linked, in no small part, to the powerful design and incentives provided by this program. During 2015, because Mylan’s share price exceeded the target share price under the program for 10 consecutive trading days, the SARs held by the NEOs converted to a fixed number of restricted Mylan ordinary shares. These ordinary shares remain unvested, however, and will be earned by the NEOs in full only if Mylan reaches its adjusted diluted EPS target and the NEOs remain with Mylan through the

end of 2018 (subject to certain limited exceptions). Participants will be eligible for 50% vesting if we achieve 90% of our adjusted diluted EPS target ($5.40 per share), with linear interpolation between $5.40 and $6.00 per share.

Evaluation with Respect to Performance Award Granted to Mr. Coury in 2014

As described in the Proxy Statement for Mylan Inc.’s 2014 Annual Meeting of Shareholders, in February 2014, Mr. Coury was granted a $20 million performance incentive opportunity in connection with the extension of his employment agreement. The award will be earned only if Mr. Coury satisfactorily performs his key leadership responsibilities and the requirements of his employment agreement through December 31, 2016 and remains employed by Mylan through such date. At Mylan Inc.’s 2014 Annual Meeting of Shareholders, shareholders strongly supported the advisory vote on compensation, which included Mr. Coury’s performance incentive award.

The Mylan Board continues to evaluate Mr. Coury’s performance to assess, among other things, whether Mr. Coury is satisfying the performance requirements of this award. In evaluating Mr. Coury’s performance through 2015, the Mylan Board noted Mr. Coury’s significant leadership achievements since the award was granted, including, among others, his continued strong overall leadership of Mylan, mentorship of executives, shareholder engagement, and unique and successful strategic vision that has led to the continued growth of Mylan’s global operating platform and strong financial results over the past several years, including significant short- and long-term value creation for shareholders and other stakeholders, and his execution, completion, and/or possible completion of the EPD Transaction, Famy Care Transaction, and Meda Transaction, each of which is expected to have a significant role in the creation of shareholder value over the long term.

 

 

 

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Developments in Early 2016

Promotion of Anthony Mauro and Extension of Executive Employment Agreement. In early 2015, Mylan took action to extend the term of Mr. Mauro’s Executive Employment Agreement with Mylan through the end of 2015. As noted above, in recognition of Mr. Mauro’s performance in his role as President, North America and increasing role with Mylan, in early 2016, Mr. Mauro was promoted to Chief Commercial Officer, effective January 4, 2016, and his Executive Employment Agreement with Mylan was amended and restated effective January 1, 2016. The Amended and Restated Executive Employment Agreement automatically renews on each anniversary of the effective date unless earlier terminated by Mr. Mauro or Mylan. The Amended and Restated Executive Employment Agreement contains substantially the same terms as Mr. Mauro’s previous contract, except that Mr. Mauro’s base salary was increased to $700,000 in connection with his promotion to Chief Commercial Officer.

Retirement of Chief Financial Officer. John D. Sheehan, former Executive Vice President and Chief Financial Officer of Mylan, retired effective April 1, 2016. In connection with Mr. Sheehan’s retirement from the Company, to secure certain consulting services, and in order to facilitate the transition of Mr. Sheehan’s responsibilities, Mr. Sheehan and Mylan Inc. entered into a Retirement and Consulting Agreement. The agreement provides that Mr. Sheehan will provide consulting services to Mylan for one year following his retirement date. Pursuant to the agreement, Mr. Sheehan will receive an amount equal to his annual base salary, payable in four equal installments on or around the end of the first four fiscal quarters following his retirement date, and COBRA health and welfare benefits during the consulting period, and he will be treated as retirement eligible for purposes of his outstanding stock options. Mr. Sheehan will also remain subject to all restrictive covenants with Mylan pursuant to their terms.

 

Compensation Best Practices

Based on shareholder outreach over the past several years, as well as the Mylan Board’s own independent analysis and initiatives, we have implemented numerous robust compensation-related policies, including, among others, those noted below.

 

What We Do

 

    Maintain a significant portion of compensation aligned with shareholder interests and tied to stock price or financial and operational business performance

 

    Balance annual and long-term incentives

 

    Employ balanced and different metrics for annual and long-term incentives

 

    Long-term incentives heavily weighted to performance-based metrics: 60% PRSUs, 20% RSUs and 20% stock options

 

    Double-trigger vesting for annual equity-based awards upon a change in control

 

    Consider peer groups and market data in determining compensation

 

    Retain an independent compensation consultant that reports directly to the Compensation Committee

 

    Maintain robust stock ownership guidelines, which our senior management significantly exceeds

 

    Maintain a robust clawback policy

 

    Conduct an annual compensation-related risk review to ensure that compensation is aligned with shareholder interests

What We Don’t Do

 

    No exercise of positive discretion in determining annual incentive payouts

 

    No re-pricing of stock options

 

    No pledging of Company ordinary shares

 

    No new 280G tax gross ups

 

    No Company matching contributions to the Restoration Plan for NEOs with RBAs
 

 

 

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Compensation Committee Report

 

 

We have reviewed and discussed the Compensation Discussion and Analysis with management. Based on such review and discussions, we recommended to the Mylan Board that the Compensation Discussion and Analysis be included in this Proxy Statement.

Respectfully submitted,

Wendy Cameron

Neil Dimick

Mark W. Parrish

 

 

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Summary Compensation Table

 

 

The following summary compensation table sets forth the cash and non-cash compensation paid to or earned by the NEOs for 2015, 2014, and 2013.

 

Name and

Principal Position

  Fiscal
Year
   

Salary

($)(2)

   

Bonus

($)

   

Stock

Awards

($)(3)

    Option
Awards
($)(4)
    Non-Equity
Incentive Plan
Compensation
($)(5)
   

Changes

in Pension

Value and

Non-qualified
Deferred
Compensation
Earnings

($)(6)

    All Other
Compensation
($)(7)
   

Total

($)

   

Total without
Transaction-

Related Excise
Tax
Reimbursement

($)(8)

 

Heather Bresch

Chief Executive Officer

    2015        1,330,769               5,200,046        1,300,007        3,900,000        768,216        6,432,030        18,931,068        13,102,073   
    2014        1,180,769               4,800,007        14,401,997        3,259,800        1,546,776        633,477        25,822,826        25,822,826   
    2013        1,080,769               3,960,020        995,198        2,200,000        339,202        471,971        9,047,160        9,047,160   

John D. Sheehan

Former Executive

Vice President and Chief Financial

Officer(1)

    2015        675,000               1,560,074        390,008        1,300,000        355,679        1,235,718        5,516,479        4,447,422   
    2014        650,000               1,300,011        2,682,497        1,177,150        341,795        177,821        6,329,274        6,329,274   
    2013        650,000               1,299,994        326,706        1,040,000        237,114        216,469        3,770,283        3,770,283   
                   
                                                                               

Rajiv Malik

President

    2015        1,019,231               3,200,041        800,017        2,500,000        970,676        11,411,770        19,901,735        15,042,664   
    2014        890,385               2,520,003        11,946,006        1,874,385        649,051        7,284,822        25,164,652        25,164,652   
    2013        840,385               2,380,011        598,127        1,564,000        429,750        2,384,328        8,196,601        8,196,601   

Anthony Mauro

Chief Commercial Officer

    2015        634,615          1,250,036        312,517        1,437,500               1,216,500        4,851,168        3,830,446   
    2014        545,192               879,983        2,577,505        996,050               240,881        5,239,611        5,239,611   
                                                                               

Robert J. Coury

Executive Chairman

    2015        1,401,923               4,860,067        1,215,004        3,375,000        1,606,533        5,242,131        17,700,658        13,428,369   
    2014        1,350,000               4,320,005        10,510,001        3,056,063        2,404,435        883,086        22,523,590        22,523,590   
    2013        1,350,000               4,319,975        1,085,667        2,700,000        4,796,967        1,157,391        15,410,000        15,410,000   

 

 

(1) Mr. Sheehan retired from the Company effective April 1, 2016.
(2) Represents the value of the base salary actually paid to the NEOs in 2015. The annual base salary approved by the Compensation Committee for each of the NEOs is payable in accordance with the Company’s normal payroll practices for its senior executives, so that an NEO’s total base salary amount is paid to him or her in 26 equal bi-weekly installments. 2015 included an additional payment date (a total of 27 payments were made in 2015), therefore the amounts shown for 2015 are greater than the applicable NEO’s annual base salary.
(3) Represents the grant date fair value of the stock awards granted to the NEO in 2015, 2014, and 2013, as applicable. For information regarding assumptions used in determining such expense, please refer to Note 11 to the Company’s Consolidated Financial Statements contained in the Form 10-K for the year ended December 31, 2015.
(4) Represents the grant date fair value of the option awards granted to the NEO in 2015, 2014, and 2013, as applicable. For information regarding assumptions used in determining such expense, please refer to Note 11 to the Company’s Consolidated Financial Statements contained in the Form 10-K for the year ended December 31, 2015. For 2014, also includes the grant date fair value of SARs granted under the One-Time Special Performance-Based Incentive Program, which were as follows: $13,202,000 for Ms. Bresch; $11,316,000 for Mr. Malik; $9,430,000 for Mr. Coury; and $2,357,500 for Messrs. Sheehan and Mauro.
(5) Represents amounts paid under the Company’s non-equity incentive compensation plan. For a discussion of this plan, see the Compensation Discussion and Analysis set forth above.
(6) Represents the aggregate change in present value of the applicable NEO’s accumulated benefit under his or her respective RBA or the Amended Retirement Benefit Agreement (“Amended RBA”) for Mr. Coury. In computing these amounts, we used the same assumptions that were used to determine the expense amounts recognized in our 2015 financial statements. In 2015, the impact of a decrease in the applicable discount rates led to an increase in the present value of accumulated benefits of approximately $129,954 for Ms. Bresch, approximately $13,091 for Mr. Sheehan, and approximately $37,751 for Mr. Malik. For further information concerning the RBAs, see the Pension Benefits for 2015 table set forth below and the discussion under “Retirement Benefit Agreements” beginning on page 64 of this Proxy Statement.
(7) Amounts shown in this column are detailed in the chart on the next page.
(8) In order to show the effect that the one-time tax reimbursement with respect to the Transaction-Related Excise Tax had on total compensation, as determined under applicable SEC rules, we have included an additional column to show total compensation less this item. The amounts reported in the Total without Transaction-Related Excise Tax Reimbursement column differ substantially from the amounts reported in the Total column required under SEC rules and are not a substitute for total compensation. Total without Transaction-Related Excise Tax Reimbursement represents total compensation, as determined under applicable SEC rules, minus, for 2015 only, the value of the one-time tax reimbursement with respect to the Transaction-Related Excise Tax reported in the All Other Compensation column. The tax reimbursement with respect to the Transaction-Related Excise Tax was a one-time payment so that, on a net after-tax basis, the NEO would be in the same position as if the Transaction-Related Excise Tax had not been imposed.

