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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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Proxy Statement
2018 Annual Meeting of
Shareholders
Mylan Better Health for a Better world
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A MESSAGE FROM THE BOARD’S LEADERSHIP
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Robert J. Coury
Chairman |
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Mark W. Parrish
Vice Chairman and Lead |
On behalf of the Board of Directors, we note that one of our most important responsibilities as directors of a global company is to focus on long-term value creation for the Company and its stakeholders. We are privileged and honored as Chairman and Lead Independent Director, respectively, to lead and serve with a talented group of directors with tremendous diversity in terms of skills, background and experience, eight of whom are independent and all of whom are fully dedicated and committed to delivering sustainable long-term value to Mylan shareholders while also serving the interests of Mylan’s other stakeholders.
STRATEGY FOR LONG-TERM SUSTAINABILITY
Mylan’s Board has been and remains committed to sustainability and the creation of long-term shareholder value. One of the most important responsibilities of the Chairman is developing our long-term vision and strategy to create this value, and providing overall strategic leadership for the Company. Our independent directors oversee management’s execution of this strategy and represent, among other things, the interests of shareholders and other stakeholders in the Boardroom. Our strategy over the past decade has resulted in the development of a true, one-of-a-kind global company that encompasses diversified global research, manufacturing and commercial platforms, a highly diversified product portfolio, and substantial capabilities that are unmatched in the industry. Equally as important to the success of our strategy has been the outstanding talent, experience and tenure of our extraordinarily dedicated and high-performing executive management team. Its exceptional leadership has been critical as the industry and healthcare systems around the world continue to rapidly evolve and our peers have experienced periods of management changes and other disruptions.
Mylan once again delivered strong results in 2017, and our strategy and long-tenured management team have truly and demonstrably served Mylan shareholders and all other stakeholders well. Over the coming years, we and our fellow directors will remain focused on overseeing the continued execution of the Company’s global strategy; developing new and robust strategies for future long-term success and sustainability; and continuing succession planning to further enhance the depth, talent and experience of our leadership team as well as other levels of management.
CONTINUED SHAREHOLDER ENGAGEMENT
We also remain committed to ongoing shareholder dialogue. As has been our longstanding practice, we have been discussing matters of importance to shareholders over the past year, including among others, their reasons for the vote at the 2017 Annual General Meeting of Shareholders. We were naturally disappointed in the vote but continue to engage with shareholders to both understand their views as well as help them to understand our perspectives on these matters. These shareholder engagement meetings have included five independent directors and our Chairman, in addition to separate meetings with our CEO and other executives. The Board and management met with shareholders representing approximately 50% of shares outstanding, which included over 70% of the shares held by our 50 largest shareholders. Topics have included Board refreshment, the Board’s role in risk oversight, executive compensation, recent dynamic industry developments, global social responsibility and the opioid crisis, among others.
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Over the past several years, we have taken many important actions that are directly relevant to many of the points discussed with shareholders and which are addressed in detail throughout this Proxy Statement. These include, among others, the continued refreshment of the Board with a view to its and the Company’s future needs and expectations; the recent establishment of a new Risk Oversight Committee at the Board level; appointment of a new Lead Independent Director; a reconfirmation that 2017 executive compensation is fully in line with our peer group and reflects a simplified structure compared to past years; and our actions relating to global social responsibility and the opioid crisis. Based on our discussions with shareholders, we also have revised the look and feel of this Proxy Statement.
In closing, we have never been more confident in, and proud of, our Board, executive leadership team and global workforce, the Company’s ability to meet challenges and seize opportunities in the complex global healthcare environment, and in our commitment to sustainable long-term value to Mylan shareholders while also serving the interests of Mylan’s other stakeholders.
Thank you for your interest in Mylan and for your continued confidence in the Board and management team.
Sincerely,
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Robert J. Coury Chairman |
Mark W. Parrish Vice Chairman and Lead Independent Director |
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Heather Bresch
Chief Executive Officer |
| Mylan |
Built to Last
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To Our Valued Shareholders,
2017 marked yet another pivotal and successful year for Mylan. We maintained our multiyear track record of delivering strong financial results while further leveraging our transformation into a highly differentiated global pharmaceutical company that is truly built to last.
We have stayed true to our mission of providing patients access to high quality medicines around the world. In addition, we have made possible meaningful careers for our employees, served local communities, incorporated responsible corporate citizenship and sustainability practices, and served other stakeholder interests.
As important, we are doing our part to help build or transform healthcare systems, guided by our view that keeping people healthy is as important as treating them when they’re sick. We believe doing so will have a lasting impact on society by delivering better health for a better world.
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DELIVERING RESULTS FOR SHAREHOLDERS
Revenues totaled nearly $12 billion, an 8% increase compared to the prior year. Our Europe and Rest of World segments experienced double-digit sales increases driven by organic growth and incremental sales from Meda, and efforts to bring those products from Meda, acquired in 2016, to an expanded customer base. The increases offset lower sales in North America, where the U.S. pharmaceutical marketplace continues to undergo rapid and unprecedented change.
On a U.S. GAAP basis, diluted earnings per share (EPS) totaled $1.30, an increase of 41% compared to 2016. This result was driven primarily by the impacts of lower costs related to litigation settlements and incremental results of acquisitions and restructuring programs, partially offset by higher interest and income-tax expense. Adjusted EPS fell 7%, to $4.56, as we absorbed the lower profitability associated with EpiPen® Auto-Injector.
Our cash flow generation reflects the resilience of our global business and the power of our built-to-last model. In fact, we estimate that approximately 75% of our cash flows now stem from largely predictable, recurring revenues across all markets around the world, with the remainder coming from a smaller basket of more-variable products, primarily in the U.S. generics market.
In addition, 2017 was outstanding in that we filed 184 global regulatory submissions. Upon launch, these products will result in further diversification across our therapeutic areas, which in turn will drive expanded access for patients and ongoing growth for Mylan.
PROVIDING LEADERSHIP TO DELIVER BETTER HEALTH FOR A BETTER WORLD
Tremendous opportunity awaits the company that is both willing and able to break down the barriers to access to affordable medicine around the world, invest in capacity and launch new products.
Mylan is that company. Having built a one-of-a-kind global platform whose strength, diversification and resilience position us like no other organization, we continued throughout 2017 to provide the leadership needed to deliver better health for a better world.
For instance, we launched Glatiramer Acetate, part of our CNS & Anesthesia therapeutic area, in the U.S. (40 mg/mL for three-times-a-week injection and 20 mg/mL for once-daily injection), reinforcing our scientific and commercial capabilities in bringing to market complex and difficult-to-manufacture products.
We received approval for Ogivri™, the U.S.’s first biosimilar for Trastuzumab and part of our oncology therapeutic area. In addition, the U.S. Food and Drug Administration (FDA) accepted for review our New Drug Application for Revefenacin, part of our respiratory and allergy therapeutic area, and our Biologics License Application for Pegfilgrastim, a biosimilar to Neulasta® and part of our oncology therapeutic area.
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In Europe, we received approval to market the first generic of the 40 mg/mL strength of Glatiramer Acetate. In addition, the European Medicines Agency (EMA) accepted marketing authorization applications for our Trastuzumab and Pegfilgrastim biosimilars. Early this year, EMA’s Committee for Medicinal Products for Human Use recommended approval of Semglee™, a biosimilar insulin glargine.
In various emerging markets, we have partnered with other companies to break down barriers. For example, we launched MyHep All, which treats hepatitis C in India, and introduced the first Tenofovir Alafenamide-based, fixed-dose combination product to be offered to patients being treated for HIV in developing countries.
Indeed, our commitment to stemming the tide of HIV is perhaps the most compelling example to date of our commitment to removing barriers. More than 40% of people being treated today for HIV globally depend on a Mylan product. Moreover, we hope to do next for cancer and diabetes what we’ve already done for HIV as we dramatically expand the number of patients served.
CONTINUING TO DO WHAT’S RIGHT
Mylan was founded nearly 60 years ago for the express purpose of providing patients access to medicine. We continue to put that purpose into action today.
One way we did so during 2017 was to begin formalizing a companywide Global Social Responsibility program. As a part of that effort, Mylan joined the United Nations Global Compact, the world’s largest business community for sustainable development. You can learn about the work we’re doing by reading our Better Health for a Better World Progress Report.
We also undertook an initiative to communicate more broadly how Mylan is delivering better health for a better world. As a part of the initiative, we launched mylanbetterhealth.com, a website highlighting our impact in the areas of access, innovation and science, public and health policy, and community support. We’re now expanding the site’s focus beyond the U.S.
LOOKING AHEAD WITH CONFIDENCE AND EXCITEMENT
We are more confident and excited than ever about Mylan’s future. We see significant opportunity to continue doing good and doing well, serving the interests of shareholders and other stakeholders. That’s because, having built the company to last, we’re moving forward from a position of great strength.
Making it all possible is Mylan’s greatest resource, our people. For once again delivering and differentiating Mylan in a rapidly changing industry, I’d like on behalf of our entire leadership team to thank our employees around the world for their outstanding teamwork and execution and for their commitment to delivering better health for a better world.
Finally, I would like to invite our shareholders to attend the Company’s Annual General Meeting of Shareholders, which will be held on June 29, 2018 at 12:00 P.M. CEST, at Hotel Okura Amsterdam, Ferdinand Bolstraat 333, 1072 LH Amsterdam, the Netherlands.
Sincerely,
Heather Bresch
CEO
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ANNUAL GENERAL MEETING OF SHAREHOLDERS
When: Friday, June 29, 2018, 12:00 p.m., CEST
Where: Hotel Okura Amsterdam, Ferdinand Bolstraat 333, 1072 LH Amsterdam,
the Netherlands
For important information concerning the AGM, voting and other matters, please refer to Appendix A-Questions and Answers, beginning on page A-1.
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| As a Dutch company, Mylan focuses on the interests of all corporate stakeholders, and believes its most important objectives are to position the organization to deliver sustainable long-term value to shareholders while also serving the interests of its other stakeholders.
The Board oversees and empowers Mylan’s talented management team to execute on these objectives through the Company’s clear, consistent and differentiated strategy.
As you think about how to vote your shares, consider the extraordinary result of that strategy to date: it has produced a sustainable company that is making great strides in its mission of delivering better health for a better world by providing 7 billion people access to high quality medicine.
That mission to provide access is grounded in our belief that every person in this world matters and that the opportunity to live the healthiest life is one that should be attainable by all.
To provide access, we must be able to satisfy the needs of an incredibly diverse global marketplace with economic and political systems, approaches to delivering and paying for healthcare, languages and traditions, and customer and patient requirements that vary by location and over time.
It is with these considerations in mind that we built and scaled our commercial, operational and scientific platforms to meet the evolving needs of customers in ways that are globally consistent and locally sensitive. As a result, Mylan now reaches patients in more than 165 countries with a tremendous range of brand-name, generic and over-the-counter products.
As important, with each additional patient we reach, our diversification grows, further reinforcing our business model’s durability.
Durability allows Mylan to withstand and overcome competitive pressures while innovating to expand the world’s access to medicine. In addition, durability means that Mylan’s shareholders and other stakeholders can expect us to continue to “do good” by expanding access to medicine and “do well” by generating consistent financial results, including reliable cash flows capable of supporting ongoing investments in long-term growth. These efforts differentiate and underscore the strength of Mylan’s business model. |
About Mylan
Mylan is a global pharmaceutical company committed to setting new standards in healthcare and providing 7 billion people access to high quality medicine. We offer a growing portfolio of more than 7,500 products, including prescription generic, branded generic and brand-name drugs and over-the-counter remedies. We market our products in more than 165 countries and territories. Every member of our approximately 35,000-strong workforce is dedicated to creating better health for a better world.
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INTRODUCTION
Mylan – Built to Last
Mylan’s mission and strategy distinguish us from all other pharmaceutical companies. It is with this backdrop that we invite you to carefully review the rest of the materials in this Proxy Statement. Our hope is that they will inform your decision to vote to support Mylan’s ongoing journey to make a lasting and positive difference in the world. Thank you.
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Our Differentiated Business Model
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Diversification Across Products, Markets and Channels Produce Durable Results
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Access Diversity Durability Deliver on our mission to provide medicine to the world’s 7 billion people Set new standards in healthcare Provide passionate global leadership Launch products in markets where they previously weren’t accessible Serve both developed and developing markets Invest in R&D across commodity. complex and bio similar products Optimize broad range of manufacturing capabilities and operational expertise Leverage scale across Rx/Gx/OTC Deliver strong product and revenue mix across segments Focus efforts to expand patient access across 10 major therapeutic franchises Live commitment to quality and safety Diversify revenue streams- no single product generates more than 4% of total revenue Develop and launch complex products Execute on strong scientific, regulatory, clinical , medical and legal IP capabilities Leverage sites with close proximity to key markets Capitalize on vertically integrated portfolio Access In our core purpose The more diversity we achieve though driving access, the more it enhance the Durability of our business model. Better heath for a better world To drive access, Mylan had build tremendous Diversity into our commercial, operational and science platforms.
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INTRODUCTION
Mylan – Built to Last
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Our Value Chain
Mylan delivers value by focusing on the activities listed above, some of which are conducted in partnership with other organizations. While each activity represents a major contribution in its own right, taken together they represent one of our industry’s most diverse and durable platforms.
Credit for executing these activities successfully is owed to Mylan’s employees who thrive in the Company’s culture. This culture unites our employees around the world in what they recognize as an important and noble cause. As such, when creative solutions and tough decisions are called for, they rise to the occasion. When the way forward is unclear, they figure it out. When challenges arise, they don’t blink; they simply remain focused on executing to deliver on Mylan’s commitments. After all, our employees know that 7 billion people are depending on them to fulfill our mission.
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OUR CULTURE
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COMMITTED | RELENTLESS | UNCONVENTIONAL | |||
| We’re constantly sparked by the urge to make a difference. |
We do what’s right, not what’s easy. | We’ll each do our part every day to provide 7 billion people access to the medicine they deserve.
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In a world full of watchers, we’re doers. And together we can do anything. | |||
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Mylan’s Board oversees a clear and effective governance structure that complements the one-of-a-kind global platform we have built over the past decade. This structure helps the Company meet challenges in the complex and evolving healthcare industry. Our approach to governance, and the outstanding execution of our management and global workforce, have enabled us to deliver sustainable long-term value to shareholders while serving the interests of other stakeholders.
We remain committed to implementing enhancements to our governance structure where appropriate, and we seek and welcome input from shareholders, outside experts and advisors. Since the beginning of 2017, we have made enhancements to our governance structure and related programs that reflect extensive Board analysis and discussion as well as consideration of comments received during shareholder engagement.
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In this Governance section, we discuss the following:
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• Our extensive shareholder engagement in 2017 and early 2018, including enhancements implemented to our governance structure and compensation programs that we have communicated to shareholders, a discussion of global social responsibility and a statement on the opioid epidemic (Shareholder Engagement, pages 5 to 11)
• How the Board provides effective oversight (Board Highlights, page 13)
• What we consider when making director nominations and the diverse viewpoints, experiences, personal backgrounds and qualifications of our nominees (Our Directors, pages 14 to 15)
• The committees of the Board and Board meetings (Board Information, pages 22 to 24)
• How we continue to build the Board for the future (Succession Planning, page 25)
• How the Board oversees risk management (Risk Oversight, page 26)
• Director independence (page 27) and certain relationships and related transactions (pages 27 to 28)
• Non-employee director compensation (pages 29 to 30)
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GOVERNANCE
Shareholder Engagement
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CONTINUING COMMITMENT TO ENGAGEMENT
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Robust shareholder engagement remains a priority for Mylan’s Board and management as the Company continues to drive long-term shareholder value while also striving to serve the interests of other stakeholders in a complex and evolving healthcare environment. We are committed to maintaining a dialogue with our shareholders to ensure that they understand our differentiated strategy and business model and that together we take the opportunity to discuss and engage on topics of interest regarding their investment in Mylan.
At the 2017 Annual General Meeting of Shareholders (“2017 AGM”), over a majority of shareholders voted against the Company’s advisory Say-on-Pay vote, and we were disappointed by the result. Accordingly, following the 2017 AGM and into the second quarter of 2018, five independent directors and the Chairman and, separately, the Chief Executive Officer (“CEO”) and other members of management, undertook an extensive shareholder-outreach initiative, meeting with shareholders representing approximately 50% of shares outstanding, which included over 70% of shares held by our 50 largest shareholders. These meetings included governance leads and portfolio managers, among others.