 

 

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Fiscal

Year

   

Use of

Company-

Provided

Automobile

($)(a)

   

Personal

Use of

Company

Aircraft

($)(b)

   

Lodging

Reimbursement

($)(c)

   

Expatriate

Benefits

($)(d)

   

401(k) and

Profit Sharing

Plan Matching

and Profit

Sharing

Contribution

($)(e)

   

Restoration

Plan

Contribution

($)(f)

   

Transaction-
Related

Excise Tax

Reimbursement

($)(g)

   

Other

($)(h)

 

Heather Bresch

    2015        19,200        310,312                      28,792        218,454        5,828,995        26,277   
    2014        19,200        319,050                      27,280        224,054               43,893   
    2013        19,200        137,137                      27,308        270,051               18,275   

John D. Sheehan

    2015        19,200        4,506                      28,800        100,100        1,069,057        14,055   
    2014        19,200                             28,250        114,100               16,271   
    2013        19,200        2,268                      27,700        161,363               5,938   

Rajiv Malik

    2015        23,392        29,557        50,000        6,333,891                      4,859,071        115,859   
    2014        29,992        32,234        50,000        7,076,038                             96,558   
    2013        19,200        25,671        50,000        2,183,224                             106,233   

Anthony Mauro

    2015        19,200                             28,800        131,918        1,020,722        15,860   
    2014        19,200                      77,267        28,250        106,222               9,942   

Robert J. Coury

    2015        38,931        605,255                      28,800        265,300        4,272,289        31,556   
    2014        40,114        498,636                      28,250        301,088               14,998   
    2013        39,047        542,296                      27,700        515,968               32,380   

 

 

(a) In the case of Ms. Bresch and Messrs. Sheehan and Mauro, these numbers represent a vehicle allowance. In the case of Messrs. Malik and Coury, this number represents the cost of a vehicle (based on lease value), insurance, and, in the case of Mr. Coury only, ancillary expenses associated with such vehicle.
(b) Amounts disclosed represent the actual aggregate incremental costs incurred by Mylan associated with the personal use of the Company’s aircraft. Incremental costs include annual average hourly fuel and maintenance costs, landing and parking fees, customs and handling charges, passenger catering and ground transportation, crew travel expenses, away from home hanger fees, and other trip-related variable costs. Because the aircrafts are used primarily for business travel, incremental costs exclude fixed costs that do not change based on usage, such as pilots’ salaries, aircraft purchase or lease costs, home-base hangar costs, and certain maintenance fees. Aggregate incremental cost as so determined with respect to personal deadhead flights is allocable to the NEO. In certain instances where there are both business and personal passengers, the incremental costs per hour are pro-rated.
(c) Represents a housing allowance afforded to Mr. Malik.
(d) Expatriate benefits for Mr. Malik represent income taxes paid by Mylan in connection with Mr. Malik’s expatriate assignment to the United States from India effective January 1, 2012. Specifically, Mr. Malik is responsible for, and has continued to pay taxes equal to those he would have been obligated for had he maintained his principal work location and residence in India rather than having transferred, at Mylan’s request, to the United States, while Mylan has responsibility for all additional taxes, including Mr. Malik’s tax obligations on the imputed income associated with Mylan’s payment of taxes on his behalf. Amounts shown for 2015, 2014, and 2013 for Mr. Malik are net of Mylan’s estimated tax refunds for each year. Estimated refunds were approximately $1.1 million for 2015, $1.5 million for 2014, and $0.3 million for 2013. Expatriate benefits for Mr. Mauro represent income taxes paid by the Company in connection with certain equity awards held by Mr. Mauro relating to a period when he provided services in Canada.
(e) In 2015, amounts disclosed for Ms. Bresch included a matched contribution of $10,592, and a profit sharing contribution from the Company of $18,200. In 2015, such amounts for each of Messrs. Sheehan, Mauro, and Coury were $10,600 and $18,200, respectively. In 2014, amounts disclosed for Ms. Bresch included the total of a $17,850 matched contribution and $9,430 in Company profit sharing, and for each of Messrs. Sheehan, Mauro, and Coury such amounts were $17,850 and $10,400, respectively. In 2013, amounts disclosed for Ms. Bresch included the total of a $9,808 matched contribution and $17,500 in Company profit sharing, and for each of Messrs. Sheehan and Coury such amounts were $10,200 and $17,500, respectively. Effective April 1, 2013, Ms. Bresch and Messrs. Sheehan and Coury are no longer eligible to receive matching contributions under the Restoration Plan.
(f) Represents profit sharing contribution under the Restoration Plan. Effective April 1, 2013, Ms. Bresch and Messrs. Sheehan and Coury are no longer eligible to receive matching contributions under the Restoration Plan. See page 63 of this Proxy Statement for further information regarding Restoration Plan contributions.
(g) Represents the one-time tax reimbursement payment with respect to the Transaction-Related Excise Tax imposed on awards granted under the One-Time Special Performance-Based Incentive Program and the stock options granted in 2014, so that, on a net after-tax basis, the NEO would be in the same position as if the Transaction-Related Excise Tax had not been imposed. See pages 53 to 55 of this Proxy Statement for further discussion of this payment.
(h) Represents out-of-pocket medical, vision, health insurance, long-term disability, and life insurance retention plan premiums. For Mr. Malik, it also represents employee contributions to the Provident Fund, a statutory plan in India, and a health insurance premium. Also includes: events and memberships; certain security services; life insurance retention plan premium for Ms. Bresch and Mr. Mauro; long-term disability premium for Ms. Bresch and Messrs. Sheehan, Mauro, and Coury; and executive physicals for Ms. Bresch and Mr. Sheehan.

 

 

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Grants of Plan-Based Awards for 2015

 

 

The following table summarizes grants of plan-based awards made to each NEO during 2015.

 

Name

         

Estimated Future Payments

Under Non-Equity Incentive

Plan Awards(1)

       

Estimated Future Payments

Under Equity Incentive Plan

Awards(2)

   

All Other

Stock

Awards:

Number of

Shares of

Stock or

Units

(#)(3)

   

All Other

Option

Awards:

Number of

Securities

Underlying

Options

(#)(4)

   

Exercise or

Base Price

of Option

Awards

($/Sh)

   

Grant

Date Fair

Value

of Stock

and

Option

Awards

($)(5)

 
 

Grant

Date

 

Approval

Date

 

Threshold

($)

   

Target

($)

   

Maximum

($)

       

Threshold

(#)

   

Target

(#)

   

Maximum

(#)

         

Heather Bresch

        975,000        1,950,000        3,900,000                                                      
  11/17/2015   11/17/2015                            38,492        76,984        115,476                             3,900,009   
  11/17/2015   11/17/2015                                                 25,662                      1,300,037   
  11/17/2015   11/17/2015                                                          67,659        50.66        1,300,007   

John D. Sheehan

        325,000        650,000        1,300,000                                                      
  11/17/2015   11/17/2015                            11,548        23,096        34,644                             1,170,043   
  11/17/2015   11/17/2015                                                 7,699                      390,031   
  11/17/2015   11/17/2015                                                          20,298        50.66        390,008   

Rajiv Malik

        625,000        1,250,000        2,500,000                                                      
  11/17/2015   11/17/2015                            23,688        47,375        71,063                             2,400,018   
  11/17/2015   11/17/2015                                                 15,792                      800,023   
  11/17/2015   11/17/2015                                                          41,637        50.66        800,017   

Anthony Mauro

        359,375        718,750        1,437,500                                                      
  11/17/2015   11/17/2015                            9,253        18,506        27,759                             937,514   
  11/17/2015   11/17/2015                                                 6,169                      312,522   
  11/17/2015   11/17/2015                                                          16,265        50.66        312,517   

Robert J. Coury

        843,750        1,687,500        3,375,000                                                      
  11/17/2015   11/17/2015                            35,976        71,951        107,927                             3,645,038   
  11/17/2015   11/17/2015                                                 23,984                      1,215,029   
  11/17/2015   11/17/2015                                                        63,235        50.66        1,215,004   

 

 

(1)  The performance goals under the annual incentive compensation program applicable to the NEOs during 2015 are described above in the Compensation Discussion and Analysis.
(2)  Consist of PRSUs awarded under the Amended 2003 Plan. The vesting terms applicable to these awards are described above in the Compensation Discussion and Analysis and below following the Outstanding Equity Awards at the End of 2015 table.
(3)  Consist of RSUs awarded under the Amended 2003 Plan. The vesting terms applicable to these awards are described below following the Outstanding Equity Awards at the End of 2015 table.
(4)  Represents the grant of ten-year stock options awarded under the Amended 2003 Plan. Stock options were granted with an exercise price equal to the closing price of the Company’s ordinary shares on the date of grant. The vesting terms applicable to these awards are described below following the Outstanding Equity Awards at the End of 2015 table.
(5)  Represents the grant date fair value of the specific award granted to the NEO. For information regarding assumptions used in determining such value, please refer to Note 11 to the Company’s Consolidated Financial Statements contained in the Form 10-K for the fiscal year ended December 31, 2015.

 

 

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Outstanding Equity Awards at the End of 2015

 

 

The following table sets forth information concerning all of the outstanding equity-based awards held by each NEO as of December 31, 2015.

 

    Option Awards        Stock Awards   

Name

 

Number of

Securities

Underlying

Unexercised

Options (#)

Exercisable

   

Number of

Securities

Underlying

Unexercised

Options (#)

Unexercisable(1)

   

Option

Exercise

Price

($)

   

Option

Expiration

Date

   

Number of

Shares or

Units of

Stock That

Have
Not Vested

(#)(2)

   

Market

Value of

Shares
or

Units of

Stock
That

Have Not

Vested

($)(3)

   

Equity

Incentive

Plan

Awards:

Number of

Unearned

Shares,

Units or

Other

Rights

That

Have Not

Vested (#)

   

Equity Incentive

Plan Awards:

Market or

Payout Value

of Unearned

Shares, Units

or Other Rights

That Have Not

Vested ($)(3)

 

Heather Bresch

    14,196               21.13        3/3/2020                               
    4,413               22.66        3/2/2021                               
    4,266               23.44        2/22/2022                               
           3,236        30.90        3/6/2023                               
    21,834        43,668        55.84        3/5/2024                               
           67,659        50.66        11/17/2025                               
                                              378,071 (4)      20,442,299   
                                25,662        1,387,544        76,984 (5)      4,162,525   

John D. Sheehan

    13,239               22.66        3/2/2021                               
    4,266               23.44        2/22/2022                               
           3,236        30.90        3/6/2023                               
    5,914        11,826        55.84        3/5/2024                               
           20,298        50.66        11/17/2025                               
                                              67,512 (4)      3,650,374   
                                7,699        416,285        23,096 (5)      1,248,801   

Rajiv Malik

    11,463        22,926        55.84        3/5/2024                               
           41,637        50.66        11/17/2025                               
                                              324,061 (4)      17,521,978   
                                15,792        853,873        47,375 (5)      2,561,566   

Anthony Mauro

    4,757               22.66        3/2/2021                               
    4,266               23.44        2/22/2022                               
           3,236        30.90        3/6/2023                               
    4,003        8,006        55.84        3/5/2024                               
           16,265        50.66        11/17/2025                               
                                              67,512 (4)      3,650,374   
                                6,169        333,558        18,506 (5)      1,000,619   

Robert J. Coury

    14,196               21.13        3/3/2020                               
    4,413               22.66        3/2/2021                               
    4,266               23.44        2/22/2022                               
           3,236        30.90        3/6/2023                               
    19,651        39,301        55.84        3/5/2024                               
           63,235        50.66        11/17/2025                               
                                              270,051 (4)      14,601,658   
                                23,984        1,296,815        71,951 (5)      3,890,391   

 

 

(1)

Vesting dates applicable to unvested stock options are as follows, in each case subject to continued employment with Mylan: the unvested options at the $30.90 exercise price for Ms. Bresch and Messrs. Sheehan, Mauro, and Coury vested on March 6, 2016; one-half of the unvested options at the $55.84 exercise price for Ms. Bresch and Messrs. Sheehan, Malik, Mauro, and Coury vested on March 5, 2016, and the remaining options will vest on March 5, 2017; one-third of the unvested options at the $50.66 exercise price vested on March 4, 2016, and the remaining options will vest 50% on each of March 4, 2017 and 2018 except that, in each case, all of Mr. Sheehan’s unvested stock options were vested as of April 21, 2016 in accordance

 

 