During our recent outreach, we discussed the Company’s structure, strategy and business model and sought to better understand shareholders’ voting decisions. Topics of discussion included, among others:
During our meetings, shareholders remained supportive of members of the Board and management, but did request the Board to discuss its response to the 2017 AGM voting results. In doing so, and as part of our response, we had the opportunity to remind shareholders that the vast majority of Mr. Coury’s compensation reported in 2016 had been previously approved by our shareholders as disclosed in certain of our public filings prior to the 2016 annual general meeting of shareholders (please see our Current Report on Form 8-K, filed with the SEC on June 3, 2016 and our Supplemental Proxy Soliciting Materials, filed with the SEC on June 2, 2017), included compensation that had accrued or was granted over his successful 15-year tenure as CEO and Executive Chairman, and became payable under the terms of compensation programs and applicable tax law upon his transition from an executive officer role. We also discussed the compensation arrangement, which is highly aligned with shareholder interests, as well as the rationale for the Board’s decision to retain Mr. Coury’s continued unique and dedicated service as Chairman into 2021.
The charts and other information on pages 6 to 11 provide further information regarding the engagement discussed above, including the Board’s process for engagement, matters discussed with shareholders, and continued enhancements to our governance structure and compensation programs. Given that 2017 compensation decisions were made prior to the 2017 AGM and related shareholder feedback, we also note certain compensation-related changes implemented earlier in 2017 which are relevant to the more recent engagement discussions.
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GOVERNANCE
Shareholder Engagement
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THE BOARD’S COMPREHENSIVE APPROACH TO SHAREHOLDER ENGAGEMENT FOLLOWING 2017 AGM
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GOVERNANCE
Shareholder Engagement
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Shareholder Feedback on Executive Compensation, Retention and Succession |
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• Discuss Board response to 2017 AGM vote
• Maintain alignment of executive compensation with shareholder interests |
• Shareholders wanted to better understand the rationale for compensation decisions and metrics
• Shareholders wanted to better understand the Board’s role in succession planning |
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Our Board’s Response |
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• In August 2017, we refreshed 2⁄3 of the Compensation Committee (and following the 2018 AGM we expect that the Committee will have a third new member, resulting in a complete refreshment)
• Following the 2017 AGM, we consulted with an independent compensation expert to review and refresh the market analysis of 2017 CEO compensation and re-confirmed that it is in line with peer practices
• We redesigned the Proxy Statement to further enhance discussion of Mylan’s compensation programs and the rationale for compensation decisions
• We added in the Proxy Statement disclosure concerning our approach to Board refreshment and management succession planning (see page 25) |
• With respect to relevant compensation decisions and actions prior to the 2017 AGM:
>> The 2017 executive compensation program reflects a simplified approach from past years, with a streamlined pay mix consisting primarily of salary, annual cash incentives and long-term equity incentives (and the 2018 program is similar) (see page 43)
>> Approximately 67% of 2017 CEO target compensation and 64% of other 2017 named executive officer (“NEO”) target compensation is performance-based, using objective quantifiable metrics that are aligned with shareholder interests and business strategy (see page 44)
>> 2017 earned compensation is highly correlated to short- and long-term performance and is commensurate with levels paid to peers (see pages 44 to 48)
>> As of June 2016, the Chairman is no longer an executive officer and his compensation structure as a non-executive has been significantly simplified and remains substantially aligned with shareholder interests and business strategy
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Shareholder Feedback on Board Dynamics
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• Further explain the Company’s philosophy regarding Board composition, refreshment and interaction with management
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Our Board’s Response |
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• We enhanced the discussion in this Proxy Statement regarding Board diversity, tenure and experience, as well as the Board’s interaction with management and division of responsibility (see pages 13 to 15)
• As noted above, we refreshed 2⁄3 of the Compensation Committee (and following the 2018 AGM, we expect that the Committee will have a third new member, resulting in a complete refreshment)
• We described how the Board has continued to refresh itself over the past decade, adding seven of its current eleven directors during that time-frame, including four in the past five years and one last year
• As part of its refreshment efforts, the Board nominated Pauline van der Meer Mohr, who has governance expertise in compensation and risk management, among other areas, and Harry A. Korman, who has a unique understanding of Mylan’s business and significant operational expertise, for election at the 2018 AGM
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• Mark Parrish was appointed as Vice Chairman and Lead Independent Director in August 2017
• JoEllen Lyons Dillon was appointed as Chair of the Governance and Nominating Committee and Dr. Randall Vanderveen was appointed as Chair of the Science and Technology Committee
• Board refreshment over the past decade has further enhanced the depth of its collective experience (see page 15)
• 36% of current Board members are women (33% if all nominees are elected)
• The Board expressed its continuing commitment to refreshment and will continue to seek highly qualified candidates
• In April 2018, Mylan’s Board adopted a diversity policy with respect to Board composition, considering characteristics such as nationality, age, gender, education and professional background, among others.
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GOVERNANCE
Shareholder Engagement
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Shareholder Feedback on Risk Oversight
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• Shareholders wanted to better understand the Board’s governance structure and oversight of risk |
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Our Board’s Response |
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• In the first quarter of 2018, the Board formed a new Risk Oversight Committee to assist in its oversight of the Company’s enterprise risk framework (see page 24)
• Risk Oversight Committee responsibilities include review of Mylan’s enterprise risk framework
• We enhanced the discussion in this Proxy Statement regarding how the Board and its committees are
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organized to oversee Mylan, including with respect to strategy and risk management and controls implemented by management to help identify, assess, manage and monitor material risks (see page 26)
• We updated the Compliance Committee Charter to reflect oversight responsibility with respect to policies relating to pricing and commercialization of the Company’s products and services
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Shareholder Feedback on Corporate Strategy
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• Increase communication about the Company’s success and strategy going forward
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Our Board’s Response |
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• We hosted an Investor Day on April 11, 2018, during which we highlighted what we have achieved and our strategy, which is discussed further in the Introduction to this Proxy Statement (and posted the Investor Day materials to investor.mylan.com)
• Continued engagement on how we are “Built to Last” and made related presentations, available online, which discuss facts relating to Mylan’s transformation, success, platform, stable and durable cash flows and sustainability
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• The Board is committed to continued engagement with current and potential investors, analysts and others to further enhance communication of Mylan’s success and other matters of interest to shareholders
• We discussed with shareholders the Board’s focus, under Mr. Coury’s leadership, on developing new strategies for the next decade and beyond |
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Shareholder Feedback on Social Responsibility
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• Further communication regarding the Board’s and management’s views regarding Corporate Social Responsibility initiatives
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Our Board’s Response |
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• Commencing in 2017 and during the first half of 2018, we have undertaken a comprehensive Global Social Responsibility program review. For more information, see Global Social Responsibility on page 10
• We established and filled an executive-level Head of Global Sustainability role
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• In early May 2018, we published an updated and enhanced Global Social Responsibility Report pursuant to our 2017 commitment to the United Nations Global Compact
• We began submitting data to CDP Worldwide, formerly the Carbon Disclosure Project, which runs the global disclosure system through which companies may measure and manage their environmental impact.
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Shareholder Feedback on Opioids
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• Shareholders wanted to better understand the Company’s role in the manufacture and sale of opioid products
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Our Board’s Response |
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• We have included discussion in this Proxy Statement regarding our minimal role in the manufacture and sale of opioid products and our commitment to helping to fight the opioid crisis (see page 11)
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GOVERNANCE
Shareholder Engagement
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GLOBAL SOCIAL RESPONSIBILITY
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Mylan’s mission, fundamental values and business practices are aligned with the sound management of environmental, social and governance (“ESG”) issues. Global social responsibility is intrinsically woven into Mylan’s commitment to achieve our mission and deliver better health for a better world. It is what drives our enduring passion to improve access and serve unmet needs across all geographies, while respecting our environment and positively impacting our stakeholders.
Our organization has grown significantly over the past few years. Acquisitions have transformed the company from a U.S.-based generics firm to a global pharmaceutical company with a commercial presence in more than 165 countries and territories. As a natural consequence of our expansion, we have a larger and more diverse organization, operations in more countries and more stakeholders with different expectations.
We are committed to our work to better understand and monitor the potential impact of our growing global operations. We also recognize the changing societal expectations of our stakeholders, including the evolving perspectives and focus related to social responsibility. We are aware of the role we can play and the voice we can have in the global community to help solve some of today’s most pressing challenges. We will strive to do so in ways that continue to build trust and loyalty and deliver value.
In 2018, we are continuing work begun in 2017 to analyze our relevant ESG practices and data, as well as to better understand the context of our stakeholders’ evolving expectations about a broad range of ESG topics.
To harness this knowledge and incorporate it into the capabilities and insights of our global organization, we have created an executive role of Head of Global Sustainability, along with a cross-functional team. This role is part of our CEO’s Executive Governance Team. Our efforts are designed not only to establish and drive our goals and objectives, but also to serve as an additional channel for engaging with our stakeholders.
Throughout 2018 and 2019 our Head of Global Sustainability will lead our efforts to:
| • | Identify and prioritize the most relevant ESG topics for our business, including identifying their potential impact on stakeholders; |
| • | Conduct an analysis of relevant policies and activities throughout the organization to identify opportunities to improve our processes, performance and communication related to the ESG topics most relevant to Mylan and its key stakeholders. This analysis will help determine a performance baseline and inform the establishment of relevant ESG goals, key performance indicators and metrics; |
| • | Engage with a cross-section of stakeholders to understand expectations regarding Mylan and applicable ESG topics; and |
| • | Expand our ESG disclosures around topics of highest overall relevance as well as those of interest to the investment community and other stakeholder groups. |
We are committed to working across our company’s global landscape to clearly identify relevant ESG considerations and fully incorporate them into our operations to advance Mylan’s mission and aspiration to deliver better health for a better world.
| FIND MORE ONLINE | ||||
| To learn more about Mylan’s commitment to Global Social Responsibility, please visit www.mylan.com/en/gsr
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GOVERNANCE
Shareholder Engagement
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THE OPIOID EPIDEMIC
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Opioid addiction, abuse and misuse is a national epidemic in the U.S. Mylan recognizes the scope and seriousness of this health crisis and is deeply concerned for those affected by it. Mylan believes it is important for all the Company’s stakeholders to understand the Company’s limited role in the production of opioid products and the actions we are taking to address the opioid epidemic.
Regarding Mylan’s current presence in the U.S. opioid market, the Company supplies approximately 1.1% of opioid-containing drug products sold, ranking it fifteenth among pharmaceutical companies according to IMS data. Mylan’s opioid portfolio, with one exception noted below, consists of generic products for which we do not deploy sales representatives or engage in direct-to-consumer marketing. In contrast, brand manufacturers and distributors of pharmaceutical opioid products have been the main focus of allegations of widespread, abusive sales and marketing practices and/or excessive shipments of these products.
Despite its limited role, Mylan is committed to doing its part to help in the fight against opioid addiction, abuse and misuse, and to be a part of the long-term solution. In 2014, Mylan launched a generic, injectable, single-vial version of naloxone, a product that is indicated for the complete or partial reversal of opioid depression induced by some natural and synthetic opioids, as well as for diagnosis of suspected or known acute opioid over-dosage. In the summer of 2016, Mylan launched a multiple-vial version of its generic naloxone injectable, thereby increasing supply for customers, physicians and other providers seeking additional inventory of this important therapy. Mylan’s injectable naloxone products are primarily used by hospitals. Today, Mylan’s naloxone presentations represent one of the lower priced options in the overall naloxone market, which includes auto-injectors and prefilled syringes. Although Mylan has only a small share of the naloxone market, it stands ready to continue to provide reliable supply and access to this important product, including through a commitment to develop an auto-injector drug-device combination for naloxone.
Mylan is also fighting the opioid epidemic by taking seriously the need to safeguard against diversion and abuse of opioids. We have internal practices designed to detect suspicious orders and prevent the sale of opioid-containing products where there may be a risk of diversion.
In April 2018, the Company announced plans to leverage its world-class scientific platform to develop a novel delivery for Meloxicam, a non-opioid pain medication. Promoting the development of non-opioid pain treatments is one of the many tactics the FDA is focused on as part of its efforts to address this growing public health problem.
Mylan’s portfolio includes the Fentanyl Transdermal System, which is a generic version of Johnson & Johnson’s branded fentanyl patch product, Duragesic™. Mylan’s Fentanyl Transdermal System is indicated for the management of pain in opioid-tolerant patients, severe enough to require daily, around-the-clock, long-term opioid treatment and for which alternative options are inadequate. Mylan’s generic patches utilize a matrix technology in which the fentanyl is incorporated into the adhesive layer of the patch. Accordingly, Mylan’s patches have no drug reservoir containing fentanyl gel. Mylan’s matrix patches are among the products containing the least amount of fentanyl needed to deliver the labeled dose. At the time of its approval, Mylan’s matrix technology design represented an important innovation for the product.
Mylan recognizes that fentanyl is a big part of the national opioid crisis. Importantly, however, lawful fentanyl products such as Mylan’s Fentanyl Transdermal System have been broadly acknowledged by federal authorities as not being responsible for the current fentanyl crisis. In its 2016 National Drug Threat Assessment Summary, the U.S. Drug Enforcement Administration concluded that “illicit fentanyl is responsible for the current epidemic; it is manufactured in China and possibly Mexico, and smuggled into the United States” and, that “non-pharmaceutical fentanyl is primarily responsible for the current fentanyl epidemic.”
Mylan has only one branded pharmaceutical opioid product in its portfolio. That product is not part of the national discussion of opioids because it is an intravenous anesthesia medicine administered only by healthcare professionals in a surgery-center setting. Patients do not receive prescriptions for this product.
Mylan is also cooperating with separately disclosed government inquiries that it, like other manufacturers of opioids, has received in an effort to assist the government in its continued fight in the war on opioid abuse. Concerning one of those inquiries, Senator McCaskill issued a report on February 15, 2018, relating to payments by drug manufacturers to third-party advocacy groups and professional societies. This report positively differentiated Mylan, finding that the Company is “[a]t the other end of the spectrum” from the other companies whose payments were examined because Mylan made only de minimis payments, and to only one of the 14 third parties cited in the report.
Mylan remains committed to working with key stakeholders to continue doing its part to contribute to a long-term solution for this national health issue.
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Table of Contents
Table of Contents
GOVERNANCE
Board Highlights
Mylan’s current Board structure enables it to best oversee and empower its management team to support and drive the Company’s outstanding results for shareholders and other stakeholders. The Company’s short- and long-term performance and the ongoing execution of our mission demonstrate the success of this structure. The Company and its stakeholders continue to benefit from the leadership, judgment, vision, experience – and performance – of the Board and management team under the highly active and extraordinary visionary leadership, insight and strategic direction of Mr. Coury as Chairman. Our Board is highly qualified, engaged, experienced and independent. Our executive directors, Ms. Bresch (CEO) and Mr. Malik (President), together with our other outstanding management team members, have worked with the Board to develop a unique vision for the Company and continue to execute on this vision, consistent with the Board’s philosophy.
The Board’s determination that the current Board structure and management team is optimal for Mylan is based on, among other factors: the Company’s consistent long-term performance and durability; the Board’s deep and unique knowledge of the complexity, size and dramatic growth of the Company, as well as the industry and markets in which we operate; senior management’s demonstrated leadership abilities; the respective talents and capabilities of each of the directors and members of management; and the Board’s demonstrated ability to take advantage of opportunities and respond to commercial, competitive, regulatory, industry and other challenges, both anticipated and unanticipated.
The Board’s governance structure provides robust and effective oversight in the following ways:
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Providing Effective Oversight
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• Eight independent members;
• The Board has established robust Corporate Governance Principles;
• We have a strong Lead Independent Director responsible for, among other things;
>> Calling and presiding at executive sessions and meetings of the independent directors;
>> Consulting with the Chairman in determining information to be sent to the Board,
meeting agendas and meeting
>> Serving as a contact person for shareholders and other stakeholders wishing to communicate with the Board; and
>> Acting as liaison between the Chairman and independent directors;
• The Audit, Compensation, Compliance, Finance, Governance and Nominating and
Risk Oversight Committees all are composed
• All Board committees operate pursuant to written charters and conduct annual self-assessments;
• In early 2018, the Board formed a Risk Oversight Committee to assist in its oversight of the Company’s enterprise risk framework;
• Approval of any appointment of members to the Audit, Compensation, Compliance,
Governance and Nominating and Risk
• The independent directors on Mylan’s Board and its committees receive
extensive information and input from multiple layers of
• Mylan’s Board and its committees have unrestricted access to management;
• Mylan’s Board and its committees can retain, at their discretion and at
Company expense, any advisors they deem necessary
• In 2017, Mylan’s Board held four executive sessions of non-management members, and its committees collectively held 16
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Table of Contents
Table of Contents
GOVERNANCE
Our Directors
Board Nominee Overview
Each of our 12 director nominees possess the relevant qualifications and experience to provide the Company with the judgment, business skills and leadership needed to guide it in a complex and evolving healthcare environment. Although the Governance and Nominating Committee has not set specific targets with respect to diversity, the Committee and the Board as a whole believe that it is important for Board members to represent diverse viewpoints. In addition, we are confident that the personal backgrounds and qualifications of the directors, considered as a group, should provide a significant composite mix of experience, knowledge and abilities. Mylan’s Board also seeks to combine the skills and experience of its long-standing members with the fresh perspectives, insights, skills and experiences of new ones. In April 2018, Mylan’s Board adopted a diversity policy with respect to Board composition, considering characteristics such as nationality, age, gender, education and professional background, among others. The nominees reflect the Board’s continued commitment to these beliefs.