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  with the terms of his Retirement and Consulting Agreement. Subject to applicable employment agreement provisions, following termination of employment, vested stock options will generally remain exercisable for 30 days following termination, except that (i) in the case of termination because of disability, 100% of options become vested and vested options will remain exercisable for two years following termination; (ii) in the case of a termination due to a reduction in force, vested options will remain exercisable for one year following termination; and (iii) in the case of death or retirement, or a participant’s death within two years following termination because of disability, 100% of options become vested and vested options will remain exercisable for the remainder of the original term. In the case of options granted in 2011, 2012, 2013, 2014, and 2015 to Mr. Coury, in 2013, 2014, and 2015 to Ms. Bresch, and in 2014 and 2015 to Mr. Malik, following termination of employment without “cause” or resignation for “good reason” (as determined pursuant to the applicable employment agreement), 100% of options become vested and vested options will remain exercisable for one year following termination.
(2) All of the RSUs shown in this column vested one-third on March 4, 2016, and the remaining RSUs will vest 50% on each of March 4, 2017 and 2018 except that Mr. Sheehan’s unvested RSUs were forfeited in connection with his retirement. In accordance with their terms, all of these awards would vest upon an involuntary termination without cause or a voluntary resignation for good reason occurs within two years following the change in control (double trigger awards). In the case of awards granted to Ms. Bresch and Messrs. Malik and Coury, the awards would also vest upon the executive’s retirement, termination without “cause” or resignation for “good reason” as defined in the applicable employment agreement.
(3) The market value of restricted ordinary shares, RSUs and PRSUs was calculated using the closing price of the Company’s ordinary shares as of December 31, 2015.
(4) On June 10, 2015, the SARs granted under the One-Time Special Performance-Based Incentive Program converted into restricted ordinary shares pursuant to the terms of the program, with any fractional shares converted into restricted cash awards. The restricted ordinary shares (and the restricted cash awards) remain subject to forfeiture and additional vesting conditions, including achievement of adjusted diluted EPS of $6.00 and continued service through December 31, 2018, and the other terms and conditions of the program. The One-Time Special Performance-Based Incentive Program is described in detail in the Form 10-K/A for Mylan’s fiscal year ending December 31, 2014. In accordance with their terms, the restricted ordinary shares (and restricted cash awards) would vest upon a change in control. In the case of awards granted to Ms. Bresch and Messrs. Malik and Coury, the restricted ordinary shares (and restricted cash awards) would also vest upon the executive’s termination without “cause” or resignation for “good reason” as defined in the applicable employment agreement, subject to the achievement of the applicable performance goals, except that, in the case of Ms. Bresch and Mr. Malik, if such termination or resignation occurs prior to January 1, 2017, only a pro-rated portion of the restricted ordinary shares will vest. Mr. Sheehan’s restricted ordinary shares (and his restricted cash awards) were forfeited in connection with his retirement.
(5) The vesting of all of the PRSUs shown in this column is subject to the attainment of performance goals. On March 4, 2018, Ms. Bresch is expected to vest in 76,984 shares, Mr. Malik is expected to vest in 47,375 shares, Mr. Mauro is expected to vest in 18,506 shares, and Mr. Coury is expected to vest in 71,951 shares. Mr. Sheehan’s PRSUs were forfeited in connection with his retirement. The PRSUs are expected to vest upon the earliest to occur of (i) March 4, 2018, provided that the performance goals have been satisfied, (ii) an involuntary termination without cause or a voluntary resignation for good reason within two years following the change in control, (iii) the executive’s death or disability, and (iv) in the case of awards granted to Ms. Bresch and Messrs. Malik and Coury, the executive’s retirement, termination without “cause”, or resignation for “good reason” as defined in the applicable employment agreement. Any outstanding shares subject to the award that remain unvested as of March 4, 2018 will be forfeited.

 

 

Option Exercises and Stock Vested for 2015

 

 

The following option awards and stock awards were exercised or became vested for the NEOs during 2015 in connection with the EPD Transaction, as described above in the Compensation Discussion and Analysis:

 

                            Option Awards                                Stock Awards   

Name

 

Number of Shares Acquired

on Exercise

(#)

   

Value Realized

on Exercise

($)

   

Number of Shares Acquired

on Vesting

(#)(1)

   

Value Realized
on Vesting

($)

 

Heather Bresch

    557,583        16,174,466        287,427        15,775,431   

John D. Sheehan

    120,710        3,473,014        100,842        5,534,713   

Rajiv Malik

    382,372        11,178,305        173,327        9,513,052   

Anthony Mauro

    37,347        951,471        57,236        3,141,398   

Robert J. Coury

    1,133,138        34,011,112        335,104        18,392,183   

 

 

(1) This number of vested ordinary shares includes PRSU awards described above in the Compensation Discussion and Analysis. The number of PRSUs that vested at target amounts were 225,913 for Ms. Bresch, 136,409 for Mr. Malik, 79,344 for Mr. Sheehan, 45,086 for Mr. Mauro, and 263,666 for Mr. Coury.

 

 

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Pension Benefits for 2015

 

 

The following table summarizes the benefits accrued by the NEOs as of December 31, 2015 under the RBA (or deferred compensation plan, in the case of Mr. Malik) in effect with the NEO. The Company does not sponsor any other defined benefit pension programs covering the NEOs.

 

Name

  Plan Name(1)  

Number of Years

Credited Service

(#)

 

Present Value of

Accumulated

Benefit

($)(2)

   

Payments During

Last Fiscal Year

($)

 

Heather Bresch

  Retirement Benefit Agreement   11     6,426,561          

John D. Sheehan

  Retirement Benefit Agreement   5     1,213,431          

Rajiv Malik

  The Executive Plan for Rajiv Malik(3)   N/A     281,445          

Rajiv Malik

  Retirement Benefit Agreement   9     3,684,867          

Anthony Mauro

  N/A   N/A              

Robert J. Coury

  Retirement Benefit Agreement   14     50,437,336          

 

 

(1) Mr. Mauro is not party to an RBA.
(2) See page 58 of this Proxy Statement for further information on the value of the accumulated pension benefit.
(3) This is a deferred compensation plan established for the benefit of Mr. Malik. The Company is no longer contributing to this plan.

 

 

Nonqualified Deferred Compensation

 

 

The following table sets forth information relating to the Restoration Plan for 2015. There was no NEO participation in the Mylan Executive Income Deferral Plan in 2015.

 

Name

 

Aggregate

Balance

at Last FYE

($)

   

Executive

Contributions

in Last FY

($)

   

Company Profit

Sharing

Contributions

in Last FY

($)

   

Aggregate

Earnings

(Loss) in

Last FY

($)(1)

   

Aggregate

Withdrawals/

Distributions

($)

   

Aggregate

Balance

at FYE

($)

 

Heather Bresch

    2,116,823        258,045        218,454        (40,599            2,552,723   

John D. Sheehan

    1,192,277        72,600        100,100        (19,814            1,345,163   

Anthony Mauro

    772,552        105,157        131,918        (12,907            996,720   

Robert J. Coury

    4,035,641        122,027        265,300        70,170               4,493,138   

 

 

(1) These amounts include earnings (losses), dividends, and interest provided on account balances, including the change in value of the underlying investments in which our NEOs are deemed to be invested. These amounts are not reported in the Summary Compensation Table.

 

 

Restoration Plan

 

 

The Restoration Plan permits employees (including certain NEOs) who earn compensation in excess of the limits imposed by Section 401(a)(17) of the Code to (i) defer a portion of base salary and bonus compensation, (ii) be credited with a Company matching contribution in respect of deferrals under the Restoration Plan, and (iii) be credited with Company non-elective contributions (to the extent so made by Mylan), in each case, to the extent that participants otherwise would be able to defer or be credited with such amounts, as applicable, under Mylan’s Profit Sharing 401(k) Plan if not for the limits on contributions and deferrals imposed by the Code. Company matching contributions immediately vest and Company profit sharing contributions are subject to an initial

three-year vesting period. Upon a change in control (as defined in the Restoration Plan), a participant will become 100% vested in any unvested portion of his or her matching contributions or non-elective contributions. In connection with the EPD Transaction, the Board of Mylan Inc. amended the Restoration Plan to provide that the transaction would not be considered a change in control. Distributions of a participant’s vested account balance will be made in a lump sum within sixty days following a participant’s separation from service (or such later date as may be required by Section 409A of the Code).

Ms. Bresch and Messrs. Sheehan, Malik, and Coury are no longer eligible to receive matching contributions under the Restoration Plan because they are party to RBAs with Mylan.

 

 

 

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Retirement Benefit Agreements

 

 

In December 2004, Mylan entered into an RBA with Mr. Coury. This RBA has been modified from time to time (as defined above, the “Amended RBA”). Additionally, Mylan entered into RBAs with Ms. Bresch and Mr. Malik in August 2009, and Mr. Sheehan in February 2011 (together with Mr. Coury’s Amended RBA, the “RBAs”). The information below is based upon the RBAs in effect as of December 31, 2015.

Pursuant to the Amended RBA, upon any termination of employment, Mr. Coury is entitled to receive a lump sum retirement benefit (the “Retirement Benefit”) equal to the present value of a monthly retirement benefit equal to 50% of the sum of his base salary as of December 31, 2011, and the average of the three highest annual cash bonuses paid to Mr. Coury during the five years preceding January 1, 2012, for a period of 15 years, discounted to Mr. Coury’s current age from 55. As a result of his years of service, Mr. Coury has fully vested in his Retirement Benefit. Pursuant to the terms of the Amended RBA, Mr. Coury is eligible to receive a supplemental retirement benefit equal to 20% of the sum of his base salary as of December 31, 2011 and the average of the three highest annual cash bonuses paid to Mr. Coury in the five years preceding January 1, 2012 (the “Supplemental Retirement Benefit”). The Supplemental Retirement Benefit vested 50% on January 1, 2013 and 50% on January 1, 2014. In connection with the extension of his employment agreement in 2014, Mr. Coury’s RBA was amended to fix the discount rate used for purposes of the RBA, so that Mylan’s obligation would no longer be subject to variations in the appropriate discount rate.

Pursuant to the RBAs of Ms. Bresch and Messrs. Sheehan and Malik, upon retirement following completion of ten or more years of service, each executive would be entitled to receive a lump sum retirement benefit equal to the present value of an annual payment of 20%, 15%, and 15%, respectively, of the sum of their base salary and target annual bonus on the date of retirement, for a period of 15 years, discounted to the executive’s current age from age 55. Having completed ten years of continuous service as an executive, Ms. Bresch is now vested 100% in her retirement benefit. Mr. Sheehan completed his fifth year of service with the Company on April 1, 2015, and vested 50% in his retirement benefit on such date, with an additional 10% vesting on April 1, 2016, at which time Mr. Sheehan retired

from the Company and ceased additional vesting in his retirement benefit. Mr. Malik has completed nine years of continuous service with the Company, and has vested 90% in his retirement benefit, with an additional 10% of the retirement benefit vesting after each year of service for up to one additional year.

Upon the occurrence of a change in control of the Company, each executive would become fully vested in his or her retirement benefit and would be entitled to receive a lump sum payment equal to the net present value of the retirement benefit, further discounted to the executive’s current age from age 55, as soon as practicable following any subsequent termination of employment. If an executive dies while employed by Mylan, the executive’s beneficiary would be entitled to receive a lump sum payment equal to the greater of (i) two times the executive’s current base salary or (ii) the net present value of the retirement benefit. As described above, each of the relevant executive officers executed a one-time waiver providing that the EPD Transaction did not constitute a change in control for purposes of the RBAs.

Ms. Bresch and Messrs. Sheehan and Malik’s RBAs provide that if the executive’s employment is terminated without cause or for good reason, the executive will receive additional years of service credit corresponding to the applicable severance multiplier under his or her Transition and Succession Agreement.

Each of the RBAs provides that the executive is prohibited for one year following termination from engaging in activities that are competitive with the Company’s activities, provided that this provision will have no effect if, after the occurrence of a change in control, Mylan refuses, fails to make, or disputes any payments to be made to the executive under the RBA, whether or not the executive actually receives payments under the RBA.

Ms. Bresch and Messrs. Sheehan and Malik’s RBAs provide that during the five-year period following termination, except for any termination occurring following a change in control, Mylan may request that the executive provide consulting services for the Company, which services will be reasonable in scope, duration, and frequency, and not to exceed 20 hours per month. The hourly rate for such consulting services will be determined by the parties at the time, but may not be less than $500 per hour, payable

 

 

 

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monthly. The executive would also be entitled to reimbursement of all out-of-pocket expenses incurred in the course of providing these services.

Information concerning the estimated value of benefits under the RBAs assuming retirement as of December 31, 2015 is at “Potential Payments Upon Termination or Change in Control” beginning on page 66 of this Proxy Statement.

In 2007, Mylan established a nonqualified deferred compensation plan for Mr. Malik, who was then living outside the United States and therefore unable to participate in Mylan’s 401(k) plan. Although Mylan no longer contributes to the account, the plan account will be distributed to Mr. Malik upon Mylan’s termination of the plan, the termination of Mr. Malik’s employment, or other qualifying distribution events, such as his retirement, disability, or death.