The following pages provide additional background information on each of our director candidates.
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Table of Contents
GOVERNANCE
Director Nominees
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Heather Bresch
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Director since 2011
Age: 48
Board Committees: Science and Technology
Other Public Company Boards: None Executive Director |
Ms. Bresch has served as Mylan’s CEO since January 1, 2012. Throughout her 26-year career with Mylan, Ms. Bresch has held roles of increasing responsibility in more than 15 functional areas. Prior to becoming CEO, Ms. Bresch served as the Company’s President, where she was responsible for its day-to-day operations. Before that, she served as Chief Operating Officer and Chief Integration Officer, leading the successful integration of two international acquisitions – Matrix Laboratories and Merck KGaA’s generics business – which more than doubled Mylan’s size and transformed it from a purely U.S. company to a global one.
As CEO, Ms. Bresch has been leading the next chapter of Mylan’s growth and performance, pursuing a strategy that already has produced a sustainable organization that is making great strides in its mission of delivering better health for a better world by providing 7 billion people access to high quality medicine. In continuing to execute on this strategy, Ms. Bresch is focused on further diversifying the Company in terms of products, markets and channels, a process proven to expand access and generate durable cash flows that can be reinvested to further differentiate Mylan and position it to support the transformation of outdated healthcare systems.
To achieve Mylan’s goals, Ms. Bresch emphasizes a collaborative company culture focused on leading, learning, teaching and performing to inspire innovation and help set new standards in healthcare. She also remains a vocal champion of initiatives and policy changes aimed at removing access barriers. Among her policy priorities is increasing generic utilization, driving biosimilars interchangeability, stemming the tide of HIV/AIDS, ensuring a fair and a level competitive playing field, and strengthening the global supply chain to make it safer.
Ms. Bresch served as chair of the U.S. Generic Pharmaceutical Association’s board of directors in 2016, 2005, and 2004, and as vice chair in 2003 and 2006. She is a frequent speaker on issues such as affordable healthcare and global competitiveness, and has testified before the U.S. Congress and FDA on issues related to access to medicine. Ms. Bresch is the pharmaceutical industry’s first female CEO of a Fortune 500 company and has been named by Fortune magazine as one of its “50 Most Powerful Women.” Ms. Bresch’s qualifications to serve on Mylan’s Board, include, among others, her leadership and unique and deep knowledge of the Company, its businesses, markets and strategies, as well as its global research, supply chain, manufacturing and commercial platforms; her knowledge and experience regarding issues, risks and opportunities in the global healthcare industry; and her knowledge and expertise regarding political and public policy healthcare-related matters, public company management and leadership and international business transactions and integration.
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Hon. Robert J. Cindrich
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Director since 2011
Age: 74
Board Committees: Compliance; Governance and Nominating; Risk Oversight (Chair); Science and Technology
Other Public Company Boards: Alllscripts Healthcare Non-Executive Director
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Since February 2011, Judge Cindrich has been serving as president of Cindrich Consulting, LLC, a business and healthcare consulting company that advises clients on corporate governance, compliance and business strategies. From October 1, 2013, through January 31, 2014, he served as interim general counsel for United States Steel Corporation (“U.S. Steel”) (NYSE: X), an integrated steel producer of flat-rolled and tubular products. 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 U.S. Steel as interim general counsel, returning to Schnader after his time there and remaining until December 2017. 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 U.S. District Court for the Western District of Pennsylvania. Prior to that appointment, he was active as an attorney in 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 Mylan’s Board include, among others, his knowledge and expertise regarding legal and regulatory matters, compliance, corporate governance, issues affecting the healthcare industry and public company risk management oversight and strategy. | |||||||||||
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GOVERNANCE
Director Nominees
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Robert J. Coury
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Chairman
Director since 2002
Age: 57
Board Committees: Executive (Chair)
Other Public Company Boards: None Non-Executive Director
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Robert J. Coury is the Chairman of Mylan N.V. Under his continuing visionary leadership and strategic direction, Mylan has transformed from the third largest generics pharmaceutical company in the U.S. into one of the largest pharmaceutical companies in the world in terms of revenue, earning spots on both the S&P 500 and, prior to the Company’s reincorporation outside of the U.S. in 2015, the Fortune 500. Mr. Coury first was elected to Mylan’s Board in February 2002, having served since 1995 as a strategic advisor to the Company. He became the Board’s Vice Chairman shortly after his election and served as CEO from September 2002 until January 2012. He served as Executive Chairman from 2012 until June 2016, when he ceased to be an employee and became Chairman.
Since 2007, Mr. Coury has led Mylan through a series of transactions totaling approximately $25 billion, which transformed Mylan into a global powerhouse within the highly competitive pharmaceutical industry, with a global workforce of approximately 35,000 and products sold in more than 165 countries. In 2007, Mylan purchased India-based Matrix Laboratories Limited, a major producer of active pharmaceutical ingredients, and the generics and specialty pharmaceuticals business of Europe-based Merck KGaA. Subsequent acquisitions under Mr. Coury’s leadership further expanded Mylan into new therapeutic categories and greatly enhanced its geographic and commercial footprint. In 2010, Mylan acquired Bioniche Pharma (“Bioniche”), a global injectables business in Ireland; in 2013, Mylan acquired India-based Agila Specialties, a global injectables company; and in 2015, Mylan acquired Abbott Laboratories’ (“Abbott”) non-U.S. developed markets specialty and branded generics business (the “EPD Business”) and Famy Care Ltd.’s women’s healthcare businesses. More recently, Mylan acquired Meda AB (publ.) (“Meda”), a leading international specialty pharmaceutical company that sells prescription and over-the-counter products and the non-sterile, topicals-focused business of Renaissance Acquisition Holdings, LLC.
During this period of expansion, Mr. Coury’s vision and leadership led to the building of an unmatched, high quality foundation for the future, supporting Mylan’s mission of providing the world’s 7 billion people with access to high quality medicine and benefiting investors, patients, customers and other stakeholders. Before becoming Executive Chairman, 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 Mylan both were key components of the Company’s past, current and future growth strategies.
Mr. Coury’s qualifications to serve on Mylan’s Board include, among others, demonstrated outstanding business acumen and strong business judgment.
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JoEllen Lyons Dillon
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Director since 2014
Age: 54
Board Committees: Audit; Compensation; Executive; Governance and Nominating (Chair)
Other Public Company Boards: None Non-Executive Director
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Ms. Dillon served most recently as chief legal officer and corporate secretary of The ExOne Company (“ExOne”) (NASDAQ: XONE), a global provider of three-dimensional printing machines, from March 2013 to August 2017, and as executive vice president from December 2014 to August 2017. Previously, she was a legal consultant on ExOne’s initial public offering. Prior to that, Ms. Dillon was a partner with Reed Smith LLP, a law firm, from 2002 until 2011. She previously had been at the law firm Buchanan Ingersoll & Rooney PC from 1988 until 2002, where she became a partner in 1997. Ms. Dillon is a member of the board of trustees of the Allegheny District chapter of the National Multiple Sclerosis Society and has previously served as chair and audit committee chair. Ms. Dillon’s qualifications to serve on Mylan’s Board include, among others, her knowledge and expertise regarding legal and regulatory matters, financial matters, compliance, corporate governance, public company oversight and international business and strategy.
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Table of Contents
GOVERNANCE
Director Nominees
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Neil Dimick, C.P.A.*
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Director since 2005
Age: 68
Board Committees: Audit (Chair); Executive; Finance; Risk Oversight
Other Public Company Boards: Resources Connection, Inc. Non-Executive Director
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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, Mr. Dimick served as a partner with Deloitte & Touche LLP (“Deloitte”) for eight years. Mr. Dimick also serves on the board of directors of Resources Connection, Inc. (NASDAQ: RECN). Mr. Dimick also served on the boards of directors of WebMD Health Corp. from 2005 to September 2017, at which time it was purchased by Internet Brands, a portfolio company of investment funds affiliated with Kohlberg Kravis Roberts & Co., LP; Alliance HealthCare Services, Inc. from 2002 to August 2017, at which time it was purchased by Tahoe Investment Group Co., Ltd.; and Thoratec Corporation from 2003 to October 2015, at which time it was purchased by St. Jude Medical, Inc. Mr. Dimick’s qualifications to serve on Mylan’s Board include, among others, his experience and expertise regarding accounting, finance, the healthcare industry, international business, corporate governance, public company management, oversight and strategy, and international business transactions.
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| * | C.P.A. distinction refers to “inactive” status. |
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Melina Higgins
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Director since 2013
Age: 50
Board Committees: Audit; Compensation;
Other Public Company Boards: Genworth Financial Inc. Non-Executive Director
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Currently retired, Ms. Higgins held senior roles of increasing responsibility at The Goldman Sachs Group, Inc. (NYSE: GS), a global investment banking, securities and investment management firm, 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 there, 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 GS Mezzanine Partners funds, which managed over $30 billion of assets and were global leaders in their industry. Ms. Higgins also is a member of 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 Mylan’s Board include, among others, her experience and expertise in finance, capital markets, international business and strategy, and international business transactions.
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GOVERNANCE
Director Nominees
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Harry A. Korman
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Nominated for election for the first time in 2018
Age: 60
Other Public Company Boards: None Non-Executive Director Nominee |
Currently retired, Mr. Korman previously held senior executive roles of increasing responsibility at Mylan Inc. and its subsidiaries from 1996 until July 2014. He served as Mylan Inc.’s global Chief Operating Officer from January 2012 until his retirement in July 2014, after which he served in a consultant role with Mylan Inc. for one year. Prior to his service as Chief Operating Officer, he was the President, North America of Mylan Inc. commencing in October 2007. Mr. Korman also served as President of Mylan Pharmaceuticals Inc. from February 2005 to December 2009. During his time as an executive at Mylan, Mr. Korman was instrumental in identifying, evaluating and executing on significant commercial and business development opportunities in the United States and other countries, including the expansion of Mylan’s global generics businesses around the world, among many other important contributions to the Company and its stakeholders. He joined Mylan in 1996 after the Company’s acquisition of UDL Laboratories (n/k/a Mylan Institutional), and served as its president, among other prior responsibilities. Mr. Korman has served as a past director and vice chairman of the Generic Pharmaceutical Association, now known as the Association for Accessible Medicines. He also previously served as a director and vice chairman of the HDMA Foundation, which serves the healthcare industry by providing research and education focused on healthcare supply issues. Mr. Korman’s qualifications to serve on Mylan’s Board include, among others, his extensive industry and leadership experience, his knowledge of healthcare systems and the U.S. and global commercial markets, and his leadership experience in the areas of global strategy, sales and marketing, commercial operations, supply chain and business development, among other areas relevant and important to Mylan’s global business.
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Rajiv Malik
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Director since 2013
Age: 57
Board Committees: Science and Technology
Other Public Company Boards: None Executive Director
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Mr. Malik has served as Mylan’s President since January 1, 2012 and has more than 35 years of experience in the pharmaceutical industry. 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. Mr. Malik has been integral in developing the strategies for the company’s acquisitions and, more importantly, in the execution and integration of acquisitions, specifically the generics business of Merck KgaA; the injectables business of Bioniche; Agila Specialties, a global injectables company; the EPD Business; Famy Care Ltd.’s women’s healthcare businesses; Meda, a leading international specialty pharmaceutical company that sells prescription and over-the-counter products; and most recently, the non-sterile, topicals-focused business of Renaissance Acquisition Holdings, LLC.
Mr. Malik oversees the day-to-day operations of the Company which includes commercial, scientific affairs, manufacturing, supply chain and quality as well as business development and information technology. Mr. Malik has been instrumental in expanding and optimizing Mylan’s product portfolio, leveraging Mylan’s global research and development capabilities and expanding Mylan’s presence in emerging markets. 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 GmbH, 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 Mylan’s Board include, among others, his leadership and unique and deep knowledge of the Company, its businesses, markets and strategies, as well as its global research, supply chain, manufacturing and commercial platforms; his knowledge and experience regarding issues, risks and opportunities in the global healthcare industry; and his knowledge and expertise regarding global regulatory matters, public company management and leadership, and international business transactions and integration. | |||||||||||
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Table of Contents
GOVERNANCE
Director Nominees
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Mark W. Parrish
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Vice Chairman and Lead Independent Director
Director since 2009
Age: 62
Board Committees: Audit; Compliance (Chair); Executive; Risk Oversight
Other Public Company Boards: Omnicell, Inc. Non-Executive Director |
Mr. Parrish has served as the Lead Independent Director and Vice Chairman of Mylan’s Board since August 2017. He has served as chief executive officer of TridentUSA Health Services, a provider of mobile X-ray and laboratory services to the long-term care industry, since 2008 and served as chairman from 2008 to 2013. Since January 2013, Mr. Parrish also has 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 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 as senior adviser to Frazier Healthcare Ventures, a healthcare oriented growth equity firm. Mr. Parrish’s qualifications to serve on Mylan’s Board include, among others, his experience as a chief executive officer; his knowledge and experience regarding issues, risks and opportunities in the global healthcare industry; and his knowledge and expertise regarding compliance, corporate governance, risk management oversight, supply chain, the healthcare industry and technology, public company management and strategy, and international business transactions. | |||||||||
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Pauline van der Meer Mohr
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Nominated for election for the first time in 2018
Age: 58
Other Public Company Boards (outside the U.S.): HSBC Holdings plc Royal DSM N.V. Non-Executive Director Nominee |
Ms. van der Meer Mohr is currently an independent non-executive director of HSBC Holdings plc (LON: HSBA), chairing that company’s Group Remuneration Committee and serving as a member of its Group Risk Committee and Nomination Committee. She also is a member of the supervisory boards of Royal DSM N.V. (AMS: DSM), currently serving as Vice-Chairman, chairing its Remuneration Committee and serving on its Nomination Committee and EY Netherlands LLP, currently serving as Chair. Ms. van der Meer Mohr recently served on the supervisory board of ASML Holding N.V. (NASDAQ and AMS: ASML) until April 2018, and as president of the Executive Board of Erasmus University in Rotterdam from 2010 to 2016. Ms. van der Meer Mohr began her career in the legal profession and previously held several legal and management positions within Royal Dutch Shell Group from 1989 to 2004. In 2004, she was appointed group human resources director at TNT N.V. before becoming senior executive vice president and head of group human resources at ABN AMRO NV in 2006. She served as a member of the Dutch Banking Code Monitoring Commission in the Netherlands from 2010 to 2013, and began her own human capital consulting firm in 2008. Ms. Van der Meer Mohr’s qualifications to serve on Mylan’s Board include, among others, her experience and expertise regarding corporate governance, finance, public company oversight outside of the U.S., legal and regulatory matters, human resources and executive compensation, risk management and oversight, corporate social responsibility and governance and oversight experience with respect to Dutch companies.
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GOVERNANCE
Director Nominees
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Randall L. (Pete) Vanderveen, Ph.D.
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Director since 2002
Age: 67
Board Committees: Compliance; Science and Technology (Chair)
Other Public Company Boards: None Non-Executive Director |
Currently retired, Dr. Vanderveen most recently was 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 from 2015 to August 2017. 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 Mylan, among other matters. Dr. Vanderveen’s qualifications to serve on Mylan’s Board include, among others, his experience and expertise regarding the healthcare industry, pharmaceuticals and pharmacy practice, public healthcare policy and economics, and scientific matters. | |||||||||
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Sjoerd S. Vollebregt
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Director since 2017
Age: 63
Board Committees: Compliance; Finance; Governance and Nominating
Other Public Company Boards (outside the U.S.): Heijmans N.V.; Non-Executive Director
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Mr. Vollebregt has been chairman of the Supervisory Board of Heijmans N.V., a Euronext Amsterdam listed company that operates in property development, residential building, non-residential building, roads and civil engineering, since 2015; chairman of the Advisory Board of Airbus Defence and Space Netherlands B.V., a subsidiary of Airbus SE, a Euronext Paris listed company, that develops solar arrays, satellite instruments and structures for launchers, since 2015; and chairman of the Economic Development Board Drecht Cities, a strategic collaboration between business, education and government in Drecht Cities, Netherlands, since December 2016. Mr. Vollebregt had served as chairman of the Executive Board of Stork B.V. and its predecessor from 2002 to 2014, which was an Amsterdam Stock Exchange-listed industrial group until 2008, consisting of a global provider of knowledge-based maintenance, modification and asset integrity products and services, food and textile equipment manufacturer and chief executive officer of Fokker Technologies Group B.V., an aerospace company and a Stork B.V. subsidiary from 2010 to 2014. Previously, Mr. Vollebregt served as a member of the Supervisory Board of TNT Express N.V., an international courier delivery services company, from 2013 to 2016, and has held various other senior positions at Excel plc, Ocean plc, Intexo Holding and Royal Van Ommeren. Mr. Vollebregt’s qualifications to serve on Mylan’s Board include, among others, his experience as a chief executive officer; his experience and expertise in public company management outside of the U.S. and strategy; his experience and expertise in manufacturing, supply chain, and technology, as well as international business transactions; and his governance and oversight experience with respect to Dutch companies. | |||||||||
Each nominee listed above, other than Mr. Korman, Ms. van der Meer Mohr and Mr. Vollebregt, was a director of Mylan Inc. on February 27, 2015, the date on which Mylan N.V. completed the acquisition of Mylan Inc. and the EPD Business (the “EPD Transaction”), and became a director of Mylan N.V. on such date in connection with the EPD Transaction.