 

 

Employment Agreements

 

 

Mylan was party to employment agreements with each of the NEOs in 2015. The information below is based on the employment agreements in effect as of December 31, 2015. For a further description of the employment agreement with Mr. Mauro, see “Promotion of Anthony Mauro and Extension of Executive Employment Agreement” on page 56 of this Proxy Statement.

Mr. Coury. Mylan and Mr. Coury entered into an employment agreement in February 2014, effective January 1, 2014. Mr. Coury’s employment agreement has a term of five years (through January 1, 2019, unless earlier terminated or extended in accordance with its terms). As Mylan’s most senior leader, Mr. Coury is responsible for the overall strategic direction of Mylan, leadership of the Mylan Board, oversight of talent management and retention, shareholder outreach, business development, and mergers and acquisitions. Pursuant to his employment agreement in effect as of December 31, 2015, Mr. Coury is entitled to an annual base salary of $1,350,000 and is eligible for an annual performance-based target bonus of at least 125% of base salary which will be payable upon the achievement of the performance targets. Mr. Coury is also entitled to participate in long-term incentive and equity plans of the Company at the discretion of the Compensation Committee and to receive employee benefits and

other fringe benefits no less favorable than the benefits to which he was entitled under his original employment agreement. Throughout the term of the agreement and for a period of two years following Mr. Coury’s termination of employment for any reason, he may not engage in activities that are competitive with the Company’s activities and may not solicit the Company’s customers or employees.

For a description of the termination provisions of Mr. Coury’s employment agreement in effect as of December 31, 2015, please see below, at “Potential Payments Upon Termination or Change in Control” on page 66 of this Proxy Statement.

Ms. Bresch and Messrs. Sheehan, Malik, and Mauro. Mylan entered into amended and restated employment agreements with Ms. Bresch and Mr. Malik in February 2014, effective January 1, 2014 (through December 31, 2018, unless earlier terminated or extended in accordance with its terms), entered into an amended and restated employment agreement with Mr. Sheehan in July 2013, and entered into an amended and restated employment agreement with Mr. Mauro in October 2011, effective January 1, 2012, which was further amended on April 10, 2015 and January 8, 2016, as described above. Each of these agreements provides for the payment of a minimum base salary as of December 31, 2015 of $1,300,000, $650,000, $1,000,000, and $625,000, with respect to Ms. Bresch and Messrs. Sheehan, Malik, and Mauro, respectively, subject to reduction only in the event of similar decreases among Mylan’s executives in the case of Ms. Bresch and Messrs. Malik, and Mauro. Each employment agreement also provides for the executive’s eligibility to receive a discretionary bonus and fringe benefits of employment as are customarily provided to senior executives of Mylan.

The agreements provide for a target bonus equal to 150%, 100%, 125%, and 115% of base salary with respect to Ms. Bresch and Messrs. Sheehan, Malik, and Mauro, respectively. Each of Ms. Bresch, Messrs. Sheehan, Malik, and Mauro’s agreements also provide that throughout the term of the agreement and for a period of one year following the executive’s termination of employment for any reason, the executive may not engage in activities that are competitive with the Company’s activities and may not solicit the Company’s customers or employees.

 

 

 

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For a description of the termination provisions under these agreements, please see immediately below, at “Potential Payments Upon Termination or Change in Control.”

 

 

Potential Payments Upon Termination or Change in Control

 

 

The following discussion summarizes the termination and change in control-related provisions of the employment agreements, RBAs, and transition and succession agreements entered into between Mylan and the applicable NEO and in effect as of December 31, 2015, and termination of employment and change in control provisions under the Amended 2003 Plan. In the discussions that follow, all amounts payable upon termination or change in control that include the value of equity, include the value, if any, attributable to the One-Time Performance-Based Awards.

Termination Under Employment Agreements

Mr. Coury. Under Mr. Coury’s employment agreement in effect as of December 31, 2015, if Mr. Coury’s employment were terminated for any reason, he will be entitled to a payment equal to three times his “annual cash compensation” (defined as the sum of Mr. Coury’s base salary as in effect on December 31, 2011, plus the higher of (i) the average annual bonus awarded to Mr. Coury with respect to 2009, 2010, and 2011 or (ii) Mr. Coury’s 2011 target bonus), and a pro-rated annual bonus for the year of termination based on actual performance, which would be reduced by Company-provided death benefits in the event of the termination of Mr. Coury’s employment due to death. Mr. Coury will also be provided with continued health and other benefits and aircraft usage for three years following any such termination of employment, and will be eligible to participate in Mylan’s Supplemental Health Insurance Plan. In addition, if Mr. Coury’s employment is terminated without “cause” or for “good reason” (each as defined under his employment agreement in effect as of December 31, 2015), all equity-based awards and Mr. Coury’s $20 million performance incentive award will fully vest.

If Mr. Coury’s employment with Mylan had terminated on December 31, 2015, by Mylan without cause or by Mr. Coury for good reason prior to a change in control, under his current employment agreement he would have been entitled to cash severance payments and other benefits having an aggregate value of

$45,578,100, and equity awards having an intrinsic value as of December 31, 2015 of approximately $20,079,472 would have become vested. If Mr. Coury’s employment with Mylan had terminated on December 31, 2015, because of his death, he would have been entitled to cash severance payments and other benefits under his employment agreement in effect as of December 31, 2015 (including equity awards) having an aggregate value of $61,413,783. If Mr. Coury’s employment with Mylan had terminated on December 31, 2015, because of his disability, he would have been entitled to cash severance payments and other benefits under his employment agreement in effect as of December 31, 2015 (including equity awards) having an estimated aggregate value as of December 31, 2015 of $65,657,572.

Ms. Bresch. Under Ms. Bresch’s employment agreement in effect as of December 31 2015, if Ms. Bresch were to resign for “good reason” or be terminated by Mylan without “cause” (each as defined in her employment agreement in effect as of December 31, 2015), or if her employment were terminated due to death or disability, in each case, prior to a change in control, she would be entitled to a lump sum payment equal to two times her annual base salary, two years of health benefits at Mylan’s cost, and a pro rata bonus based upon the actual bonus she would have been entitled to receive for the fiscal year in which the termination occurs. Such payments and benefits would be reduced by Company-provided death or disability benefits in the event of termination of Ms. Bresch’s employment due to death or disability. Pursuant to the applicable individual award agreements, if Ms. Bresch’s employment is terminated without cause or for good reason, all outstanding equity-based awards granted to Ms. Bresch would have fully vested. Pursuant to the terms of Ms. Bresch’s employment agreement in effect as of December 31, 2015, if the term of employment were not extended or renewed, she would have been entitled to the same payments and benefits as if she had been terminated without cause. If Mylan had offered to renew Ms. Bresch’s term of employment on substantially similar terms and conditions, and Ms. Bresch rejected such offer, she would have been entitled to a lump sum payment equal to 12 months’ continuation of base salary and health benefits at Mylan’s cost.

If Ms. Bresch’s employment had been terminated on December 31, 2015, by Mylan without cause or by

 

 

 

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Ms. Bresch for good reason prior to a change in control, she would have been entitled to cash severance and other benefits under her employment agreement in effect as of December 31, 2015 and equity awards having an estimated aggregate value of $20,593,879. If Ms. Bresch’s employment with Mylan had terminated on December 31, 2015 because of her death or disability, she would have been entitled to cash severance payments and other benefits under her employment agreement in effect as of December 31, 2015 and equity awards having an aggregate value of $20,593,879.

Mr. Sheehan. Under Mr. Sheehan’s employment agreement as in effect on December 31, 2015, if Mr. Sheehan were to resign for “good reason” or be terminated by Mylan without “cause” (each as defined in his employment agreement in effect as of December 31, 2015), or if his employment were terminated due to death or disability, in each case, prior to a change in control, he would be entitled to a lump sum payment equal to his annual base salary, 12 months of health benefits at Mylan’s cost, plus a pro rata bonus equal to the bonus he would have been entitled to receive for the fiscal year in which the termination occurs. Such payments and benefits would be reduced by Company-provided death or disability benefits in the event of termination of Mr. Sheehan’s employment due to death or disability. If Mylan had failed to extend or renew the term of employment in Mr. Sheehan’s employment agreement as in effect on December 31, 2015 on terms mutually acceptable to him and Mylan, by the terms of his employment agreement in effect on December 31, 2015, he would be entitled to a lump sum payment equal to 12 months’ continuation of base salary and health benefits at Mylan’s cost.

If Mr. Sheehan’s employment had been terminated on December 31, 2015, by Mylan without cause or by Mr. Sheehan for good reason prior to a change in control, he would have been entitled to cash severance and other benefits under his employment agreement in effect on such date having an estimated aggregate value of $1,982,307. If Mr. Sheehan’s employment with Mylan had terminated on December 31, 2015, because of his death or disability, he would have been entitled to cash severance payments and other benefits under his employment agreement in effect on such date and equity awards having an aggregate value of $3,791,587. Mr. Sheehan did not receive any payments or benefits from Mylan under his employment agreement in connection with his retirement.

Mr. Malik. Under Mr. Malik’s employment agreement in effect as of December 31, 2015, if Mr. Malik were to resign for “good reason” or be terminated by Mylan without “cause” (each as defined in his employment agreement in effect as of December 31, 2015), or if his employment were terminated due to death or disability, in each case, prior to a change in control, he would be entitled to a lump sum payment equal to one-and-one-half times his annual base salary, 18 months of health benefits at Mylan’s cost, and a pro rata bonus based upon the actual bonus he would have been entitled to receive for the fiscal year in which the termination occurs. Such payments and benefits would be reduced by Company-provided death or disability benefits in the event of termination of Mr. Malik’s employment due to death or disability. Pursuant to the applicable individual award agreements, if Mr. Malik were to resign for good reason or be terminated by Mylan without cause, all outstanding equity-based awards granted to Mr. Malik beginning in 2013 would have fully vested. Pursuant to the terms of Mr. Malik’s employment agreement in effect as of December 31, 2015, if the terms of employment were not extended or renewed, he would have been entitled to the same payments and benefits as if he had been terminated without cause. If Mylan had offered to renew Mr. Malik’s term of employment on substantially similar terms and conditions, and Mr. Malik rejected such offer, he would have been entitled to a lump sum payment equal to 12 months’ continuation of base salary and health benefits at Mylan’s cost.

If Mr. Malik’s employment had been terminated on December 31, 2015, by Mylan without cause or by Mr. Malik for good reason prior to a change in control, he would have been entitled to cash severance and other benefits under his employment agreement in effect as of December 31, 2015 and equity awards having an estimated aggregate value of $14,612,047. If Mr. Malik’s employment with Mylan had terminated on December 31, 2015, because of his death or disability, he would have been entitled to cash severance payments and other benefits under his current employment agreement and equity awards having an aggregate value of $14,612,047.

Mr. Mauro. Under Mr. Mauro’s employment agreement in effect on December 31, 2015, if Mr. Mauro were to be discharged by Mylan without “cause” (as defined in his employment agreement in effect on December 31, 2015) or if his employment were terminated due to death or disability, in each case, prior to a change in control, he would be entitled

 

 

 

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to a lump sum payment equal to his annual base salary, 12 months of health benefits at Mylan’s cost and a pro rata bonus equal to the bonus he would have been entitled to receive for the fiscal year in which the termination occurs. Such payments and benefits would be reduced by Company-provided death or disability benefits in the event of termination of Mr. Mauro’s employment due to death or disability. If the term of employment in Mr. Mauro’s employment agreement in effect on December 31, 2015 was not extended or renewed, he would have been entitled to the same payments and benefits as if he had been terminated without cause.

If Mr. Mauro’s employment had been terminated on December 31, 2015, by Mylan without cause, he would have been entitled to cash severance and other benefits under his current employment agreement having an estimated aggregate value of $2,094,807. If Mr. Mauro’s employment with Mylan had been terminated on December 31, 2015, because of his death or disability, he would have been entitled to benefits under his current employment agreement and equity awards having an aggregate value of $3,559,426.

Retirement Benefit Agreements

Mr. Coury and Ms. Bresch. If the employment of each of Mr. Coury and Ms. Bresch had terminated for any reason on December 31, 2015, each of the executives would have been entitled to an estimated lump sum payment under their Amended RBA or RBA, as applicable, equal to $50,437,336 and $6,426,561, respectively.

Messrs. Sheehan and Malik. If the employment of each of Messrs. Sheehan and Malik had terminated for any reason on December 31, 2015, each of the executives would have been entitled to lump sum payments having the following estimated values under their respective RBAs: (i) in the case of termination by Mylan for “cause” or by the executive without “good reason,” as defined in the executive’s employment agreement, $1,213,431 and $3,684,866, respectively; (ii) in the case of a termination by Mylan without cause or by the executive for good reason, $1,941,490 and $4,094,295, respectively; and (iii) in the case of termination because of death or disability, $2,426,862 and $4,094,295, respectively. If a change in control had occurred on December 31, 2015, each of Messrs. Sheehan and Malik would be entitled upon a simultaneous termination of employment to the benefit the executive would have been entitled to under his

RBA in the case of termination because of death or disability. As discussed above, in connection with the EPD Transaction, the executive officers executed a one-time waiver of accelerated vesting of the benefits under their RBAs. In connection with his retirement on April 1, 2016, Mr. Sheehan will receive a lump sum payment equal to the vested benefit under his RBA as of such date.

Termination Under Transition and Succession Agreements (Change in Control)

Mr. Coury. Pursuant to Mr. Coury’s prior employment agreement, Mr. Coury waived his right to the cash severance payments and continuation benefits under his Transition and Succession Agreement dated December 2, 2004, as amended. This waiver does not apply to Mr. Coury’s right under the Transition and Succession Agreement to receive from Mylan a gross-up payment for any excise tax on “excess parachute payments” and reimbursement of legal fees associated with good faith disputes regarding termination of employment, in seeking benefits under the Transition and Succession Agreement.

Pursuant to Mr. Coury’s employment agreement in effect as of December 31, 2015, if a change in control had occurred on December 31, 2015, and Mr. Coury’s employment had been terminated without cause or for good reason on the same date, then Mr. Coury would not have been entitled to payment of cash severance or continuation benefits under his Transition and Succession Agreement. However, under his employment agreement in effect as of December 31, 2015, he would be entitled to the cash severance and other benefits described above under “Employment Agreements.” If a change in control had occurred on December 31, 2015, and Mr. Coury’s employment had been terminated without cause or for good reason on the same date, Mr. Coury would not have been subject to the excise tax under Section 280G of the Code and therefore would not have been entitled to a gross-up payment.

Ms. Bresch and Messrs. Sheehan, Malik, and Mauro. The Transition and Succession Agreements with the other NEOs provide that if the executive’s employment is terminated other than for cause (including death or disability) or if the executive terminates his or her employment for good reason, in each case prior to a change in control under certain circumstances (such as in the event the termination arose in connection with the change in control) or

 

 

 

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within two years following the occurrence of a change in control, or, under certain circumstances, for any reason within 90 days following the first anniversary of a change in control, the executive would become entitled to receive a lump sum severance payment, equal to, in the case of Ms. Bresch and Messrs. Sheehan and Malik, the higher of (i) the compensation and benefits payable under his or her employment agreement as if the change in control were deemed to be a termination without cause under the employment agreement and (ii) a lump sum severance payment in an amount equal to three times the sum of base salary and highest bonus paid to the executive under the employment agreement or the Transition and Succession Agreement, or, in the case of Mr. Mauro, a lump sum severance payment in an amount equal to the greater of three times the sum of base salary and the higher cash bonus paid to Mr. Mauro by Mylan as reflected on Mr. Mauro’s W-2 in (a) the tax year immediately preceding the year in which the date of termination occurs or (b) the year in which the change in control occurs. Such payments and benefits would be reduced by Company-provided death or disability benefits in the event of the executive’s termination due to death or disability. Each executive would additionally be entitled to continuation of health and insurance benefits for a period of three years. The Transition and Succession Agreements for each of these NEOs also provide for a gross-up payment for any excise tax on “excess parachute payments.”

If a change in control had occurred on December 31, 2015, and the employment of each of Ms. Bresch and Messrs. Sheehan, Malik, and Mauro had been terminated on such date under circumstances entitling them to payments under their Transition and Succession Agreements, the executives would have been entitled to cash severance and other benefits (which includes the vesting of equity awards and the valuation of other perquisites and are in addition to the Retirement Benefit which they would receive as described above) having an estimated aggregate value as follows: for Ms. Bresch, $44,383,299; for Mr. Sheehan, $12,840,389; for Mr. Malik, $32,579,780; and for Mr. Mauro, $13,142,454. Ms. Bresch and Messrs. Sheehan, Malik, and Mauro would also have been entitled to a gross-up payment for excise taxes estimated at $17,166,142, $6,030,373, $11,266,557, and $5,463,896, respectively. As a result of his retirement from the Company on April 1, 2016, Mr. Sheehan is no longer eligible to receive any cash severance or other benefits under his Transition and Succession Agreement.

As described above, subsequent to the execution of these agreements, Mylan adopted a policy that no new Transition and Succession Agreements will provide for an excise tax gross–up for golden parachute payments. For legal and other considerations, the Transition and Succession Agreements currently in effect and executed prior to the new policy are not subject to that policy. Mylan does not have the right to unilaterally abrogate pre-existing binding contracts with its executives, and does not believe it would be in shareholders’ best interests to expend funds to “buy out” the executives from these rights. Since implementation of the new policy, no new or amended Transition and Succession Agreements with excise tax gross-up provisions have been executed and several have expired as executives have retired from Mylan (as was the case with the retirements of Hal Korman and John Sheehan over the last several years).

2003 Long-Term Incentive Plan, as amended

The Amended 2003 Plan provides that, unless otherwise provided in an award agreement, at the time of a change in control (as defined in the Amended 2003 Plan), (i) each stock option and SAR outstanding will become immediately and fully exercisable, (ii) all restrictions applicable to awards of restricted stock and RSUs will terminate in full, (iii) all performance awards (with certain limited exceptions) will become fully payable at the maximum level, and (iv) all other stock-based awards will become fully vested and payable.

Annual equity awards contain “double trigger” vesting provisions that provide for accelerated vesting only if (i) there has been a change in control and (ii) an involuntary termination without cause or a voluntary resignation for good reason occurs within two years following the change in control, unless otherwise specifically determined by the Compensation Committee. A description of the material terms that apply to the equity awards held by the NEOs, including the awards granted under the One-Time Special Performance-Based Incentive Program, may be found in the footnotes to the Outstanding Equity Awards at the End of 2015 table.

If a change in control and qualifying termination had occurred on December 31, 2015, the intrinsic value of vesting equity-based awards held by the NEOs would have equaled approximately: for Mr. Coury, $20,079,472; for Ms. Bresch, $26,298,063; for Mr. Sheehan, $5,459,654; for Mr. Malik, $21,079,400; and for Mr. Mauro, $5,114,993.

 

 

 

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Voting Item 5 — Approval, on an Advisory Basis, of the Compensation of the Named Executive Officers of the Company

 

 

As required by Section 14A of the Exchange Act, the Company’s shareholders have the opportunity to approve, on an advisory basis, the compensation of the Company’s NEOs as disclosed in this Proxy Statement in accordance with the SEC rules.

As demonstrated in detail under the heading “Executive Compensation – Compensation Discussion and Analysis,” our executive compensation program is designed to incentivize, and in fact effectively incentivizes, the continued development of a robust, sustainable platform, as well as outstanding performance and shareholder value creation over the short- and long-term, and align compensation with performance and shareholder and other stakeholder interests. Please see the Compensation Discussion and Analysis beginning on page 35 of this Proxy Statement for additional details about our executive compensation programs, including information about the fiscal year 2015 compensation of our NEOs.

As also demonstrated above, shareholders have benefitted significantly from the long-term value creation under the leadership of the NEOs, as well as the record performance of the Company in 2015, and stand to benefit even further if the Company meets its current long-term target of achieving adjusted diluted EPS of at least $6.00 by 2018. We therefore recommend that shareholders indicate their support for the Company’s NEO compensation as described in this Proxy Statement. This proposal, commonly known as a “say-on-pay” proposal, gives shareholders the opportunity to express their views on the NEOs’ compensation.

Given the demonstrated, outstanding short and long-term performance described above, including record total adjusted revenues, adjusted EBITDA, and adjusted diluted EPS realized in 2015 – under the leadership of the NEOs – the Mylan Board recommends that shareholders vote “FOR” the following resolution at the annual general meeting:

RESOLVED, that the Company’s shareholders approve, on an advisory basis, the compensation of the Named Executive Officers, as disclosed on pages 35 through 69 of the Company’s Proxy Statement for the 2016 Annual General Meeting of Shareholders pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, the 2015 Summary Compensation Table, and the other related tables and disclosure.”

Although advisory and not binding, the Compensation Committee and the Mylan Board will take into account the outcome of this vote when considering future executive compensation arrangements for the Company’s executive officers.

We provide our shareholders with an advisory say-on-pay vote on an annual basis, and the next vote will be at the 2017 annual general meeting. At the 2017 annual general meeting, we will also provide our shareholders with the opportunity to provide an advisory vote indicating how frequently we should seek a say-on-pay vote, that is, whether shareholders would prefer an advisory vote on NEO compensation once every one, two or three years.

THE MYLAN BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF THE NAMED EXECUTIVE OFFICERS OF THE COMPANY, AS STATED IN THE ABOVE RESOLUTION.

 

 

 

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Voting Item 6 — Re-approval of the Performance
Goals set forth in the Company’s 2003 Long-Term Incentive Plan

 

 

The Company’s 2003 Long-Term Incentive Plan was adopted by Mylan Board in 2003, approved by shareholders on July 25, 2003, and amended on December 2, 2004, April 3, 2006, May 24, 2008 and May 7, 2009 (the “2003 Plan”). The 2003 Plan was amended and restated by the Mylan Board on February 17, 2012, approved by shareholders on May 4, 2012 and further amended by the Mylan Board on February 25, 2014 (the Amended 2003 Plan). The Amended 2003 Plan was assumed by Mylan N.V. on February 27, 2015.

Section 162(m) of the Code limits the Company’s ability to deduct for federal income tax purposes certain compensation in excess of $1 million paid to its Chief Executive Officer and three other most highly compensated officers other than the Chief Financial Officer, unless the compensation qualifies as qualified performance-based compensation. To qualify for the performance-based compensation exception, among other requirements, before payment, shareholders in a separate vote must approve the applicable performance goals. Performance goals must be re-approved by shareholders every five years. Shareholders of the Company last re-approved the Amended 2003 Plan’s performance goals at Mylan Inc.’s 2012 annual meeting, and there have been no changes to the list of performance goals since that time. As a result, the Company will need the Amended 2003 Plan’s performance goals re-approved at either this year’s or next year’s annual general meeting so that awards made to certain Mylan officers that are intended to qualify as performance-based compensation deductible under Section 162(m) of the Code may so qualify. For purposes of Section 162(m) of the Code, the material terms of the performance goals include (i) the employees eligible to receive compensation under the Amended 2003 Plan, (ii) a description of the business criteria on which the performance goals may be based, and (iii) the maximum amount of compensation that can be paid to a participant under the performance goals, and are specifically described below.

The Company is not requesting additional shares under or proposing any amendments to the terms

of the Amended 2003 Plan in connection with the re-approval of the material terms of the performance-based goals. Shareholder re-approval at the 2016 annual general meeting of the material terms of performance goals under the Amended 2003 Plan will permit the Company to continue to grant awards intended to qualify as performance-based compensation deductible under Section 162(m) of the Code until its 2021 annual general meeting. If the material terms of the performance goals under the Amended 2003 Plan are not re-approved by shareholders at the 2016 annual general meeting, the Company will still have until the 2017 annual general meeting to grant awards that will qualify as performance-based under Section 162(m) of the Code as it is not required to obtain shareholder re-approval until the 2017 annual general meeting. If the material terms of the performance goals under the Amended 2003 Plan are not re-approved by shareholders at the 2016 or 2017 annual general meetings, no awards granted under the Amended 2003 Plan until such approval is obtained will qualify as performance-based under Section 162(m) of the Code, which may limit the Company’s ability to claim tax deductions with respect to compensation as more fully described on page 52 of this Proxy Statement.