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GOVERNANCE
Board Information
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AUDIT COMMITTEE |
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| Members Mr. Dimick (Chair) Ms. Dillon Ms. Higgins Mr. Parrish
Number of meetings during 2017: 4 |
KEY OVERSIGHT RESPONSIBILITIES INCLUDE, BUT ARE NOT LIMITED TO:
● Integrity of the Company’s financial statements and its accounting and financial reporting processes
● The effectiveness of the Company’s internal control over financial reporting
● Compliance with applicable legal and regulatory requirements
● The qualifications, independence and performance of the independent registered public accounting firm for U.S. public reporting purposes and the Company’s external auditor for purposes of Dutch law
● The Internal Audit group
● The Company’s processes and procedures related to risk assessment and risk management
● Related party transactions
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COMPENSATION COMMITTEE |
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| Members Ms. Cameron (Chair)* Ms. Dillon Ms. Higgins
Number of meetings during 2017: 4 |
KEY OVERSIGHT RESPONSIBILITIES INCLUDE, BUT ARE NOT LIMITED TO:
● CEO and senior management compensation, including the corporate goals and objectives relevant to such compensation and evaluating performance in light of those goals and objectives
● Board and committee compensation
● Relationship between the Company’s compensation policies and practices and risk management
● Compensation and benefits-related disclosures
● Equity compensation plans in which executives participate
* As noted above, Ms. Cameron will retire from the Board effective June 29, 2018 and, therefore, has not been nominated for re-election.
|
|
COMPLIANCE COMMITTEE |
||||||
| Members Mr. Parrish (Chair) Mr. Cindrich Dr. Vanderveen Mr. Vollebregt
Number of meetings during 2017: 4
|
KEY OVERSIGHT RESPONSIBILITIES INCLUDE, BUT ARE NOT LIMITED TO:
● Chief Compliance Officer’s implementation of Mylan’s corporate compliance program
● Considering or evaluating significant
global compliance-related policies, including with respect to pricing
● Making recommendations to the Board with respect to the formulation, implementation, maintenance and monitoring of Mylan’s corporate compliance program and Code of Business Conduct and Ethics
|
|
EXECUTIVE COMMITTEE |
||||||
| Members Mr. Coury (Chair) Ms. Dillon Mr. Dimick Mr. Parrish
Number of meetings during 2017: 3 |
KEY RESPONSIBILITIES INCLUDE, BUT ARE NOT LIMITED TO:
● Assisting the Board in fulfilling its fiduciary responsibilities by exercising those powers of the Board not otherwise limited by a resolution of the Board or by law
● Strategic planning and additional oversight of strategy implementation
|
| 2018 Proxy Statement |
|
23 |
Table of Contents
GOVERNANCE
Board Information
|
FINANCE COMMITTEE |
||||||
| Members Ms. Higgins (Chair) Mr. Dimick Mr. Vollebregt
Number of meetings during 2017: 2
|
KEY OVERSIGHT RESPONSIBILITIES INCLUDE, BUT ARE NOT LIMITED TO:
● Material mergers, acquisitions and combinations with other companies
● Swaps and derivatives transactions
● Establishment of credit facilities
● Financings with commercial lenders
● Issuance and repurchase of the Company’s debt, equity, hybrid or other securities
|
|
GOVERNANCE AND NOMINATING COMMITTEE |
||||||||
| Members Ms. Dillon (Chair) Mr. Cindrich Mr. Vollebregt
Number of meetings during 2017: 4
|
KEY OVERSIGHT RESPONSIBILITIES INCLUDE, BUT ARE NOT LIMITED TO:
● Corporate governance matters
● Nomination or re-nomination of director candidates
● The Board’s review and consideration of shareholder recommendations for director candidates
● The annual self-evaluation of the Board and its committees
|
|
RISK OVERSIGHT COMMITTEE |
||||||||
| Members Mr. Cindrich (Chair) Mr. Dimick Mr. Parrish
Newly Formed in February 2018
|
KEY OVERSIGHT RESPONSIBILITIES INCLUDE, BUT ARE NOT LIMITED TO:
● Mylan’s enterprise risk framework
● Material enterprise risks not allocated to the Board or another committee
|
|
SCIENCE AND TECHNOLOGY COMMITTEE |
||||||||
| Members Dr. Vanderveen (Chair) Ms. Bresch Mr. Cindrich Mr. Malik
Number of meetings during 2017: 2 |
KEY RESPONSIBILITIES INCLUDE, BUT ARE NOT LIMITED TO:
● R&D strategy and portfolio from a scientific and technological perspective ● Significant emerging scientific and technological developments relevant to Mylan
|
| 24 |
|
2018 Proxy Statement |
Table of Contents
Table of Contents
GOVERNANCE
|
Risk Management
|
||||||
|
Mylan operates in a complex and rapidly changing environment that involves many risks. In addition to general market and economic risks, the Company faces risks related to its industry; information technology and cybersecurity; data privacy; financial controls and reporting; legal, regulatory and compliance; finances and taxation; global operations; environment and social responsibility; and product portfolio and commercialization. As a company committed to operating ethically and with integrity, we proactively manage and, where possible, mitigate risks to help ensure compliance with applicable rules and regulations, maintain integrity and continuity in our operations and business and to protect our assets and reputation. Risk management is an enterprise-wide objective subject to oversight by the Board and its committees. It is the responsibility of Mylan’s management and employees to implement and administer risk-management processes to identify material risks to our business. In addition, management must assess, manage and monitor those risks, all while maintaining flexibility in how we operate. To further embed risk management and compliance into our culture, Mylan implements appropriate policies and procedures and trains employees on how to comply with them.
Mylan’s Board, in turn, directly or through its committees, oversees management’s implementation of risk management. We have approved a robust Code of Business Conduct and Ethics and other related policies, and the Board and its committees rigorously review with management key actual and potential significant risks at least quarterly. Consistent with our proactive approach to risk management, the Board recently formed a Risk Oversight Committee to assist in its oversight of our enterprise risk management framework, in coordination with the respective oversight responsibilities of other Board committees. | ||||||
|
Board Committees’ Role in Risk Oversight
|
||||||
|
• The Risk Oversight Committee recently was formed to assist the Board in its oversight of Mylan’s enterprise risk management framework. The Committee reviews the enterprise risk framework, infrastructure and controls implemented by management to help identify, assess, manage and monitor material risks; reviews management’s exercise of its responsibility to identify, assess and manage material risks not allocated to the Board or another committee; and reviews Mylan’s efforts to foster a culture of risk-adjusted decision-making without constraining reasonable risk-taking and innovation.
• The Audit Committee focuses on financial and disclosure controls and reporting risks as well as oversight of Mylan’s internal audit function. The Committee oversees, among other matters, Mylan’s processes and procedures relating to risk assessment and risk management and the quality and adequacy of the Company’s internal control over financial reporting. Mylan’s internal audit function meets with the Committee at least quarterly to discuss potential risk or control issues. The Committee also meets quarterly with Mylan’s global independent auditor and Dutch independent auditor.
• The Compensation Committee focuses on compensation-related risks that may be inherent in our business and the design of compensation-related plans and programs, and receives reports from management and/or outside advisors and experts regarding various related matters on at least a quarterly basis.
• The Compliance Committee is responsible for overseeing the Chief Compliance Officer’s implementation of Mylan’s Corporate Compliance Program and related policies and procedures. The Committee appoints and replaces this individual, and reviews his or her performance, responsibilities, plans and resources. The Committee makes recommendations with respect to the Corporate Compliance Program and Code of Business Conduct and Ethics, including monitoring and evaluating significant reports of actual or alleged violations by employees and executive officers and third-party risks. The Committee also considers and evaluates significant global compliance-related policies, including policies related to pricing and/or commercialization of Company products and services. The Committee receives reports from various levels of management and outside advisors and meets on at least a quarterly basis.
• The Finance Committee is responsible for reviewing and providing advice to Mylan’s Board with respect to the Company’s capital structure, capital management, financing and material business transactions and the risks related to such activities.
• The Governance and Nominating Committee is responsible for identifying, recruiting and nominating qualified individuals to become members of Mylan’s Board, recommending committee assignments, overseeing the Board’s annual evaluation of the independence of directors and other risks related to corporate governance.
| ||||||
| 26 |
|
2018 Proxy Statement |
Table of Contents
Table of Contents
GOVERNANCE
Director Independence and Certain Relationships and Related Transactions
| 28 |
|
2018 Proxy Statement |
Table of Contents
GOVERNANCE
Non-Employee Director Compensation
Non-Employee Director Compensation for 2017
The following table sets forth information concerning the compensation earned by Mylan’s directors who are not employees of the Company or Mylan Inc. (each a “Non-Employee Director,” and, together, the “Non-Employee Directors”) for 2017. Directors who are employees of Mylan Inc. receive no compensation for their Board service. A discussion of the elements of Non-Employee Director compensation follows the table.
| Name
|
Fees Earned or Paid ($)
|
RSUs ($)(1)
|
Option Awards
|
All Other ($)(2)
|
Total ($)
|
|||||||||||||||
| Wendy Cameron
|
|
129,500
|
|
|
165,043
|
|
|
50,010
|
|
|
—
|
|
|
344,553
|
| |||||
| Hon. Robert J. Cindrich
|
|
124,000
|
|
|
165,043
|
|
|
50,010
|
|
|
—
|
|
|
339,053
|
| |||||
| Robert J. Coury
|
|
1,800,000
|
|
|
—
|
|
|
—
|
|
|
81,133
|
|
|
1,881,133
|
| |||||
| JoEllen Lyons Dillon
|
|
154,500
|
|
|
165,043
|
|
|
50,010
|
|
|
—
|
|
|
369,553
|
| |||||
| Neil Dimick
|
|
174,500
|
|
|
165,043
|
|
|
50,010
|
|
|
—
|
|
|
389,553
|
| |||||
| Melina Higgins
|
|
142,500
|
|
|
165,043
|
|
|
50,010
|
|
|
—
|
|
|
357,553
|
| |||||
| Douglas J. Leech*
|
|
67,500
|
|
|
165,043
|
|
|
50,010
|
|
|
—
|
|
|
282,553
|
| |||||
| Joseph C. Maroon, M.D.*
|
|
64,500
|
|
|
165,043
|
|
|
50,010
|
|
|
—
|
|
|
279,553
|
| |||||
| Mark W. Parrish
|
|
192,500
|
|
|
165,043
|
|
|
50,010
|
|
|
—
|
|
|
407,553
|
| |||||
| Rodney L. Piatt*
|
|
109,500
|
|
|
165,043
|
|
|
50,010
|
|
|
—
|
|
|
324,553
|
| |||||
| Randall L. (Pete) Vanderveen, Ph.D.
|
|
117,500
|
|
|
165,043
|
|
|
50,010
|
|
|
—
|
|
|
332,553
|
| |||||
| Sjoerd S. Vollebregt**
|
|
62,000
|
|
|
165,012
|
|
|
50,012
|
|
|
—
|
|
|
277,024
|
| |||||
| * | Not nominated for re-election at the 2017 AGM and retired from the Board effective June 22, 2017. Compensation listed reflects amounts paid and equity awarded through June 22, 2017. |
| ** | Elected to Mylan’s Board at the 2017 AGM. |
| (1) | Represents the grant date fair value of the specific award granted to the Non-Employee Director. Option awards and RSU (as defined below) awards granted in 2017 generally vested on March 3, 2018. 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, 2017. The aggregate number of ordinary shares subject to stock options held by the Non-Employee Directors, as of December 31, 2017, were as follows: Ms. Cameron, 11,293; Judge Cindrich, 11,293; Mr. Coury, 231,074; Ms. Dillon, 11,293; Mr. Dimick, 11,293; Ms. Higgins, 17,916; Mr. Leech, 11,293; Dr. Maroon, 11,293; Mr. Parrish, 11,293; Mr. Piatt, 67,850; Dr. Vanderveen, 11,293; and Mr. Vollebregt, 3,867. The number of unvested RSUs held by each of the Non-Employee Directors, as of December 31, 2017, were as follows: Ms. Cameron, 3,653; Judge Cindrich, 3,653; Mr. Coury, 1,000,000; Ms. Dillon, 3,653; Ms. Higgins, 3,653; Mr. Parrish, 3,653; Dr. Vanderveen, 3,653; and Mr. Vollebregt, 4,230. The number of unvested performance-based restricted ordinary shares held by Mr. Coury, as of December 31, 2017, was 270,051. |
| (2) | Because of persistent and serious security concerns, the Board determined that Mr. Coury should be authorized to use Mylan’s aircraft for business and personal purposes. Aggregate incremental cost for personal aircraft usage for 2017 was $33,269, which was calculated in the same manner as described in footnote (b) to the Summary Compensation Table (see page 54). Also reflects costs relating to use of a company vehicle (based on lease value), insurance and ancillary expenses associated with such vehicle ($26,705), and costs relating to attendance at events, security services and tax preparation services related to U.K. tax returns. |
| 2018 Proxy Statement |
|
29 |
Table of Contents
GOVERNANCE
Non-Employee Director Compensation
| 30 |
|
2018 Proxy Statement |
Table of Contents
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 22, 2018 by (i) Mylan N.V.’s directors, nominees and NEOs, and (ii) all directors, nominees and executive officers of Mylan N.V. as a group (based on 515,470,127 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 also is considered to beneficially own shares that he or she has the right to acquire within 60 days of May 22, 2018. 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 the shares shown as beneficially owned by them, unless otherwise indicated in the footnotes below. The address for each beneficial owner listed in the table below is c/o Mylan N.V., Building 4, Trident Place, Mosquito Way, Hatfield, Hertfordshire, AL10 9UL, England.
|
Name of Beneficial Owner
|
Amount and
|
Options
|
Percent of Class
|
|||||||||
|
Heather Bresch
|
|
822,042
|
(1)(7)
|
|
252,764
|
|
|
*
|
| |||
|
Wendy Cameron
|
|
72,707
|
|
|
11,293
|
|
|
*
|
| |||
|
Hon. Robert J. Cindrich
|
19,079 |
|
11,293
|
|
|
*
|
| |||||
|
Robert J. Coury
|
|
1,266,279
|
(2)(7)
|
|
231,074
|
|
|
*
|
| |||
|
JoEllen Lyons Dillon
|
|
9,639
|
|
|
11,293
|
|
|
*
|
| |||
|
Neil Dimick
|
|
44,617
|
|
|
11,293
|
|
|
*
|
| |||
|
Daniel M. Gallagher
|
|
4,282
|
|
|
16,416
|
|
* | |||||
|
Melina Higgins
|
|
83,092
|
(3)
|
|
17,916
|
|
|
*
|
| |||
|
Harry A. Korman(4)
|
|
20,250
|
|
|
25,966
|
|
|
*
|
| |||
|
Rajiv Malik
|
|
784,169
|
(5)(7)
|
|
131,330
|
|
|
*
|
| |||
|
Anthony Mauro
|
|
153,258
|
(6)(7)
|
|
63,745
|
|
|
*
|
| |||
|
Kenneth S. Parks
|
|
5,584
|
|
|
18,059
|
|
|
*
|
| |||
|
Mark W. Parrish
|
|
37,395
|
|
|
11,293
|
|
|
*
|
| |||
|
Pauline van der Meer Mohr(4)
|
|
0
|
|
|
0
|
|
* | |||||
|
Randall L. (Pete) Vanderveen, Ph.D.