The Mylan Board believes that an effective equity-based compensation program continues to be important to the future success of the Company, as it aligns the interests of the management of the Company with those of the shareholders. Also, as part of the composition of total compensation, it plays a key role attracting and retaining quality individuals.

Performance Goals to be Re-Approved

Under the Amended 2003 Plan, awards intended to qualify as “performance-based” for purposes of Section 162(m) of the Code will include specified levels of one or more of the following metrics: revenue, economic value added (EVA), operating income, return on shareholders’ equity, return on sales, stock price, earnings per share, earnings before interest, taxes, depreciation and amortization (EBITDA), cash flow, sales growth, margin improvement, income before taxes (IBT), IBT margin, return on investment,

 

 

 

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return on capital, return on assets, value of assets, market share, market penetration goals, personnel performance goals, business development goals (including without limitation regulatory submissions, product launches and other business development-related opportunities), regulatory compliance goals, international business expansion goals, customer retention goals, customer satisfaction goals, goals relating to acquisitions or divestitures, gross or operating margins, operating efficiency, working capital performance, earnings per share, growth in earnings per share, expense targets and/or productivity targets or ratios (the “Performance Goals”). Where applicable, the Performance Goals may be expressed in terms of attaining a specified level of the particular criteria may be applied to one or more of the Company, a subsidiary, or affiliate, or a division of or strategic business unit of the Company or may be applied to the performance of the Company relative to a market index, a group of other companies or a combination thereof, all as determined by the Committee. The Committee will make equitable adjustments to Performance Goals in recognition of unusual or nonrecurring events affecting the Company or any subsidiary or affiliate or the financial statements of the Company or any subsidiary or affiliate, in response to changes in applicable laws or regulations, or to account for items of gain, loss or expense determined to be extraordinary or unusual in nature or infrequent in occurrence or related to the disposal of a segment of a business or related to a change in accounting principles. Notwithstanding the attainment by the Company of the specified Performance Goals, the Committee has the discretion, which need not be exercised uniformly among the participants, to reduce or eliminate the performance award that would be otherwise payable on the achievement of the Performance Goals. Any performance targets applicable to restricted shares or restricted units that are not intended to qualify as “performance-based” for purposes of Section 162(m) of the Code will be determined by the Committee.

Background: Additional Terms of the Amended 2003 Plan

The following is a summary of the additional terms of the Amended 2003 Plan. This summary is qualified in its entirety by reference to the complete text of the Amended 2003 Plan, which is attached as Appendix B.

Purpose. The Mylan Board believes that the grant of stock-based and cash-based incentive awards to key

employees, consultants, independent contractors, and non-employee directors of Mylan is a vital factor in attracting and retaining effective and capable personnel who contribute to the growth and success of Mylan and in establishing a direct link between the financial interests of these individuals and Mylan shareholders.

Duration of the Amended 2003 Plan. The Amended 2003 Plan became effective in 2012 upon its approval by the shareholders, and will remain effective until terminated by the Mylan Board. No incentive stock options may be granted under the Amended 2003 Plan after the tenth anniversary of the effective date of the Amended 2003 Plan.

Amendment of the Amended 2003 Plan. The Mylan Board may amend the Amended 2003 Plan at any time, but no amendment may, without the participant’s consent, materially adversely affect the right of such participant under a previously granted award. In addition, no amendment may, without approval by the shareholders of Mylan (i) increase the total number of shares of ordinary shares which may be issued under the Amended 2003 Plan; (ii) increase the total number of shares which may be covered by awards to any one participant; (iii) reduce the exercise price of an outstanding option or of an outstanding stock appreciation right; (iv) cancel an outstanding option or stock appreciation right in exchange for other options or stock appreciation rights with an exercise price that is less than the exercise price of the cancelled option or the cancelled stock appreciation right, as applicable; or (v) cancel an outstanding option or an outstanding stock appreciation right with an exercise price that is less than the fair market value of an ordinary share on the date of cancellation in exchange for cash or another award.

Shares to be Issued. Mylan initially reserved 15,000,000 shares, which was automatically adjusted to 22,500,000 shares as a result of a stock split in 2003. Shareholders subsequently approved an additional 15,000,000 shares for issuance under the 2003 Plan in May 2008. The Amended 2003 Plan increased the shares reserved for issuance by an additional 17,800,000 shares, principally to afford the Company the ability to provide grants to its employees. As of May 16, 2016, there were 11,816,675 shares remaining available for grant. Shares subject to terminated, cancelled or forfeited awards once again become available for grant under the Amended 2003

 

 

 

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Plan. Ordinary shares subject to any award that are surrendered by a participant (including in connection with tax withholding obligations) may be subject to new awards. If ordinary shares are tendered or withheld to pay the exercise price or withholding taxes due upon an option exercise, only the net number of shares issued will count against the number of shares available for issuance under the Amended 2003 Plan. The ordinary shares to be issued or delivered under the Amended 2003 Plan will be authorized and unissued shares or previously issued and outstanding ordinary shares reacquired by Mylan.

On May 16, 2016, the closing price of an ordinary share on the NASDAQ Global Select Market was $40.45 per share.

Administration. The Amended 2003 Plan is administered by the Compensation Committee (the “Committee”). The Committee (i) determines the employees, consultants, independent contractors, and non-employee directors who will be eligible for and granted awards; (ii) determines the amount and type of awards; (iii) establishes rules and guidelines relating to the Amended 2003 Plan; (iv) establishes, modifies, and determines terms and conditions of awards; and (v) takes such other action as may be necessary for the proper administration of the Amended 2003 Plan. Members of the Committee are entitled to be indemnified by Mylan with respect to claims relating to their actions in the administration of the Amended 2003 Plan except in the case of willful misconduct.

Participants. Any employee, consultant, independent contractor or non-employee director of Mylan or its subsidiaries may be selected by the Committee to receive an award under the Amended 2003 Plan. As of December 31, 2015, there were approximately 35,000 employees and independent contractors and 10 non-employee directors who may be eligible to participate in the Amended 2003 Plan. No participant is eligible to receive an award during any one calendar year in respect of more than 1,600,000 shares (all of which may be granted as options or stock appreciation rights).

Certain Adjustments. The share limitations under the Amended 2003 Plan, as well as the terms of outstanding awards, are subject to adjustment in accordance with the anti-dilution provisions of the Amended 2003 Plan in connection with any certain changes in the capitalization of Mylan.

Stock Options. The Committee may grant to a participant incentive stock options that qualify under Section 422 of the Code, options which do not qualify as incentive stock options (“non-qualified stock options”), or a combination thereof. The terms and conditions of stock option grants including the quantity, price, waiting periods, and other conditions on exercise will be determined by the Committee. During any calendar year, no participant may be granted options (or stock appreciation rights, as described below) in respect of more than 1,600,000 ordinary shares (subject to adjustment). Options generally will have a term of ten years, except that the option may expire earlier upon a participant’s termination of services (which include the participant’s death, permanent disability, retirement, reduction in force, or other termination) as set forth in the Amended 2003 Plan and in the participant’s option agreement.

The exercise price for stock options will be determined by the Committee at its discretion, provided that the exercise price per share for each stock option shall be at least equal to 100% of the fair market value of one ordinary share on the date when the stock option is granted. Payment for ordinary shares on the exercise of stock options may be made in cash, by the delivery (actually or by attestation) of ordinary shares or a combination of cash and ordinary. In the discretion of the Committee, payment may be made in accordance with a “cashless” exercise through a brokerage firm.

Stock Appreciation Rights. Stock appreciation rights may be granted by the Committee to a participant either separate from or in tandem with non-qualified stock options or incentive stock options. A stock appreciation right entitles the participant to receive, upon its exercise, a payment equal to (i) the excess of the fair market value of an ordinary share on the exercise date over the exercise price of the stock appreciation rights, multiplied by (ii) the number of ordinary shares with respect to which the stock appreciation right is exercised. The exercise price of a stock appreciation right is determined by the Committee, but in the case of stock appreciation rights granted in tandem with stock options, the exercise price may not be less than the exercise price of the related stock option. Upon exercise of a stock appreciation right, payment will be made in cash or ordinary shares, or a combination thereof, as determined in the discretion of the Committee. During any calendar year, no participant may be granted

 

 

 

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stock appreciation rights or options in respect of more than 1,600,000 ordinary shares (subject to adjustment).

Restricted Shares and Restricted Units. The Committee may award to a participant ordinary shares subject to specified restrictions (“restricted shares”). The restricted shares are subject to forfeiture and are non-transferable until the participant meets certain conditions such as continued employment over a specified forfeiture period and/or attains specified performance targets over the forfeiture period.

The Committee, in its sole discretion, may waive all restrictions with respect to a restricted share award under certain circumstances (including the death, disability, or retirement of a participant, or a material change in circumstances arising after the date of grant) subject to such terms and conditions as it deems appropriate.

The Committee may also grant units representing the right to receive ordinary shares in the future subject to the achievement of one or more goals relating to the completion of service by the participant and/or the achievement of performance or other objectives (“restricted units”). The Committee has the sole discretion to waive the forfeiture period and any other conditions with respect to restricted units under appropriate circumstances (including the death, permanent disability or retirement of the participant or a material change in circumstances) provided, however, that, except in connection with a change in control, any performance conditions applicable to awards that are intended to qualify for the “performance-based” compensation exception contained in Section 162(m) of the Code will not be waived.

Performance Awards. The Committee may grant performance awards to participants under such terms and conditions as the Committee deems appropriate. A performance award entitles a participant to receive a payment from Mylan, the amount of which is based upon the attainment of predetermined performance targets over a specified award period. Performance awards may be paid in cash, ordinary shares or a combination thereof, as determined by the Committee upon prior written certification by the Committee of attainment of the Performance Goals and will in no event be payable after March 15th of the year

following the year in which the performance award is no longer subject to a substantial risk of forfeiture.

Award periods and performance targets will be determined by the Committee. Awards intended to qualify as “performance-based” for purposes of Section 162(m) of the Code will include specified levels of one or more of the Performance Goals listed above and in conjunction with the establishment of Performance Goals, the Committee will adopt an objective formula (on the basis of percentages of participants’ salaries, shares in a bonus pool or otherwise) for computing the respective amounts payable to participants if and to the extent that the Performance Goals are attained (and, to the extent based on percentages of a bonus pool, such percentages shall not exceed 100% in the aggregate).

With respect to restricted shares, restricted unit awards, and performance awards intended to qualify for the “performance-based” exception contained in Section 162(m) of the Code, the Amended 2003 Plan provides that no more than 250,000 shares (subject to adjustment) may be granted to a single participant for any performance period.

Other Stock-Based Awards. The Committee may make other awards of stock purchase rights or cash awards, ordinary share awards or other types of awards that are valued in whole or in part by reference to the value of ordinary shares. The Committee will determine the terms and conditions that apply to these awards.

Short-Term Cash Awards. The Committee may make performance-based annual cash incentive awards to employees using whatever performance criteria the Committee deems appropriate. However, with respect to those employees whom the Committee determines to be subject to Section 162(m) of the Code, annual cash incentive awards that are intended to qualify as “performance-based” compensation exempt from the Section 162(m) limitation on deductibility will be based only on attainment of specified levels of the Performance Goals. In administering the incentive program and determining short-term incentive awards, to the extent an award is intended to qualify as “performance-based” compensation under Section 162(m), the Committee will not have the flexibility to pay a covered executive more than the incentive amount indicated by the

 

 

 

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executive’s attainment under the applicable payment schedule. The Committee will have the flexibility, however, to reduce this amount. The maximum value of short-term cash incentive awards for covered employees (as defined in Section 162(m) of the Code) shall not exceed $5 million for any fiscal year.

Change in Control. Unless otherwise provided by the Committee in an applicable award agreement, in the event of a change in control (as defined in the Amended 2003 Plan), the following shall occur: (i) all options and stock appreciation rights outstanding on the date of the change in control will become immediately and fully exercisable; (ii) all restrictions applicable to restricted shares and restricted unit awards will terminate fully and the participant will immediately have the right to the delivery of share certificates; (iii) all performance awards for all award periods will immediately become fully payable (at the target level) to all participants and will be paid to participants within thirty days after the change in control; and (iv) all other stock-based awards will immediately become fully vested and payable to all participants and will be paid to participants within thirty days after the change in control.

Federal Income Tax Consequences. The following is a summary of the principal federal income tax consequences of Amended 2003 Plan benefits under present tax law. This summary is not intended to be exhaustive and, among other things, does not describe state, local or foreign tax consequences. The discussion of Mylan tax deductions assumes that all awards are structured to comply with the “performance-based” compensation exception, or are otherwise deductible, under Section 162(m) of the Code.

Stock Options. No tax is incurred by the participant, and no amount is deductible by Mylan, upon the grant of a nonqualified stock option. At the time of exercise of such an option, the difference between the exercise price and the fair market value of ordinary shares will constitute ordinary income to the participant. Mylan will be allowed a deduction equal to the amount of ordinary income recognized by the participant.

In the case of incentive stock options, although no income is recognized upon exercise by the participant and Mylan is not entitled to a deduction, the excess of the fair market value of ordinary shares on the date of exercise over the exercise price is counted in

determining the participant’s alternative minimum taxable income. If the participant does not dispose of the shares acquired on the exercise of an incentive stock option within one year after their receipt and within two years after the grant of the incentive stock option, gain or loss recognized on the disposition of the shares will be treated as long-term capital gain or loss. In the event of an earlier disposition of shares acquired upon the exercise of an incentive stock option, the participant may recognize ordinary income, and if so, Mylan will be entitled to a deduction in the same amount.

Stock Appreciation Rights. The participant will not recognize any income at the time of the grant of a stock appreciation right. Upon the exercise of a stock appreciation right, the cash and the value of any ordinary share received will constitute ordinary income to the participant. Mylan will be entitled to a deduction in the amount of such income at the time of exercise.

Restricted Shares. A participant normally will not recognize taxable income upon an award of restricted shares, and Mylan will not be entitled to a deduction until the lapse of the applicable restrictions. Upon the lapse of the restrictions, the participant will recognize ordinary taxable income in an amount equal to the fair market value of ordinary shares as to which the restrictions have lapsed, and Mylan will be entitled to a deduction in the same amount. However, a participant may elect under Section 83(b) of the Code to recognize taxable ordinary income in the year the restricted shares are awarded in an amount equal to the fair market value of the shares at that time, determined without regard to the restrictions. In such event, Mylan will then be entitled to a deduction in the same amount. Any gain or loss subsequently recognized by the participant will be a short-term or long-term capital gain or loss, depending on how long the shares are held by the participant.

Restricted Units. A participant normally will not recognize taxable income upon an award of restricted units, and Mylan will not be entitled to a deduction until the lapse of the applicable restrictions. Upon the lapse of the restrictions and the issuance of the earned shares, the participant will recognize ordinary taxable income in an amount equal to the fair market value of ordinary shares received and Mylan will be entitled to a deduction in the same amount.

 

 

 

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Performance Awards, Other Stock-Based Awards and Short-Term Cash Awards. Normally, a participant will not recognize taxable income upon the award of such grants. Subsequently, when the conditions and requirements for the grants have been satisfied and the payment determined, any cash received and the fair market value of any ordinary shares received will constitute ordinary income to the participant. Mylan will then be entitled to a deduction in the same amount.

As of December 31, 2015, the value of (i) outstanding stock options was approximately $175.6 million (calculated based on the closing price of an ordinary share on such date and the weighted average exercise price of outstanding stock options) and (ii) other outstanding stock based awards was approximately $241.9 million (calculated based on the closing price of an ordinary share on such date and with performance-based awards measured based on target level performance). Since the Amended 2003 Plan was implemented, the following individuals or groups have received the following number of stock options or stock appreciation rights under the Amended 2003 Plan, in each case, determined as of

April 1, 2016: Ms. Cameron, 124,916; Judge Cindrich, 39,010; Ms. Dillon, 8,365; Mr. Dimick, 114,916; Ms. Higgins, 14,988; Mr. Leech, 124,916; Dr. Maroon, 124,916; Mr. Parrish, 62,783; Mr. Piatt, 124,916; Dr. Vanderveen, 124,916; Mr. Coury (Executive Chairman), 4,446,121; Ms. Bresch (Chief Executive Officer), 2,887,627; Mr. Sheehan (Former Executive Vice President and Chief Financial Officer), 567,914; Mr. Malik (President), 2,307,079; Mr. Mauro (Chief Commercial Officer), 474,799; all non-employee directors as a group, 864,642; all current executive officers as a group, 10,683,540; all associates of the foregoing as a group, 0; and all employees as a group, 41,546,960.

Plan Benefits

The benefits or amounts that individuals will receive in the future under the Amended 2003 Plan are not determinable. In 2015, the non-employee directors and the NEOs were granted awards as set forth in, respectively, the non-employee director compensation for 2015 table and the grants of plan-based awards in 2015 table on pages 26 and 60 of this Proxy Statement.

 

 

Equity Compensation Plan Information

The following table shows information about the securities authorized for issuance under Mylan’s equity compensation plans as of December 31, 2015:

 

Plan Category

 

Number of Securities to be
Issued upon Exercise of
Outstanding Options, Warrants
and Rights

(a)

   

Weighted-Average Exercise
Price of Outstanding Options,
Warrants and Rights

(b)

   

Number of Securities Remaining
Available for Future Issuance
Under Equity Compensation
Plans (excluding securities
reflected in column(a))

(c)

 

Equity compensation plans approved by security holders

    12,206,935      $ 35.09        13,671,681   

Equity compensation plans not approved by security holders

    —          —          —     
 

 

 

   

 

 

   

 

 

 

Total

    12,206,935      $ 35.09        13,671,681   

A copy of the Amended 2003 Plan is set forth in Appendix B to this Proxy Statement.

THE MYLAN BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE RE-APPROVAL OF THE PERFORMANCE GOALS SET FORTH IN THE COMPANY’S 2003 LONG-TERM INCENTIVE PLAN.

 

 

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Voting Item 7 — Authorization of the Mylan Board to Acquire Ordinary Shares and Preferred Shares in the Capital of the Company

 

 

At the annual general meeting, as is typical for Dutch listed companies, Mylan shareholders will be asked to resolve on a renewal of the authority of the Mylan Board to repurchase Company shares. This authority to repurchase shares is similar to that generally afforded under state law to public companies domiciled in the United States. Under Dutch law, a company may not subscribe for newly issued shares in its own capital. Subject to certain provisions of Dutch law and the Company’s articles of association, the Company is permitted to acquire fully paid up shares in its own share capital for such consideration as the Mylan Board may determine (but within the boundaries set by the general meeting), to the extent that (i) the shareholders’ equity less the acquisition price is not less than the sum of the paid-up and called-up part of the Company’s capital and the reserves that the Company is required to maintain pursuant to Dutch law, (ii) the nominal value of the shares to be acquired in the Company’s capital, which the Company holds or holds in pledge or which are held by a subsidiary, does not exceed 50% of the issued capital, and (iii) the acquisition of such shares has been authorized by the general meeting. Such authorization is valid for a maximum of 18 months (subject to further authorizations). Authorization is not required for the acquisition of the Company’s ordinary shares listed on NASDAQ or the TASE for the purpose of transferring the shares to employees under its equity incentive plans.

With effect from February 27, 2015 (the Closing Date), the general meeting authorized the Mylan Board to repurchase Company shares for a maximum period of 18 months, with such authorization expiring on August 27, 2016 (the “Share Repurchase Authorization”). More specifically, the general meeting authorized the Mylan Board to repurchase (i) the maximum number of ordinary shares allowed under Dutch law and applicable securities regulations on the NASDAQ Global Select Market for a period of 18 months, at prices as to be determined by the Mylan Board or one or more members of the Mylan Board in their discretion, either on the open market (including block trades that satisfy the safe harbor provisions of Rule 10b-18 pursuant to the Exchange Act), through privately negotiated transactions, or in one or more self-tender offers at prices per share between an

amount equal to 0.01 and an amount equal to 120% of the market price of the ordinary shares on NASDAQ (the market price being deemed to be the average of the closing price on each of the consecutive days of trading during a period no shorter than one trading day and no longer than 10 trading days immediately preceding the date of repurchase, as reasonably determined by the Mylan Board or one or more members of the Mylan Board) and (ii) the maximum number of preferred shares allowed under Dutch law from Stichting Preferred Shares Mylan (a Dutch foundation (stichting)) (the “Foundation”) for a period of 18 months against the nominal value of the preferred shares.

The Company is now asking its shareholders to renew and thereby effectively extend the Share Repurchase Authorization for a period of 18 months from June 24, 2016 (the date of the annual general meeting). If shareholders grant the renewed and extended Share Repurchase Authorization, the Share Repurchase Authorization will expire on December 24, 2017. Adoption of this voting item will allow the Mylan Board to have the flexibility to repurchase Mylan shares after August 27, 2016 without the expense of calling an extraordinary general meeting of shareholders. For instance, on November 16, 2015 and pursuant to the Share Repurchase Authorization, the Company announced that the Mylan Board had approved the repurchase of up to $1 billion of the Company’s ordinary shares either in the open market through privately-negotiated transactions or in one or more self-tender offers (the “Share Repurchase Program”). The Share Repurchase Program does not obligate the Company to acquire any particular amount of ordinary shares and expires on August 27, 2016. As of May 16, 2016, the Company has repurchased 1,311,193 ordinary shares pursuant to the Share Repurchase Program. Without the Share Repurchase Authorization, the Company would not be able to implement a program similar to the Share Repurchase Program after August 27, 2016. If shareholders do not grant the renewed and extended Share Repurchase Authorization, the Share Repurchase Authorization will expire on August 27, 2016.

 

 

THE MYLAN BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE AUTHORIZATION OF THE MYLAN BOARD TO ACQUIRE ORDINARY SHARES AND PREFERRED SHARES IN THE CAPITAL OF THE COMPANY.

 

 

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Compensation Committee Interlocks and Insider Participation

 

 

None of the members of the Compensation Committee during 2015 (Ms. Cameron, Mr. Dimick, Mr. Parrish, and Mr. Piatt) was an officer or employee of the Company, and no executive officer of the Company

served on the compensation committee or board of any company that employed any member of the Compensation Committee or the Mylan Board.

 

 

 

Certain Relationships and Related Transactions

 

 

The Mylan Board annually reviews certain relationships and related party transactions, with respect to directors, as part of its assessment of each director’s independence. Based on a review of the transactions between Mylan and its directors and executive officers, their immediate family members, and their affiliated entities, Mylan has determined that since the beginning of 2015, it was a party to the following transactions in which the amount involved exceeded $120,000 and in which any of Mylan’s directors, executive officers, or greater than five percent shareholders, or any of their immediate family members or affiliates, have or had a direct or indirect material interest:

As previously disclosed, Mylan has engaged Coury Financial Group, LP (“CFG”), Coury Investment Advisors, Inc. (“CIA”), and Coury Consulting, L.P. (“Coury Consulting”), the principals of which are brothers of Robert J. Coury, Executive Chairman, to provide certain services to Mylan. CFG, CIA, and Coury Consulting are in the business of providing strategic business consulting and corporate benefits advice and services, among others. Since approximately 1995, CFG and CIA have served as the broker in connection with several of the Company’s employee benefit programs. Effective January 1, 2015, Mylan’s arrangements with CFG and CIA provided for a fixed base fee of $37,500 per month to be paid by Mylan for a period of three years, corresponding to the term of agreements negotiated with certain benefit plan carriers and capping payments over that time period. However, where required by law, CFG and CIA will continue to receive commissions directly from certain other benefit plan carriers, and in 2015 and early 2016, received payments totaling approximately $311,000 in commissions for these services directly from the insurance carriers (including payments for 2014 business paid in 2015).