|
|
41,817
|
|
|
11,293
|
|
|
*
|
| |||
|
Sjoerd S. Vollebregt
|
|
4,230
|
|
|
3,867
|
|
|
*
|
| |||
|
All directors, nominees and executive officers as a group (16 persons)
|
|
3,368,440
|
(7)(8)
|
|
828,895
|
|
|
*
|
| |||
| * | Less than 1%. |
| (1) | Includes 1,157 ordinary shares held in Ms. Bresch’s 401(k) account, and 282,231 shares held in grantor retained annuity trusts of which she is the sole trustee. |
| (2) | Includes 700,000 ordinary shares held in a grantor retained annuity trust of which Mr. Coury is the sole trustee. |
| (3) | Includes 74,000 ordinary shares held by Ms. Higgins’ spouse. |
| (4) | Mr. Korman and Ms. van der Meer Mohr are nominated for election to the Board for the first time in 2018. |
| (5) | Includes 250,000 ordinary shares held in a grantor retained annuity trust of which Mr. Malik is the sole trustee. |
| (6) | Includes 5,574 ordinary shares held in Mr. Mauro’s 401(k) account. |
| (7) | Includes performance-based restricted ordinary shares issued on June 10, 2015 upon conversion of stock appreciation rights pursuant to the terms of Mylan’s One-Time Special Performance-Based Five-Year Realizable Value Incentive Program implemented in 2014. The restricted ordinary shares remain subject to forfeiture and additional vesting conditions, including achievement of adjusted EPS of $6.00 and continued service, and the other terms and conditions of the program. |
| (8) | Includes 6,731 ordinary shares held in the executive officers’ 401(k) accounts. |
| 2018 Proxy Statement |
|
31 |
Table of Contents
SECURITY OWNERSHIP
Security Ownership of Certain Beneficial Owners
The following table lists the names and addresses of shareholders known to management to own beneficially more than five percent of the ordinary shares of Mylan N.V. as of May 22, 2018 (based on 515,470,127 ordinary shares of Mylan N.V. outstanding as of such date):
|
Name and Address of Beneficial Owner
|
Amount and
|
Percent of
|
||||||
|
Wellington Management Company LLP and affiliates, 280 Congress Street, Boston, MA 02210
|
|
45,480,852
|
(1)
|
|
8.8%
|
| ||
|
BlackRock, Inc., 55 East 52nd Street, New York, NY 10055
|
|
40,564,099
|
(2)
|
|
7.9%
|
| ||
|
The Vanguard Group, 100 Vanguard Blvd., Malvern, PA 19355
|
|
35,343,486
|
(3)
|
|
6.9%
|
| ||
|
Vanguard Specialized Funds – Vanguard Heath Care Fund – 23-2439149, 100 Vanguard Blvd., Malvern, PA 19355
|
|
29,844,042
|
(4)
|
|
5.8%
|
| ||
| (1) | 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 8, 2018, Wellington Management Group LLP has sole voting power over 0 shares, shared voting power over 8,654,058 shares, sole dispositive power over 0 shares and shared dispositive power over 45,480,852 shares; Wellington Group Holdings LLP has sole voting power over 0 shares, shared voting power over 8,654,058 shares, sole dispositive power over 0 shares and shared dispositive power over 45,480,852 shares; Wellington Investment Advisors Holdings LLP has sole voting power over 0 shares, shared voting power over 8,654,058 shares, sole dispositive power over 0 shares and shared dispositive power over 45,480,852 shares; and Wellington Management Company LLP has sole voting power over 0 shares, shared voting power over 7,655,266 shares, sole dispositive power over 0 shares and shared dispositive power over 43,848,488 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, except for Vanguard Health Care Fund. |
| (2) | Based on Schedule 13G/A filed by BlackRock, Inc. with the SEC on January 30, 2018, BlackRock, Inc. has sole voting power over 36,615,713 shares, shared voting power over 0 shares, sole dispositive power over 40,564,099 shares and shared dispositive power over 0 shares. |
| (3) | Based on Schedule 13G/A filed by The Vanguard Group with the SEC on February 8, 2018, The Vanguard Group has sole voting power over 724,044 shares, shared voting power over 98,314 shares, sole dispositive power over 34,556,051 shares and shared dispositive power over 787,435 shares. |
| (4) | Based on Schedule 13G/A filed by Vanguard Specialized Funds – Vanguard Health Care Fund – 23-2439149 with the SEC on February 2, 2018, Vanguard Specialized Funds – Vanguard Health Care Fund – 23-2439149 has sole voting power over 29,844,042 shares, shared voting power over 0 shares, sole dispositive power over 0 shares and shared dispositive power over 0 shares. |
Section 16(a) Beneficial Ownership Reporting Compliance
| 32 |
|
2018 Proxy Statement |
Table of Contents
The names, ages, and positions of Mylan’s executive officers as of May 30, 2018, are as follows:
|
Heather Bresch
|
48
|
Chief Executive Officer (principal executive officer)
| ||
|
Rajiv Malik
|
57
|
President
| ||
|
Kenneth S. Parks
|
54
|
Chief Financial Officer (principal financial officer)
| ||
|
Daniel M. Gallagher
|
45
|
Chief Legal Officer
| ||
|
Anthony Mauro
|
45
|
Chief Commercial Officer
|
| 2018 Proxy Statement |
|
33 |
Table of Contents
Table of Contents
Table of Contents
Table of Contents
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Business Performance and How It Aligns to Compensation
Over the last decade, we have continued to transform from a mid-sized U.S. generics company to a highly differentiated global pharmaceutical company capable of delivering better health to customers around the world. Our experienced executive leadership team has led our workforce of approximately 35,000 in building a one-of-a-kind durable, differentiated platform that is capable of withstanding market volatility – something that sets Mylan apart in a rapidly changing industry.
2017 Highlights
|
Access |
|
• Filed 184 regulatory submissions demonstrating the depth of our global pipeline
• Gained approval on several key products, including OgivriTM (U.S.), Glatiramer Acetate (U.S. and Europe) and Generic Estrace® Cream (U.S.)
• Received FDA acceptance for review of our New Drug Application for Revefenacin and our Biologics License Application for Pegfilgrastim
• Introduced MyHep AllTM in India to combat hepatitis C
• Helped stem the tide of HIV by introducing the first Tenofovir Alafenamide-based, fixed-dose combination product to be offered to patients in developing countries
• Secured marketing authorization for Trastuzumab in 20 emerging markets
• Launched more than 40 injectable products worldwide, further advancing our strategy
|
|
Diversification |
|
• Generated $11.9 billion in total revenues with more than 50% from outside the U.S., further demonstrating that we are no longer dependent on any one geography or product
• Advanced our ONE Mylan commercial strategy across our geographies and channels to distinguish us as customers’ partner of choice
• Enhanced our portfolio through inorganic investments in key areas including OTC, complex and niche active pharmaceutical ingredients, and specialty dermatological products
|
|
Durability |
|
• Increased net cash provided by operating activities to $2.06 billion and adjusted free cash flow to $2.6 billion, reflecting the strength and durability of our portfolio
• Paid down debt of ~$1.36 billion
• Leveraged the integration of acquisitions and realized opportunities to optimize our operations
|
| 37 |
|
2018 Proxy Statement |
Table of Contents
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Our executive compensation program continues to demonstrate the strong alignment between Company performance – including driving access for patients, building diversification into our business model and enhancing the durability of our results – and how our leaders are rewarded. Company performance has remained strong over an extended period, including in 2017. This is perhaps most impressive given recent periods of turmoil and disruption in the industry and healthcare systems around the world (particularly in the U.S. over the past several years). We did not meet all of our challenging compensation metric targets in 2017 and, as a direct result, the resulting CEO and other executive compensation has been directly impacted.
| • | Compensation totals reported in the Summary Compensation Table have generally declined over the last three years; 7.5% for our CEO since 2016. |
| • | The annual incentive payouts, which are driven solely by Company performance, have declined for three straight years. |
| • | The recently completed long-term performance period for the PRSUs granted in 2015 achieved 75% of target performance and the value of the shares earned at vesting was 61% of target on the date of the grant. |
| 2018 Proxy Statement |
|
38 |
Table of Contents
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
The following summary describes the compensation for our CEO for the last two years. Please see page 53 for the compensation of all other NEOs.
|
Chief Executive Officer
|
|
|
2016 |
|
|
2017 |
| |||||
| Heather Bresch |
Base Salary: | $1,300,000 | $1,300,000 | |||||||
| Annual Incentive Payout: | $2,276,625 | $1,950,000 | ||||||||
|
Annual LTI Grant: |
|
$8,996,430 |
|
|
$9,100,045 |
| ||||
|
Change in Pension Value: |
|
$506,765 |
|
|
— |
| ||||
| All Other Compensation: | $697,300 | $394,352 | ||||||||
|
|
|
|
|
|||||||
| Summary Compensation Total: | $13,777,120 |
|
$12,744,397
|
| ||||||
2017 Compensation Decisions
| • | Base Salary: No change was made to Ms. Bresch’s base salary in 2017. It has remained the same since March 2015. |
| • | Annual Incentive: $1,950,000 calculated by applying the Company Performance Factor under the plan formula (100% for 2017) (see page 46). No change was made to Ms. Bresch’s target opportunity in 2017 and it has remained the same since 2015. |
| • | Long-Term Incentive: Ms. Bresch received a long-term incentive (“LTI”) grant in March 2017 valued at $9,100,045, of which 70% of the total is performance-based. The LTI award was delivered through PRSUs, RSUs and stock options. |
CEO Reported and Realizable Pay
The following graph demonstrates that the CEO’s total realizable pay over a three-year period is aligned with Mylan’s TSR relative to the Company’s 2017 peer group.
3-Year CEO Realizable Pay vs TSR*
| * | Realizable pay includes cumulative salary and annual incentives paid for the most recent three years for which peer group data was publicly available (2014-2016), plus the current value (as of December 31, 2017) of stock options (intrinsic value) and time-based RSUs granted during the most recent three years, plus the value (as of December 31, 2017) of performance-based LTI awards, other than stock options, earned during the most recent three years, plus the change in pension value and all other compensation for the most recent three years. TSR data derived from the S&P Capital IQ. The 12 peer companies in this chart reflect the current peer group, excluding Teva Pharmaceutical Industries Ltd., for which sufficient information was not publicly available. |
| 39 |
|
2018 Proxy Statement |
Table of Contents
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
| Compensation Practices Overview |
The Compensation Committee oversees the design and implementation of executive compensation programs aligned to industry best practices. It also serves to reinforce our unique, performance-driven culture by incentivizing the right behaviors and values expected of Mylan leaders and encouraging ownership of results. We balance competitive base pay and annual and long-term incentives to attract, retain, motivate and reward outstanding executive talent.
The summary below identifies certain features of our compensation program, which are described throughout the CD&A.
What We Do
|
✓ Maintain a significant portion of compensation aligned with shareholder interests and tied to ordinary share price or financial and operational business performance
|
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✓ Balance annual and long-term incentives, which are both aligned with performance and broader stakeholder interests
|
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✓ Employ balanced and different metrics for annual and long-term incentives
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✓ Base long-term incentives heavily on performance-based metrics
|
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✓ Use double-trigger vesting for annual LTI awards upon a change in control
|
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✓ Consider peer groups and market data in determining compensation
|
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✓ Retain an independent compensation consultant that reports directly to the Compensation Committee
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✓ Maintain strong ordinary share ownership guidelines, which our senior management significantly exceeds
|
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✓ Maintain a robust clawback policy
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✓ Conduct an annual compensation-related risk review to ensure that compensation is aligned with shareholder interests
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What We Don’t Do
|
û No
automatic accelerated vesting of stock options, RSUs and PRSUs upon satisfying retirement eligibility (55 years of age
|
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û No exercise of positive discretion in determining annual or LTI payouts
|
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û No re-pricing of stock options
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û No hedging or pledging of ordinary shares
|
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û No new 280G tax gross-ups
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û No Company matching contributions to the Restoration Plan for NEOs with Retirement Benefit Agreements
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| 2018 Proxy Statement |
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40 |
Table of Contents
Table of Contents
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
|
Peer Group
|
| Abbott Laboratories |
Novartis AG |
|||||
| Amgen Inc. |
Perrigo Company plc |
|||||
| Celgene Corp. |
Pfizer Inc. |
|||||
| Endo International plc |
Regeneron Pharmaceuticals, Inc. |
|||||
| Gilead Sciences, Inc. |
Sanofi |
|||||
| Mallinckrodt Public Limited Company |
Teva Pharmaceutical Industries Ltd. |
|||||
| Merck & Co., Inc.
|
||||||
| 2018 Proxy Statement |
|
42 |
Table of Contents
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Components of 2017 Executive Compensation
Our executive compensation program is designed to incentivize our NEOs to deliver exceptional long-term shareholder value and to fully align the interests of our executives with those of our shareholders and other stakeholders. We pay our NEOs through three primary components of compensation: base salary, an annual incentive and a long-term incentive. In addition, our NEOs receive certain benefits and perquisites. Our program is heavily weighted toward performance-based compensation and annual and long-term incentive outcomes are primarily dependent on the achievement of outstanding performance results.
| Pay Element |
Performance- |
Form | 2017 Metrics | 2017 Performance / Shareholder Alignment | ||||
|
Salary |
Fixed |
Cash |
N/A |
Attracts and retains executives through competitive base compensation
| ||||
|
Annual Incentive Compensation |
Variable |
Cash |
Adjusted EPS |
Reinforces the importance of earnings, which are expected to have a direct relationship to the price of Mylan’s ordinary shares
| ||||
|
Cash |
Global Regulatory Submissions |
Encourages the approval and commercialization of new products to yield new revenue sources that are essential for Mylan to remain competitive, and as such are fundamental to our short- and long-term sustainable growth strategy
| ||||||
|
Cash |
Adjusted Free Cash Flow |
Captures the potential impact of all types of business transactions on the generation of adjusted operating cash flow
| ||||||
|
Cash |
U.S. GAAP Revenue
|
Incentivizes management to focus on top-line growth, essential to Mylan’s ongoing value creation and consistent with our long-term growth strategy
| ||||||
|
Long-Term Incentive Compensation |
Variable |
Stock Options |
Stock Price |
Provides value only if the stock price increases from the grant date | ||||
|
RSUs
|
Stock Price |
Offers realized value dependent on continued employment and absolute stock performance over time
| ||||||
| PRSUs
|
ROIC
|
Focuses executives on earning an appropriate return on investment
| ||||||
|
PRSUs |
Relative TSR
|
Incentivizes executives to deliver superior shareholder returns as compared to competitors
|
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2018 Proxy Statement |
Table of Contents
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
|
|
||||||||
|
|
|||||||
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 pay equity considerations; competitive recruitment for outstanding talent; and the executive’s experience, tenure and leadership. The Compensation Committee also considers, among other factors, 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 2017, no NEOs received base salary increases except for Mr. Parks. The Compensation Committee increased Mr. Parks’ base salary by 14% effective as of September 1, 2017, to reflect his strong performance and expanded responsibility for the Global Integrated Services function. Ms. Bresch and Mr. Malik’s salaries have not increased since 2015, and Mr. Mauro’s salary has not increased since 2016.
|
NEO |
Position |
2016 |
2017 |
Change in
|
||||||||||
|
Heather Bresch
|
Chief Executive Officer
|
|
$1,300,000
|
|
|
$1,300,000
|
|
|
—
|
| ||||
|
Rajiv Malik
|
President
|
|
$1,000,000
|
|
|
$1,000,000
|
|
|
—
|
| ||||
|
Kenneth S. Parks
|
Chief Financial Officer
|
|
$600,000
|
|
|
$685,000
|
|
|
14%
|
| ||||
|
Daniel M. Gallagher
|
Chief Legal Officer
|
|
N/A
|
|
|
$800,000
|
|
|
—
|
| ||||
|
Anthony Mauro
|
Chief Commercial Officer
|
|
$700,000
|
|
|
$700,000
|
|
|
—
|
| ||||
| 2018 Proxy Statement |
|
44 |
Table of Contents
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Mylan’s annual incentive compensation consists of performance-based annual cash awards that are determined according to the achievement of objective operational and financial measures identified by the Board as critical to the successful execution of Mylan’s business strategy and tied to the continued creation of shareholder value.
For 2017, the Compensation Committee set challenging performance goals based on four key performance indicators of the current and future strength of our business. In addition, the metrics were selected specifically because they are related to the actions and leadership of our management team and measure their ability to extract the greatest value from our assets. U.S. GAAP Revenue was introduced as a new performance metric for the 2017 annual incentive program. This metric was added to further incentivize senior management to focus on top-line growth. The Compensation Committee chose to use adjusted metrics for the other two financial goals (adjusted EPS and adjusted free cash flow) because it believes that these adjusted metrics present the most consistent measure of evaluating Mylan’s financial performance, and the ongoing operations of the Company.
|
IMPORTANT FACTS ABOUT OUR 2017 ANNUAL INCENTIVE TARGETS
|
Challenging Targets Based on Past Performance Results and Future Expectations
Adjusted EPS
| • | Reinforces the importance of a performance measure of earnings, which are expected to have a direct relationship to the price of Mylan’s ordinary shares |
Global Regulatory Submissions
| • | Encourages the approval and commercialization of new products to yield new revenue sources that are essential for Mylan to remain competitive, and as such are fundamental to our short- and long-term growth strategy |
Adjusted Free Cash Flow
| • | Captures the potential impact of all types of business transactions on the generation of net cash provided by operating activities, adjusted for certain special items and capital expenditures, and strengthens our balance sheet |
U.S. GAAP Revenue
| • | Incentivizes management to focus on top-line growth, essential to Mylan’s ongoing value creation and consistent with our long-term growth strategy |
|
2017 |
||||||||||||||||
| Goal | Weighting | Threshold | Target | Maximum | ||||||||||||
| Adjusted EPS |
30% | $5.15 | $5.35 | $5.55 | ||||||||||||
| Global Regulatory Submissions |
25% | 120 | 135 | 150 | ||||||||||||
| Adjusted Free Cash Flow ($ in millions) |
25% | $2,000 | $2,200 | $2,400 | ||||||||||||
| U.S. GAAP Revenue ($ in millions) |
20% | $12,250 | $13,000 | $13,750 | ||||||||||||
| Payout Opportunity (as % of Target) |
50% | 100% | 200% | |||||||||||||
No annual incentives are paid with respect to a metric if threshold performance is not achieved. Furthermore, the Compensation Committee has committed to not using its discretion to upwardly adjust annual incentive award amounts generated by the performance metrics.
2017 NEO Target Award Opportunities (Including Maximum Opportunity) Subject to Performance
| NEO
|
Position
|
Base Salary
|
Target
|
Target Annual Incentive
|
Maximum
|
|||||||||||
|
Heather Bresch |
Chief Executive Officer |
$ |
1,300,000 |
|
150% |
$ |
1,950,000 |
|
|
$3,900,000 |
| |||||
|
Rajiv Malik |
President |
$ |
1,000,000 |
|
125% |
$ |
1,250,000 |
|
|
$2,500,000 |
| |||||
|
Kenneth S. Parks |
Chief Financial Officer |
|
$685,000 |
|
115% |
|
$787,750 |
|
|
$1,575,500 |
| |||||
|
Daniel M. Gallagher |
Chief Legal Officer |
|
$800,000 |
|
115% |
|
$920,000 |
|
|
$1,840,000 |
| |||||
|
Anthony Mauro |
Chief Commercial Officer |
|
$700,000 |
|
115% |
|
$805,000 |
|
|
$1,610,000 |
| |||||
The payout opportunities are one-half (50%) of the target amount for threshold performance and two times (200%) the target amount for maximum performance.
| 45 |
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2018 Proxy Statement |
Table of Contents
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
2017 Actual Annual Incentive Compensation
The Company achieved below-threshold performance with respect to the adjusted EPS metric, maximum performance on the global submissions metric, maximum performance on the adjusted free cash flow metric, and below-threshold performance on the U.S. GAAP revenue metric in 2017. As a result, the NEOs received payouts of annual incentive awards for 2017 at 100% of target.
| Goal*
|
Weighting
|
2017 Target
|
2017 Actual Results
|
Weighted Score
|
||||||||||||||||||||||
|
Adjusted EPS
|
30%
|
|
$5.35
|
|
|
$4.56
|
|
|
Below Threshold
|
|
|
0
|
%
| |||||||||||||
|
Global Regulatory Submissions
|
25%
|
|
135
|
|
|
184
|
|
|
Above Maximum
|
|
|
50
|
%
| |||||||||||||
|
Adjusted Free Cash Flow ($ in millions)
|
25%
|
|
$2,200
|
|
|
$2,627
|
|
|
Above Maximum
|
|
|
50
|
%
| |||||||||||||
|
U.S. GAAP Revenue ($ in millions)
|
20%
|
|
$13,000
|
|
|
$11,908
|
|
|
Below Threshold
|
|
|
0
|
%
| |||||||||||||
|
2017 Company Performance
|
|
100
|
%
| |||||||||||||||||||||||
* The adjusted EPS amount is derived from Mylan’s audited financial statements in the same manner as Mylan publicly reports adjusted EPS (which for 2017 is reconciled to the most directly comparable U.S. GAAP measure in Appendix B), but for annual incentive plan purposes is measured on a constant currency basis. Adjusted free cash flow is derived from Mylan’s audited financial statements in the same manner as Mylan publicly reports adjusted free cash flow (which for 2017 is reconciled to the most directly comparable U.S. GAAP measure in Appendix B).
| NEO
|
Position
|
Base Salary
|
Target
|
Company
|
Actual
|
|||||||||
|
Heather Bresch |
Chief Executive Officer |
|
$1,300,000 |
|
150% |
100% |
|
$1,950,000 |
| |||||
|
Rajiv Malik |
President |
|
$1,000,000 |
|
125% |
100% |
|
$1,250,000 |
| |||||
|
Kenneth S. Parks |
Chief Financial Officer |
|
$685,000 |
|
115% |
100% |
|
$787,500 |
| |||||
|
Daniel M. Gallagher |
Chief Legal Officer |
|
$800,000 |
|
115% |
100% |
|
$920,000 |
| |||||
|
Anthony Mauro |
Chief Commercial Officer |
|
$700,000 |
|
115% |
100% |
|
$805,000 |
| |||||
| 2018 Proxy Statement |
|
46 |
Table of Contents
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
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 measures associated with the growth and success of Mylan. The Compensation Committee has historically approved annual LTI award grants in the first quarter of the fiscal year, with the grant effective following the release of year-end audited financial results with exceptions for new hires (as was the case for Mr. Gallagher in 2017), promotions and other special awards, grants or circumstances.
Long-Term Incentive Structure. For 2017, LTI awards were granted to our NEOs in the form of PRSUs, stock options and RSUs in the proportions shown below.
| Vehicle
|
LTI Mix
|
Incentive Opportunity |
Vesting Schedule | |||||
|
PRSUs Performance
|
|
50%
|
|
PRSUs provide value |
PRSUs cliff-vest at the end of the three-year performance period based on the achievement of pre-determined performance criteria, generally provided that the NEO remains continuously employed by Mylan.
| |||
|
Stock Options Performance
|
|
20%
|
|
Stock options provide |
Stock options are granted with an exercise price equal to the closing price of Mylan’s ordinary shares on the date of grant. They vest in three equal annual installments, generally provided that the NEO remains continuously employed by Mylan.
| |||
|
RSUs Time |
|
30%
|
|
RSU value increases/ |
RSUs vest in three equal annual installments, generally provided that the NEO remains continuously employed by Mylan. | |||
This mix of awards provides recipients with a combination of incentive opportunities, aligns our executives with shareholders and ensures each vehicle has its own risk-reward profile with a unique benefit. The mix of the 2017 LTI grant was generally consistent with the mix of the 2016 grant. After a review of peer company practices, the Committee recognized that many peer companies provided a greater proportion of their long-term incentive mix in the form of RSUs. The Committee believes the 2017 long-term incentive mix provides a strong performance alignment, with 70% of the mix in PRSUs or stock options. The RSUs create ownership alignment with shareholders and provide a stable element of long-term compensation to encourage retention of executive talent.
2017- 2019 PRSU Performance Metrics
| Metric
|
Weighting
|
Threshold
|
Target
|
Maximum
|
||||||||||||
| ROIC*
|
|
50%
|
|
|
8%
|
|
|
10%
|
|
|
12%
|
| ||||
| Relative TSR** |
50% |
|
25th Percentile of Peer Group
|
|
|
50th Percentile of Peer Group
|
|
|
75th Percentile of Peer Group
|
| ||||||
|
Payout Opportunity (as % of Target) |
|
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 B. Starting in 2016, the definition of ROIC was updated to include intangible assets and goodwill in the denominator to more appropriately reflect the strategic acquisitions Mylan has made. |
| ** | Relative TSR is calculated by comparing the difference between Mylan’s 30-day trailing average closing ordinary share price at the day before the beginning of the performance period and day before the end of the performance period plus any dividends paid during the performance period against the same metric for each company in our peer group. |
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2018 Proxy Statement |
Table of Contents
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Each NEO’s 2017 LTI award had a targeted value at grant equal to a percentage of the NEO’s base salary. Values are determined based on a variety of factors, including peer group compensation, individual performance and tenure.
Below are the actual annual LTI award values approved by the Compensation Committee for our NEOs:
|
Performance-Based |
Time-Based | Total LTI Award
|
||||||||||||||||||
|
NEO
|
Position
|
PRSUs
|
Stock Options
|
RSUs
|
||||||||||||||||
|
Heather Bresch
|
Chief Executive Officer
|
|
$4,550,033
|
|
|
$1,820,011
|
|
|
$2,730,001
|
|
|
$9,100,045
|
| |||||||
|
Rajiv Malik
|
President
|
|
$2,800,031
|
|
|
$1,120,004
|
|
|
$1,680,018
|
|
|
$5,600,053
|
| |||||||
|
Kenneth S. Parks
|
Chief Financial Officer
|
|
$900,031
|
|
|
$360,012
|
|
|
$540,037
|
|
|
$1,800,080
|
| |||||||
|
Daniel M. Gallagher*
|
Chief Legal Officer
|
|
$1,600,006
|
|
|
$640,009
|
|
|
$960,027
|
|
|
$3,200,042
|
| |||||||
|
Anthony Mauro
|
Chief Commercial Officer
|
|
$1,250,040
|
|
|
$500,017
|
|
|
$750,033
|
|
|
$2,500,090
|
| |||||||
| * | Excludes Mr. Gallagher’s Sign-On RSUs and awards under the One-Time Special Performance-Based Five-Year Realizable Value Incentive Program. For details regarding these awards, see “Other Compensation Matters and Considerations – Employment Agreements.” |
PRSUs Granted in 2015
Although Mylan typically grants equity awards in the first quarter of the fiscal year, in 2015, PRSU grants to NEOs were postponed until the end of the year because of the EPD Transaction. Due to the timing of the 2015 PRSU grants, the awards were based on performance measured in 2016-2017 rather than the three-year performance period that is typically applied to PRSUs. The Company achieved higher than maximum performance with respect to the ROIC metric and below-threshold performance on the relative TSR metric. As a result, the NEOs received a payout for the PRSUs at 75% of the target number of shares.
| 2016-2017 Goal
|
Weighting
|
2-Year Target
|
Actual Result
|
% of Target
|
Weighted
|
|||||||||||||||
|
ROIC* |
|
50% |
|
|
38% |
|
|
67% |
|
|
Above
|
|
|
75% |
| |||||
|
Relative TSR of Peer Group |
|
50% |
|
|
50th percentile of
|
|
|
22nd percentile of
|
|
|
Below
|
|
|
0% |
| |||||
|
Total Payout (as % of Target) |
75% | |||||||||||||||||||
| * | ROIC for the PRSUs granted in 2015 is calculated from Mylan’s audited financial statements in the same manner as set forth in the reconciliations provided in Appendix B. |
When applying the Mylan closing ordinary share price at vesting of $40.97, the NEOs received approximately 61% of the targeted grant date value of the award.
| NEO
|
Position
|
Target
|
Grant Date
|
Company
|
Actual Earned (#)
|
Actual
|
||||||||||||||||
|
Heather Bresch |
Chief Executive Officer |
|
76,984 |
|
|
$3,900,009 |
|
|
75% |
|
|
57,738 |
|
|
$2,365,526 |
| ||||||
|
Rajiv Malik |
President |
|
47,375 |
|
|
$2,400,018 |
|
|
75% |
|
|
35,532 |
|
|
$1,455,746 |
| ||||||
|
Kenneth S. Parks* |
Chief Financial Officer |
|
N/A |
|
|
N/A |
|
|
N/A |
|
|
N/A |
|
|
N/A |
| ||||||
|
Daniel M. Gallagher* |
Chief Legal Officer |
|
N/A |
|
|
N/A |
|
|
N/A |
|
|
N/A |
|
|
N/A |
| ||||||
|
Anthony Mauro |
Chief Commercial Officer |
|
18,506 |
|
|
$937,514 |
|
|
75% |
|
|
13,880 |
|
|
$568,664 |
| ||||||
| * | Neither Mr. Parks nor Mr. Gallagher received the 2016-2017 PRSUs as they were not employed by Mylan when the PRSU award was granted in November 2015. |
| 2018 Proxy Statement |
|
48 |
Table of Contents
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
| 49 |
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2018 Proxy Statement |
Table of Contents
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Other Compensation Matters and Considerations
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)
|
|||
|
CEO
|
|
6x
|
| |
|
President
|
|
4x
|
| |
|
Other NEOs
|
|
3x
|
| |
| 2018 Proxy Statement |
|
50 |
Table of Contents
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
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2018 Proxy Statement |
Table of Contents
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Deductibility Cap on Executive Compensation
Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), as in effect for 2017, restricts the deductibility for federal income tax purposes of the compensation paid to the CEO and each of the other NEOs who was an executive officer at the end of the applicable fiscal year (other than our Chief Financial Officer) for such fiscal year to the extent that such compensation for such executive exceeds $1 million and does not qualify as “qualified performance-based compensation” as defined under Section 162(m) of the Code. The Compensation Committee historically considered available opportunities to deduct compensation paid to NEOs for U.S. federal income tax purposes. The Tax Cuts and Jobs Act, which was enacted on December 22, 2017, eliminated the exception for “performance-based” compensation and expanded the number of executives to which the 162(m) limit may apply. As a result, except to the extent provided in limited transition relief, compensation over $1 million paid to any NEO will no longer be deductible under Section 162(m) of the Code. The Board and the Compensation Committee reserve the right to provide compensation to our executives that is not deductible, including but not limited to when necessary to comply with contractual commitments, or to maintain the flexibility needed to attract talent, promote retention or recognize and reward desired performance.
We have reviewed and discussed the CD&A with management. Based on such review and discussions, we recommended to the Board that the CD&A be included in this Proxy Statement.
Respectfully submitted,
Wendy Cameron
JoEllen Lyons Dillon
Melina Higgins
Compensation Committee Interlocks and Insider Participation
None of the members of the Compensation Committee during 2017 (Ms. Cameron, Ms. Dillon, Mr. Dimick, Ms. Higgins and Mr. Parrish) was an officer or employee of the Company, was formerly an officer of the Company, or had any relationship requiring disclosure by the Company under Item 404 of Regulation S-K. During 2017, no executive officer of the Company served on the compensation committee or board of another entity, one of whose executive officers served on the Compensation Committee or the Board.
| 2018 Proxy Statement |
|
52 |
Table of Contents
EXECUTIVE COMPENSATION
Executive Compensation Tables
2017 Summary Compensation Table
The following summary compensation table sets forth the cash and non-cash compensation paid or granted to or earned by the NEOs for 2017, 2016 and 2015.