Since approximately 2000, Coury Consulting from time to time has been engaged to provide specialized consulting and advisory services to Mylan. Most recently, Mylan engaged Coury Consulting to provide

consulting and advisory services with regard to Mylan’s Human Resources function as well as certain of Mylan’s compensation, benefits, and health care related programs. Beginning on January 1, 2015, Mylan paid Coury Consulting $40,000 per month for 12 months, with the possibility of a performance payment at the end of the term in Mylan’s discretion. In 2016, Mylan made a performance payment of $500,000 for that contract term based on, among other factors, significant work completed, increase in scope, exceptional performance, and results. Mylan renewed the agreement with Coury Consulting effective January 1, 2016 at a rate of $80,000 per month for 18 months. The renewed agreement does not provide for a performance payment.

As discussed on page 42 of this Proxy Statement, on February 27, 2015 the EPD Transaction was completed pursuant to which Mylan N.V. issued 110,000,000 ordinary shares (worth approximately $6.31 billion) to various Abbott affiliates and pursuant to which Abbott became a holder of over 5% of Mylan N.V.’s outstanding ordinary shares. As previously disclosed, at the closing of the EPD Transaction, Mylan, Abbott and certain of their affiliates also entered into ancillary agreements providing for transition services, manufacturing relationships, and license arrangements. In addition to these ancillary agreements, since the beginning of 2015, Abbott and Mylan have entered into or engaged in ordinary course, arms length transactions with each other. From January 1, 2015 to early 2016, Mylan has received inventory and services from Abbott pursuant to those ancillary agreements, and also received inventory and services pursuant to separate ordinary course, arms length transactions, totaling approximately $183 million (substantially all of which related to the ancillary agreements). During this time period, Mylan has also provided inventory and services pursuant to those ancillary agreements to Abbott totaling approximately $55 million.

On April 3, 2015, Mylan entered into a call option agreement with the Foundation pursuant to which

 

 

 

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Mylan granted the Foundation a call option to acquire from time to time, at an exercise price of 0.01 per share, Mylan preferred shares up to a maximum number at any time equal to the total number of Mylan ordinary shares issued at such time. On July 23, 2015, in response to Teva Pharmaceutical Industries Ltd.’s unsolicited expression of interest in acquiring Mylan, the Foundation exercised its call option and acquired 488,388,431 Mylan preferred shares (which represented 100% of the class of Mylan preferred shares) pursuant to the terms of the call option agreement. Each Mylan ordinary share and preferred share is entitled to one vote on each matter properly brought before a general meeting of shareholders so that beginning on July 23, 2015, the Foundation was the beneficial owner of more than five percent of a class of Mylan’s voting securities and therefore a “related person” of Mylan. The Foundation is an independent entity with its own independent directors and advisers and is entitled to determine, in its sole discretion, subject to the limits set by its governing documents and applicable Dutch law, whether or not to exercise the call option and any resulting voting power. On September 19, 2015, the Foundation requested the redemption of the Mylan preferred shares issued on July 23, 2015 and holders of Mylan shares approved the redemption of the Mylan preferred shares on January 7, 2016 at an extraordinary general meeting. The redemption of the Mylan preferred shares became effective on March 17, 2016. The Foundation will continue to have the right to exercise its call option in the future consistent with its governing documents and applicable Dutch law. Since the beginning of 2015, Mylan has made payments to

the Foundation totaling approximately $12.7 million. Such payments were made in satisfaction of Mylan’s contractual obligation to pay the Foundation’s expenses. Although the Foundation is under no obligation to do so, it has informed Mylan that these expenses were primarily fees for the Foundation’s independent legal and financial advisors. During that period, the Foundation also paid Mylan approximately $1.3 million to purchase the preferred shares.

Mr. Piatt, like each member of the Mylan Board, is party to an indemnification agreement with the Company. In accordance with such agreement, the Company made payments of approximately $63,000 in 2015 and early 2016 for written claims for repayment or advancement of expenses presented by Mr. Piatt related to the previously disclosed SEC investigation and anticipates making additional such payments of approximately $275,000 for legal fees and expenses incurred during 2015 through early 2016. Mylan expects that Mr. Piatt will make additional written claims for repayment or advancement of expenses during the pendency of the SEC investigation and anticipates that it will make payments for any such claims.

In 2013, the Mylan Board approved a written related party transactions policy that establishes guidelines for reviewing and approving transactions involving any director or certain executives in which (1) the aggregate amount involved will or may be expected to exceed $25,000; (2) Mylan or an affiliate of Mylan is a participant; and (3) any related party has or will have a direct or indirect interest.

 

 

 

Communications with Directors

 

 

Any interested parties may contact any individual director, the Mylan Board, the non-executive directors as a group or any other group or committee of directors, by calling +44 (0) 1707-853-000 or by writing to them at the following address:

Mylan N.V.

Attn: Corporate Secretary

Building 4, Trident Place

Mosquito Way, Hatfield,

Hertfordshire, AL10 9UL England

Communications regarding accounting, internal accounting controls, or auditing matters may be reported to the Audit Committee using the above address. All communications received as set forth above shall be opened by the office of the Secretary for the purpose of determining whether the contents represent a message to our directors. Materials that are not in the nature of advertising or promotions of a product or service or patently offensive shall be forwarded as appropriate to the Mylan Board or to each director who is a member of the group or committee to which the envelope is addressed.

 

 

 

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Proposals for the 2017 Annual General Meeting of Shareholders

 

 

Because Mylan is a Dutch public limited company whose shares are traded on a U.S. securities exchange, both U.S. and Dutch rules and time frames apply if shareholders wish to submit a proposal for consideration by Mylan shareholders at the 2017 annual general meeting of shareholders. Under Dutch law and Mylan’s articles of association, if a shareholder is interested in submitting a proposed agenda item or a proposed resolution within the authority of shareholders to be presented at the 2017 annual general meeting of shareholders, the shareholder must fulfill the requirements set forth in Dutch law and Mylan’s articles of association, including satisfying both of the following criteria:

 

    Mylan must receive the proposed agenda item (supported by reasons) or proposed resolution in writing (excluding e-mail and other forms of electronic communication) no later than 60 days before the date of the annual general meeting of shareholders (which date has not yet been declared by the Mylan Board); and

 

    the number of shares held by the shareholder, or group of shareholders, submitting the proposed agenda item or proposed resolution must equal at least 3% of Mylan’s issued share capital.

Consistent with established Dutch law and the Company’s articles of association, executive directors and non-executive directors are appointed by the general meeting from a binding nomination proposed by the Mylan Board. The proposed candidate specified in a binding nomination shall be

appointed provided that the requisite quorum is present or represented at the general meeting, unless the nomination is overruled by the general meeting voting against the appointment of the candidate by a resolution adopted with a majority of at least two-thirds of the votes cast, representing more than half of the issued share capital.

Pursuant to U.S. federal securities laws, if a shareholder wishes to have a proposed agenda item or a proposed resolution within the authority of shareholders included in Mylan’s proxy statement for the 2017 annual general meeting of shareholders, then in addition to the above requirements, the shareholder also needs to follow the procedures outlined in Rule 14a-8 of the Exchange Act. If you wish to submit a proposal intended to be presented at our 2017 annual general meeting of shareholders pursuant to Rule 14a-8, your proposal must be received by us no later than January 25, 2017, and must otherwise comply with the requirements of Rule 14a-8 and Dutch law in order to be considered for inclusion in the 2017 proxy statement and proxy.

Any proposed agenda item or proposed resolution within the authority of shareholders under our articles of association or pursuant to Rule 14a-8 for our 2017 annual general meeting of shareholders should be sent to our principal executive offices at the following address:

Mylan N.V.

Attn: Corporate Secretary

Building 4, Trident Place

Mosquito Way, Hatfield,

Hertfordshire, AL10 9UL England

 

 

 

Other Matters

 

 

The Dutch Civil Code does not permit any business to be voted on at the annual general meeting of shareholders other than that stated in the notice of

meeting unless the matter is unanimously approved by all votes cast and all issued shares are present or represented at the meeting.

 

 

 

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Householding

 

 

In accordance with the notices previously sent to street name shareholders who share a single address, we are sending only one copy of this proxy statement to that address unless we have received contrary instructions from any shareholder at that address. This practice, known as “householding”, is designed to reduce printing and postage costs. However, if any shareholder residing at such an address wishes to receive a separate copy of this proxy statement, we will promptly deliver the requested documents upon written or

oral request to Mylan’s Corporate Secretary. If you are receiving multiple copies of this proxy statement, you can request householding by contacting Mylan’s Corporate Secretary at:

Mylan N.V.

Building 4, Trident Place

Mosquito Way, Hatfield,

Hertfordshire, AL10 9UL England

+44 (0) 1707 853 000

 

 

 

2015 Annual Report on Form 10-K

 

 

A copy of our Annual Report on Form 10-K for the year ended December 31, 2015 (the “Form 10-K”), as amended, has been mailed to all shareholders entitled to notice of, and to vote at, the 2016 annual general meeting. The Form 10-K is not incorporated into this Proxy Statement and shall not be deemed to be solicitation material. A copy of the Form 10-K

is also available without charge from the Company website at mylan.com/investors or upon written request to Investor.Relations@mylan.com or:

Mylan N.V.

Attn: Investor Relations

Building 4, Trident Place

Mosquito Way, Hatfield,

Hertfordshire, AL10 9UL England

 

 

 

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Appendix A — Reconciliation of Non-GAAP Measures (Unaudited)

Adjusted Third Party Net Sales — Europe

 

       Year Ended December 31,  
(Unaudited; in millions)      2015        2014  

U.S. GAAP third party net sales from Europe

     $ 2,205.6         $ 1,476.8   

Add:

         

Acquisition related customer incentive

       17.1             
    

 

 

      

 

 

 

Adjusted third party net sales from Europe

     $ 2,222.7         $ 1,476.8   
    

 

 

      

 

 

 

Adjusted Third Party Net Sales — Generic

 

       Year Ended December 31,  
(Unaudited; in millions)      2015        2014  

U.S. GAAP Generics segment third party net sales

     $ 8,157.8         $ 6,459.3   

Add:

         

Acquisition related customer incentive

       17.1             
    

 

 

      

 

 

 

Adjusted Generics segment third party net sales

     $ 8,174.9         $ 6,459.3   
    

 

 

      

 

 

 

Adjusted Third Party Net Sales

 

       Year Ended December 31,  
(Unaudited; in millions)      2015        2014  

GAAP third party net sales

     $ 9,362.6         $ 7,646.5   

Add:

         

Acquisition related customer incentive

       17.1             
    

 

 

      

 

 

 

Adjusted third party net sales

     $ 9,379.7         $ 7,646.5   
    

 

 

      

 

 

 

Adjusted Revenue

 

       Year Ended December 31,  
(Unaudited; in millions)      2015        2014  

U.S. GAAP Total Revenues

     $ 9,429.3         $ 7,719.6   

Add:

         

Acquisition related customer incentive

       17.1             
    

 

 

      

 

 

 

Adjusted total revenues

     $ 9,446.4         $ 7,719.6   
    

 

 

      

 

 

 

 

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Adjusted Diluted EPS

 

    Year Ended December 31,  
(Unaudited; in millions, except
per share amounts)
  2015     2014     2013     2012     2011     2010     2009     2008  

U.S. GAAP net earnings attributable to Mylan N.V. and U.S. GAAP diluted EPS

  $ 848      $ 1.70      $ 929      $ 2.34      $ 624      $ 1.58      $ 641      $ 1.52      $ 537      $ 1.22      $ 224      $ 0.68      $ 94      $ 0.30      $ (335   $ (1.10

Purchase accounting related amortization (primarily included in cost of sales) (a)

    901          419          371          391          365          309          283          489     

Goodwill impairment charges

                                                                   385     

Bystolic revenue

                                                                   (468  

Litigation settlements, net

    (97       48          (10       (3       49          127          226          17     

Interest expense, primarily amortization of convertible debt discount

    46          46          38          36          49          60          43          30     

Non-cash accretion and fair value adjustments of contingent consideration liability

    38          35          35          39                                         

Clean energy investments pre-tax loss (b)

    93          79          22          17                                         

Financing related costs (included in other expense (income), net) (c)

    112          33          73