| Name and Principal Position
|
Fiscal
|
Salary
|
Bonus
|
Stock
|
Option
|
Non-Equity ($)(5)
|
Changes in Pension Deferred Compensation Earnings
|
All Other
|
Total
|
|||||||||||||||||||||||||||
|
Heather Bresch Chief Executive Officer |
|
2017 |
|
|
1,300,000 |
|
|
— |
|
|
7,280,034 |
|
|
1,820,011 |
|
|
1,950,000 |
|
|
— |
|
|
394,352 |
|
|
12,744,397 |
| |||||||||
| 2016 | 1,300,000 | — | 7,436,421 | 1,560,009 | 2,276,625 | 506,765 | 697,300 | 13,777,120 | ||||||||||||||||||||||||||||
|
|
2015
|
|
|
1,330,769
|
|
|
—
|
|
|
5,200,046
|
|
|
1,300,007
|
|
|
3,900,000
|
|
|
768,216
|
|
|
6,432,030
|
|
|
18,931,068
|
| ||||||||||
|
Kenneth S. Parks Chief Financial Officer |
|
2017 |
|
|
628,115 |
|
|
— |
|
|
1,440,068 |
|
|
360,012 |
|
|
787,750 |
|
|
— |
|
|
130,072 |
|
|
3,346,017 |
| |||||||||
|
|
2016
|
|
|
346,154
|
|
|
375,000
|
|
|
2,766,841
|
|
|
300,000
|
|
|
700,500
|
|
|
—
|
|
|
18,498
|
|
|
4,506,993
|
| ||||||||||
|
Rajiv Malik President |
|
2017 |
|
|
1,000,000 |
|
|
— |
|
|
4,480,049 |
|
|
1,120,004 |
|
|
1,250,000 |
|
|
— |
|
|
892,077 |
|
|
8,742,130 |
| |||||||||
| 2016 | 1,000,000 | — | 4,319,120 | 900,014 | 1,459,375 | 616,520 | 391,373 | 8,686,402 | ||||||||||||||||||||||||||||
|
|
2015
|
|
|
1,019,231
|
|
|
—
|
|
|
3,200,041
|
|
|
800,017
|
|
|
2,500,000
|
|
|
970,676
|
|
|
11,411,770
|
|
|
19,901,735
|
| ||||||||||
|
Daniel M. Gallagher Chief Legal Officer
|
|
2017 |
|
|
600,000 |
|
|
350,000 |
|
|
4,756,220 |
|
|
640,009 |
|
|
920,000 |
|
|
— |
|
|
62,958 |
|
|
7,329,187 |
| |||||||||
|
Anthony Mauro Chief Commercial Officer |
|
2017 |
|
|
700,000 |
|
|
— |
|
|
2,000,073 |
|
|
500,017 |
|
|
805,000 |
|
|
— |
|
|
191,921 |
|
|
4,197,011 |
| |||||||||
| 2016 | 700,000 | — | 2,213,881 | 490,013 | 939,838 | — | 259,102 | 4,602,834 | ||||||||||||||||||||||||||||
|
|
2015
|
|
|
634,615
|
|
|
—
|
|
|
1,250,036
|
|
|
312,517
|
|
|
1,437,500
|
|
|
—
|
|
|
1,220,083
|
|
|
4,854,751
|
| ||||||||||
| (1) | Represents the value of the base salary actually paid to the NEO in 2017, 2016 or 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 in 26 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. |
| (2) | For Mr. Parks, the amount shown for 2016 represents the value of his sign-on bonus, which is subject to full or partial repayment in the event Mr. Parks leaves Mylan prior to the third anniversary of his joining Mylan. For Mr. Gallagher, the amount shown for 2017 represents the value of his sign-on bonus, which was subject to full or partial repayment in the event Mr. Gallagher left Mylan prior to the first anniversary of his joining Mylan (except in certain circumstances). |
| (3) | Represents the grant date fair value of the stock awards granted to the NEO in 2017, 2016 or 2015, as applicable. The grant date fair value of PRSUs for 2017 is based on the target value and is as follows: Ms. Bresch ($4,550,033), Mr. Parks ($900,031), Mr. Malik ($2,800,031), Mr. Gallagher ($1,600,006) and Mr. Mauro ($1,250,040). If the maximum achievement of performance goals had been assumed, the grant date fair value of the PRSUs for 2017, would have been as follows: Ms. Bresch ($6,825,072), Mr. Parks ($1,350,069), Mr. Malik ($4,200,068), Mr. Gallagher ($2,400,028), and Mr. Mauro ($1,875,060). For Mr. Parks, the amount shown for 2016 also includes the grant date fair value of PRSUs granted to him under the One-Time Special Five-Year Performance-Based Realizable Value Incentive Program, which was $1,566,811, which assumes achievement of performance targets at maximum level. For Mr. Gallagher, the amount shown for 2017 also includes the grant date fair value of PRSUs granted to him under the One-Time Special Five-Year Performance-Based Realizable Value Incentive Program, which was $1,546,152, which assumes the achievement of performance targets at maximum level. For information regarding assumptions used in determining the expense of such awards, please refer to Note 11 to the Company’s Consolidated Financial Statements contained in the Form 10-K for the year ended December 31, 2017. |
| (4) | Represents the grant date fair value of the option awards granted to the NEO in 2017, 2016 or 2015, as applicable. For information regarding assumptions used in determining the expense of such awards, please refer to Note 11 to the Company’s Consolidated Financial Statements contained in the Form 10-K for the year ended December 31, 2017. |
| (5) | Represents amounts paid under the Company’s non-equity incentive compensation plan. For a discussion of this plan, see the CD&A set forth above. |
| (6) | Represents the aggregate change in present value of the applicable NEO’s accumulated benefit under his or her respective RBA. In computing these amounts, we used the same assumptions that were used to determine the expense amounts recognized in our 2017 financial statements. In 2017, the impact of an increase in the applicable discount rates led to a decrease in the present value of accumulated benefits of approximately $198,000 for Ms. Bresch and approximately $110,000 for Mr. Malik. For further information concerning the RBAs, see the Pension Benefits for 2017 Table set forth below and the section below entitled “Retirement Benefit Agreements,” beginning on page 59 of this Proxy Statement. |
| 53 |
|
2018 Proxy Statement |
Table of Contents
EXECUTIVE COMPENSATION
Executive Compensation Tables
| (7) | Amounts shown in this column are detailed in the following chart: |
| Fiscal
|
Use of
|
Personal ($)(b)
|
Lodging
|
Expatriate
|
401(k) and
|
Restoration
|
Transaction-
|
Other
|
||||||||||||||||||||||||||||
|
Heather Bresch |
|
2017 |
|
|
20,736 |
|
|
158,038 |
|
|
— |
|
|
— |
|
|
24,420 |
|
|
165,331 |
|
|
— |
|
|
25,827 |
| |||||||||
| 2016 | 20,507 | 184,020 | — | — | 29,419 | 302,790 | — | 160,564 | ||||||||||||||||||||||||||||
|
|
2015
|
|
|
19,200
|
|
|
310,312
|
|
|
—
|
|
|
—
|
|
|
28,792
|
|
|
218,454
|
|
|
5,828,995
|
|
|
26,277
|
| ||||||||||
|
Kenneth S. Parks |
|
2017 |
|
|
19,766 |
|
|
10,440 |
|
|
— |
|
|
— |
|
|
18,115 |
|
|
73,440 |
|
|
— |
|
|
8,311 |
| |||||||||
|
|
2016
|
|
|
10,944
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,908
|
|
|
—
|
|
|
—
|
|
|
646
|
| ||||||||||
|
Rajiv Malik |
|
2017 |
|
|
30,170 |
|
|
28,896 |
|
|
— |
|
|
691,967 |
|
|
24,300 |
|
|
109,469 |
|
|
— |
|
|
7,275 |
| |||||||||
| 2016 | 30,725 | 80,295 | — | 247,421 | 10,600 | — | — | 22,332 | ||||||||||||||||||||||||||||
|
|
2015
|
|
|
23,392
|
|
|
29,557
|
|
|
50,000
|
|
|
6,333,891
|
|
|
—
|
|
|
—
|
|
|
4,859,071
|
|
|
115,859
|
| ||||||||||
|
Daniel M. Gallagher
|
|
2017
|
|
|
14,400
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18,039
|
|
|
29,700
|
|
|
—
|
|
|
819
|
| |||||||||
|
Anthony Mauro |
|
2017 |
|
|
19,200 |
|
|
2,595 |
|
|
— |
|
|
— |
|
|
24,238 |
|
|
123,285 |
|
|
— |
|
|
22,603 |
| |||||||||
| 2016 | 19,200 | 608 | — | — | 28,335 | 170,589 | — | 40,370 | ||||||||||||||||||||||||||||
|
|
2015
|
|
|
19,200
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28,800
|
|
|
131,918
|
|
|
1,020,722
|
|
|
19,443
|
| ||||||||||
| (a) | In the case of Ms. Bresch and Messrs. Parks, Gallagher and Mauro, these numbers represent a vehicle allowance and ancillary expenses associated with such vehicle. In the case of Mr. Malik, this number represents the cost of a vehicle (based on lease value), insurance and 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) | Beginning in 2016, Mr. Malik was no longer eligible to receive a housing allowance or home-leave benefit, both of which he received in prior years. |
| (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 to pay 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 generally 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. Beginning in 2016, Mr. Malik no longer receives a tax equalization benefit in respect of his LTI awards. Amounts shown for 2017, 2016 and 2015 for Mr. Malik are net of Mylan’s estimated tax refunds for each year. Estimated refunds were $15,685 for 2017, and approximately $0.2 million for 2016 and approximately $1.1 million for 2015. |
| (e) | For 2017, amounts disclosed included, for Ms. Bresch and Messrs. Parks, Malik, Gallagher and Mauro, a matching contribution of $10,920, $4,615, $10,800, $4,539 and $10,738, respectively, and a profit sharing contribution received in March 2018 in respect of fiscal year 2017 equal to $13,500 for each NEO. In March 2017, the Company made a profit sharing contribution to each NEO, other than Mr. Gallagher, in respect of fiscal year 2016 equal to $13,250. For 2016, amounts disclosed included, for Ms. Bresch and Messrs. Parks, Malik and Mauro, a matching contribution of $10,869, $6,908, $10,600 and $9,785, respectively, and, for Ms. Bresch and Mr. Mauro, a profit sharing contribution from the Company of $18,550. For 2015, amounts disclosed for Ms. Bresch included a matching contribution of $10,592, and a profit sharing contribution from the Company of $18,200. For 2015, amounts disclosed for Mr. Mauro included a matching contribution of $10,600, and a profit sharing contribution from the Company of $18,200. Mr. Malik became eligible to participate in Mylan’s U.S. retirement plans in 2016. |
| (f) | For 2017, amounts disclosed included, for Messrs. Parks, Gallagher and Mauro, a matching contribution under the Restoration Plan of $20,509, $13,200 and $54,793, respectively, and a profit sharing contribution under the Restoration Plan received in March 2018 in respect of fiscal year 2017 for each of Ms. Bresch and Messrs. Parks, Malik, Gallagher and Mauro equal to $165,331, $52,931, $109,469, $16,500 and $68,492, respectively. In March 2017, the Company made a profit sharing contribution to each of Ms. Bresch and Messrs. Parks, Malik and Mauro under the Restoration Plan in respect of fiscal year 2016 equal to $246,750, $4,058, $161,750 and $93,740, respectively. Ms. Bresch is no longer eligible to receive a matching contribution under the Restoration Plan. Although he became eligible to participate in Mylan’s U.S. retirement plans in 2016, Mr. Malik is not eligible to receive a matching contribution under the Restoration Plan. See page 59 of this Proxy Statement for further information regarding Restoration Plan contributions. |
| (g) | Represents the one-time tax reimbursement payment with respect to the excise tax under Section 4985 of the Code that was imposed in connection with the EPD Transaction on the value of certain LTI awards held by the directors and NEOs. Such payment ensured that, on a net after-tax basis, the NEO would be in the same position as if such excise tax had not been imposed. See the Proxy Statement for Mylan’s 2016 Annual Meeting of Shareholders for further discussion of the excise tax imposed in connection with the EPD Transaction and this one-time payment. |
| (h) | Represents events for all NEOs other than Mr. Gallagher; life insurance retention plan premium for Ms. Bresch and Mr. Mauro; long-term disability premiums; a health insurance premium for Mr. Malik; for 2016 and 2015, only, contributions to the Provident Fund, a statutory plan in India, for Mr. Malik; for 2016 only, matching of certain charitable contributions for Ms. Bresch and Messrs. Malik and Mauro; for 2016 only, certain personal security services for Ms. Bresch; and tax preparation services related to U.K. tax returns for all NEOs other than Mr. Gallagher. |
| 2018 Proxy Statement |
|
54 |
Table of Contents
EXECUTIVE COMPENSATION
Executive Compensation Tables
Grants of Plan-Based Awards for 2017
The following table summarizes grants of plan-based awards made to each NEO during 2017.
|
Estimated Future Payments Under Non-Equity Incentive Plan Awards(1)
|
Estimated Future Payments Under Equity Incentive Plan Awards(2)
|
|||||||||||||||||||||||||
| Name
|
Grant Date
|
Approval
|
Threshold
|
Target ($)
|
Maximum
|
Threshold
|
Target
|
Maximum
|
All Other (#)(3)
|
All Other
|
Exercise
|
Grant Date
| ||||||||||||||
|
Heather Bresch |
975,000 |
1,950,000 |
3,900,000 |
— |
— |
— |
— |
— |
— |
— | ||||||||||||||||
| 3/3/2017 | 2/22/2017 | — | — | — | 50,355 | 100,709 | 151,064 | — | — | — | 4,550,033 | |||||||||||||||
| 3/3/2017 | 2/22/2017 | — | — | — | — | — | — | 60,425 | — | — | 2,730,001 | |||||||||||||||
| 3/3/2017
|
2/22/2017 | —
|
—
|
—
|
—
|
—
|
—
|
—
|
106,558
|
45.18
|
1,820,011
| |||||||||||||||
|
Kenneth S. Parks |
393,875 | 787,750 | 1,575,500 | — | — | — | — | — | — | — | ||||||||||||||||
| 3/3/2017 | 2/22/2017 | — | — | — | 9,961 | 19,921 | 29,882 | — | — | — | 900,031 | |||||||||||||||
| 3/3/2017 | 2/22/2017 | — | — | — | — | — | — | 11,953 | — | — | 540,037 | |||||||||||||||
| 3/3/2017
|
2/22/2017 | —
|
—
|
—
|
—
|
—
|
—
|
—
|
21,078
|
45.18
|
360,012
| |||||||||||||||
|
Rajiv Malik |
625,000 |
1,250,000 |
2,500,000 |
— |
— |
— |
— |
— |
— |
— | ||||||||||||||||
| 3/3/2017 | 2/22/2017 | — | — | — | 30,988 | 61,975 | 92,963 | — | — | — | 2,800,031 | |||||||||||||||
| 3/3/2017 | 2/22/2017 | — | — | — | — | — | — | 37,185 | — | — | 1,680,018 | |||||||||||||||
| 3/3/2017
|
2/22/2017 | —
|
—
|
—
|
—
|
—
|
—
|
—
|
65,574
|
45.18
|
1,120,004
| |||||||||||||||
|
Daniel M. Gallagher |
460,000 | 920,000 | 1,840,000 | — | — | — | — | — | — | — | ||||||||||||||||
| 5/2/2017 | 5/2/2017 | — | — | — | 20,253 | 40,507 | — | — | — | — | 1,546,152 | |||||||||||||||
| 5/12/2017 | 5/2/2017 | — | — | — | 20,545 | 41,089 | 61,634 | — | — | — | 1,600,006 | |||||||||||||||
| 5/2/2017 | 5/2/2017 | — | — | — | — | — | — | 17,030 | — | — | 650,035 | |||||||||||||||
| 5/12/2017 | 5/2/2017 | — | — | — | — | — | — | 24,654 | — | — | 960,027 | |||||||||||||||
| 5/12/2017
|
5/2/2017 | —
|
—
|
—
|
—
|
49,247
|
38.94
|
640,009
| ||||||||||||||||||
|
Anthony Mauro |
402,500 | 805,000 | 1,610,000 | — | — | — | — | — | — | — | ||||||||||||||||
| 3/3/2017 | 2/22/2017 | — | — | — | 13,834 | 27,668 | 41,502 | — | — | — | 1,250,040 | |||||||||||||||
| 3/3/2017 | 2/22/2017 | — | — | — | — | — | — | 16,601 | — | — | 750,033 | |||||||||||||||
| 3/3/2017
|
2/22/2017
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
29,275
|
45.18
|
500,017
| |||||||||||||||
| (1) | The performance goals under the annual incentive compensation program applicable to the NEOs during 2017 are described above in the CD&A. |
| (2) | Consists of PRSUs awarded under the Amended 2003 Plan. The vesting terms applicable to these awards are described above in the CD&A and below following the Outstanding Equity Awards at the End of 2017 table. |
| (3) | Consists 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 2017 table. |
| (4) | Represents the grant of 10-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 2017 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, 2017. |
| 55 |
|
2018 Proxy Statement |
Table of Contents
EXECUTIVE COMPENSATION
Executive Compensation Tables
Outstanding Equity Awards at the End of 2017
The following table sets forth information concerning all of the outstanding LTI awards held by each NEO as of December 31, 2017.
|
Option Awards
|
Stock Awards
|
|||||||||||||||||||||||||||||||||
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable |
Number of Securities Underlying Unexercised Options (#) Unexercisable(1) |
Option ($) |
Option Expiration Date |
Number of Shares or Units of Stock That Have Not Vested (#)(2) |
Market Value of Shares or Units of Stock That Have Not Vested ($)(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 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
| |||||||||||
|
|
65,502 |
|
|
— |
|
|
55.84 |
|
|
3/5/2024 |
|
|
— |
|
|
— |
|
|
— |
|
||||||||||||||
|
|
45,106 |
|
|
22,553 |
|
|
50.66 |
|
|
11/17/2025 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
| |||||||||||
|
|
28,986 |
|
|
57,971 |
|
|
46.27 |
|
|
2/17/2026 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
| |||||||||||
|
|
— |
|
|
106,558 |
|
|
45.18 |
|
|
3/3/2027 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
| |||||||||||
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
378,071 |
(4) |
|
15,996,184 |
| |||||||||||
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
8,554 |
|
|
361,920 |
|
|
76,984 |
(5) |
|
3,257,193 |
| |||||||||||
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
48,333 |
|
|
2,044,969 |
|
|
101,146 |
(5) |
|
4,279,487 |
| |||||||||||
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
60,425 |
|
|
2,556,582 |
|
|
100,709 |
(5) |
|
4,260,998 |
| |||||||||||
|
Kenneth S. Parks |
|
5,517 |
|
|
11,032 |
|
|
46.52 |
|
|
6/6/2026 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
| ||||||||||
|
|
— |
|
|
21,078 |
|
|
45.18 |
|
|
3/3/2027 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
| |||||||||||
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
4,299 |
|
|
181,891 |
|
|
19,347 |
(5) |
|
818,572 |
| |||||||||||
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
40,507 |
(4) |
|
1,713,851 |
| |||||||||||
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
11,953 |
|
|
505,731 |
|
|
19,921 |
(5) |
|
842,858 |
| |||||||||||
|
Rajiv Malik |
|
34,389 |
|
|
— |
|
|
55.84 |
|
|
3/5/2024 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
| ||||||||||
|
|
27,758 |
|
|
13,879 |
|
|
50.66 |
|
|
11/17/2025 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
| |||||||||||
|
|
16,723 |
|
|
33,445 |
|
|
46.27 |
|
|
2/17/2026 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
| |||||||||||
|
|
— |
|
|
65,574 |
|
|
45.18 |
|
|
3/3/2027 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
| |||||||||||
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
324,061 |
(4) |
|
13,711,021 |
| |||||||||||
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
5,264 |
|
|
222,720 |
|
|
47,375 |
(5) |
|
2,004,436 |
| |||||||||||
|
|
28,508 |
|
|
1,206,173 |
|
|
58,354 |
(5) |
|
2,468,958 |
| |||||||||||||||||||||||
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
37,185 |
|
|
1,573,297 |
|
|
61,975 |
(5) |
|
2,622,162 |
| |||||||||||
|
Daniel M. Gallagher |
|
— |
|
|
49,247 |
|
|
38.94 |
|
|
5/12/2027 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
| ||||||||||
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
40,507 |
(4) |
|
1,713,851 |
| |||||||||||
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
24,654 |
|
|
1,043,111 |
|
|
41,089 |
(5) |
|
1,738,476 |
| |||||||||||
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
17,030 |
|
|
720,539 |
|
|
— |
|
|
— |
| |||||||||||
|
Anthony Mauro |
|
4,757 |
|
|
— |
|
|
22.66 |
|
|
3/2/2021 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
| ||||||||||
|
|
4,266 |
|
|
— |
|
|
23.44 |
|
|
2/22/2022 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
| |||||||||||
|
|
3,236 |
|
|
— |
|
|
30.90 |
|
|
3/6/2023 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
| |||||||||||
|
|
12,009 |
|
|
— |
|
|
55.84 |
|
|
3/5/2024 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
| |||||||||||
|
|
10,844 |
|
|
5,421 |
|
|
50.66 |
|
|
11/17/2025 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
| |||||||||||
|
|
9,105 |
|
|
18,209 |
|
|
46.27 |
|
|
2/17/2026 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
| |||||||||||
|
|
— |
|
|
29,275 |
|
|
45.18 |
|
|
3/3/2027 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
| |||||||||||
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
67,512 |
(4) |
|
2,856,433 |
| |||||||||||
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
2,056 |
|
|
86,989 |
|
|
18,506 |
(5) |
|
782,989 |
| |||||||||||
|
|
12,545 |
|
|
530,779 |
|
|
31,771 |
(5) |
|
1,344,231 |
| |||||||||||||||||||||||
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
16,601 |
|
|
702,388 |
|
|
27,668 |
(5) |
|
1,170,633 |
| |||||||||||
| (1) | Vesting dates applicable to unvested stock options are as follows, in each case generally subject to continued employment with Mylan: on March 4, 2018, the unvested options at the $50.66 exercise price for Ms. Bresch and Messrs. Malik and Mauro vested; on February 17, 2018, one-half of the unvested options at the $46.27 exercise price for Ms. Bresch and Messrs. Malik and Mauro vested and one half of the |
| 2018 Proxy Statement |
|
56 |
Table of Contents
EXECUTIVE COMPENSATION
Executive Compensation Tables
| unvested options at the $46.52 exercise price for Mr. Parks vested, and, in each case, the remaining one-half will vest on February 17, 2019; the unvested options at the $45.18 exercise price for Ms. Bresch and Messrs. Malik, Mauro and Parks and at the $38.94 exercise price for Mr. Gallagher will vest in three equal annual installments beginning on March 3, 2018. 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; (iii) in the case of death, including within two years following termination because of disability, or, in the case of options granted prior to January 1, 2017, retirement, 100% of options become vested and vested options will remain exercisable for the remainder of the original term; and (iv) in the case of an involuntary termination without cause or a voluntary resignation for good reason that occurs within two years following a change in control, 100% of options become vested (double-trigger awards). In the case of options granted in 2013, 2014, 2015, 2016 or 2017 to Ms. Bresch, and in 2014, 2015, 2016 or 2017 to Mr. Malik, and, solely with respect to options granted to Mr. Gallagher in 2017, following termination of employment without “cause” or resignation for “good reason” as defined in the applicable employment agreement, 100% of options become vested and vested options will remain exercisable for one year following termination. |
| (2) | On March 4, 2018, 8,554 RSUs for Ms. Bresch, 5,264 RSUs for Mr. Malik and 2,056 RSUs for Mr. Mauro vested. Of the 48,333 RSUs for Ms. Bresch, 11,239 vested on February 17, 2018 and 37,094 will vest on February 17, 2019, of the 28,508 RSUs for Mr. Malik, 6,484 vested on February 17, 2018 and 22,024 will vest on February 17, 2019, and of the 12,545 RSUs for Mr. Mauro, 3,530 vested on February 17, 2018 and 9,015 will vest on February 17, 2019. 60,425 RSUs for Ms. Bresch, 11,953 RSUs for Mr. Parks, 37,185 RSUs for Mr. Malik, 24,654 RSUs for Mr. Gallagher and 16,601 RSUs for Mr. Mauro vest in three equal annual installments beginning on March 3, 2018. 17,030 RSUs for Mr. Gallagher, which represent the Gallagher Sign-On RSUs, vest 50% on April 1, 2019 and 50% on April 1, 2020. In accordance with their terms, all of these awards would vest upon an involuntary termination without cause or a voluntary resignation for good reason that occurs within two years following a change in control (double-trigger awards) or upon the executive’s death or disability. In the case of awards granted to Ms. Bresch and Messrs. Malik and Gallagher (for Mr. Gallagher, solely with respect to RSUs granted in 2017), the awards would also vest upon the executive’s 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, 2017, $42.31. |
| (4) | These awards consist of restricted ordinary shares under the One-Time Special Five-Year Performance-Based Realizable Value Incentive Program. The restricted ordinary shares remain subject to forfeiture and additional vesting conditions, including achievement of adjusted EPS of $6.00 for full vesting and continued service through December 31, 2018, or, in the case of Mr. Gallagher only, April 1, 2020, and the other terms and conditions of the program. The One-Time Special Five-Year Performance-Based Realizable Value Incentive Program is described in detail in the Proxy Statement for Mylan Inc.’s 2014 Annual Meeting of Shareholders. In accordance with their terms, the restricted ordinary shares would vest upon a change in control. In the case of awards granted to Ms. Bresch and Mr. Malik, the restricted ordinary shares would also vest upon the executive’s termination due to death or disability or without “cause” or resignation for “good reason” as defined in the applicable employment agreement, subject to the achievement of the applicable performance goals. |
| (5) | The vesting of these PRSUs is subject to the attainment of performance goals. On March 4, 2018, Ms. Bresch vested in 57,738 ordinary shares or 75% of the target 76,984 PRSUs, Mr. Malik vested in 35,532 ordinary shares or 75% of the target 47,375 PRSUs and Mr. Mauro vested in 13,680 ordinary shares or 75% of the target 18,506 PRSUs. On February 17, 2019, Ms. Bresch is expected to vest in PRSUs relating to 101,146 ordinary shares, Mr. Parks is expected to vest in PRSUs relating to 19,347 ordinary shares, Mr. Malik is expected to vest in PRSUs relating to 58,354 ordinary shares and Mr. Mauro is expected to vest in PRSUs relating to 31,771 ordinary shares. On March 3, 2020, Ms. Bresch is expected to vest in PRSUs relating to 100,709 ordinary shares, Mr. Parks is expected to vest in PRSUs relating to 19,921 ordinary shares, Mr. Malik is expected to vest in PRSUs relating to 61,975 ordinary shares, Mr. Gallagher is expected to vest in PRSUs relating to 41,089 ordinary shares and Mr. Mauro is expected to vest in PRSUs relating to 27,668 ordinary shares. The PRSUs are expected to vest upon the earliest to occur of (i) February 17, 2019 or March 3, 2020, as applicable, 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 a 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 Gallagher (for Mr. Gallagher, solely with respect to PRSUs granted in 2017), the executive’s termination without “cause,” or resignation for “good reason” as defined in the applicable employment agreement. Any outstanding ordinary shares subject to the award that remain unvested as of February 17, 2019, or March 3, 2020, as applicable, will be forfeited. |
| 57 |
|
2018 Proxy Statement |
Table of Contents
EXECUTIVE COMPENSATION
Executive Compensation Tables
Option Exercises and Stock Vested for 2017
The option awards and ordinary share awards reflected in the table below were exercised or became vested for the NEOs during 2017.
|
Option Awards
|
Stock Awards
|
|||||||||||||||||||
| Name
|
Number of
Shares
|
Value Realized
|
Number of
Shares
|
Value Realized
|
||||||||||||||||
|
Heather Bresch
|
|
—
|
|
|
—
|
|
|
19,793
|
|
|
859,070
|
| ||||||||
|
Kenneth S. Parks
|
|
—
|
|
|
—
|
|
|
2,150
|
|
|
90,408
|
| ||||||||
|
Rajiv Malik
|
|
—
|
|
|
—
|
|
|
11,748
|
|
|
510,480
|
| ||||||||
|
Daniel M. Gallagher
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
| ||||||||
|
Anthony Mauro
|
|
—
|
|
|
—
|
|
|
5,587
|
|
|
241,369
|
| ||||||||
Pension Benefits for 2017
The following table summarizes the benefits accrued by Ms. Bresch and Mr. Malik as of December 31, 2017, under the RBA (or Executive Plan, in the case of Mr. Malik) in effect during 2017. The Company does not sponsor any other defined benefit pension programs covering the NEOs.
| Name
|
Plan Name(1)
|
Number of Years (#)
|
Present ($)(2)
|
Payments ($)
|
||||||||||
|
Heather Bresch
|
Retirement Benefit Agreement
|
|
13
|
|
|
6,735,866
|
|
|
—
|
| ||||
|
Kenneth S. Parks
|
N/A
|
|
N/A
|
|
|
—
|
|
|
—
|
| ||||
|
Rajiv Malik
|
The Executive Plan for Rajiv Malik(3)
|
|
N/A
|
|
|
360,874
|
|
|
—
|
| ||||
|
Rajiv Malik
|
Retirement Benefit Agreement
|
|
11
|
|
|
4,191,581
|
|
|
—
|
| ||||
|
Daniel M. Gallagher
|
N/A
|
|
N/A
|
|
|
—
|
|
|
—
|
| ||||
|
Anthony Mauro
|
N/A
|
|
N/A
|
|
|
—
|
|
|
—
|
| ||||
| (1) | Messrs. Parks, Gallagher and Mauro are not party to a defined benefit pension arrangement. |
| (2) | See pages 51 and 53 of this Proxy Statement for further information on the value of the accumulated pension benefit. |
| (3) | This is a deferred compensation plan established for the benefit of Mr. Malik. The Company is no longer contributing to this plan. |
Nonqualified Deferred Compensation
The following table sets forth information relating to the Restoration Plan for 2017. There was no NEO participation in the Mylan Executive Income Deferral Plan in 2017.
| Name
|
Aggregate ($)
|
Executive ($)
|
Company Profit ($)
|
Aggregate ($)(1)
|
Aggregate
|
Aggregate ($)
|
||||||||||||||||||
|
Heather Bresch
|
|
3,022,352
|
|
|
—
|
|
|
246,750
|
|
|
516,098
|
|
|
—
|
|
|
3,785,200
|
| ||||||
|
Kenneth S. Parks
|
|
—
|
|
|
20,509
|
|
|
24,567
|
|
|
3,000
|
|
|
—
|
|
|
48,076
|
| ||||||
|
Rajiv Malik
|
|
—
|
|
|
—
|
|
|
161,750
|
|
|
13,719
|
|
|
—
|
|
|
175,469
|
| ||||||
|
Daniel M. Gallagher
|
|
—
|
|
|
13,200
|
|
|
13,200
|
|
|
994
|
|
|
—
|
|
|
27,394
|
| ||||||
|
Anthony Mauro
|
|
1,338,426
|
|
|
54,793
|
|
|
148,534
|
|
|
184,247
|
|
|
—
|
|
|
1,726,000
|
| ||||||
| (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. |
| 2018 Proxy Statement |
|
58 |
Table of Contents
Table of Contents
Table of Contents
EXECUTIVE COMPENSATION
Potential Payments Upon Termination or Change in Control
| 61 |
|
2018 Proxy Statement |
Table of Contents
EXECUTIVE COMPENSATION
Potential Payments Upon Termination or Change in Control
| 2018 Proxy Statement |
|
62 |
Table of Contents
EXECUTIVE COMPENSATION
Potential Payments Upon Termination or Change in Control
2003 Long-Term Incentive Plan, as Amended
| 63 |
|
2018 Proxy Statement |
Table of Contents
EXECUTIVE COMPENSATION
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Company is providing the following information about the relationship of the annual total compensation of the Company’s employees and the annual total compensation of the Company’s CEO. The pay ratio figures below are a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K under the Exchange Act.
We determined that as of December 31, 2017, our total number of U.S. employees was approximately 6,308 and our total number of non-U.S. employees was approximately 25,520. We excluded from this employee population a total of 1,589 employees from:
| Hungary (662) |
Malaysia (58) |
Albania (11) |
Bahrain (2) | |||
| China (226) |
Serbia (56) |
Algeria (9) |
Oman (2) | |||
| Russia (169) |
Ukraine (50) |
Armenia (7) |
Ivory Coast (1) | |||
| Turkey (125) |
Belarus (13) |
Azerbaijan (5) |
Kenya (1) | |||
| Thailand (97) |
Bosnia and Herzegovina (12) |
Qatar (3) |
||||
| Mexico (66) |
Kazakhstan (11) |
Zambia (3) |
The total number of employees from these non-U.S. jurisdictions was less than 5 percent of our total employee population.
To determine our median employee, we chose base salary as our consistently applied compensation measure. We then calculated an annual base salary for each employee, annualizing pay for those employees who commenced work during 2017 and for any employees who were on leave for a portion of 2017. For hourly employees, we used a reasonable estimate of hours worked to determine annual base pay. We used a clustered sampling methodology to identify the median base salary within this employee population.
Our median employee is a packaging operator located in Ireland, which reflects the true global nature of our organization and the fact that we are a diversified company within our peer group whose employees participate in all aspects of bringing our products to market, from R&D to manufacturing. This diversification should be considered by readers who would compare our CEO Pay Ratio to those within our peer or industry group and reflects differences in pay demographics among those groups.
Total annual compensation for the median employee was $40,270 and total annual compensation for the CEO was $12,763,539, resulting in a ratio of median employee total annual compensation to CEO total annual compensation of 317 to 1. Total annual compensation for the median employee and the chief executive officer is calculated according to the disclosure requirements of Item 402(u) of Regulation S-K under the Exchange Act and includes base salary, annual incentive, equity awards, change in pension values and other compensation such as perquisites and medical benefits.
| 2018 Proxy Statement |
|
64 |
Table of Contents
Table of Contents
Table of Contents
Report of the Audit Committee of Mylan’s Board
Report of the Audit Committee of Mylan’s Board
The following Report of the Audit Committee of the 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.
April 29, 2018
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 and within the meaning of the DCGC. The Audit Committee operates under a written charter adopted by the Board, a copy of which is available on the Company’s website at www.mylan.com/en/company/corporate-governance.
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 four times in 2017, 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 2017, which was filed with the Securities and Exchange Commission.
BY THE AUDIT COMMITTEE:
Neil Dimick, Chairman
JoEllen Lyons Dillon
Melina Higgins
Mark W. Parrish
| 2018 Proxy Statement |
|
67 |
Table of Contents
Table of Contents
Table of Contents
Appendix A – Questions and Answers
The following questions and answers are intended to address questions that you, as a shareholder of Mylan N.V., may have regarding the AGM and provide information with respect to the AGM, proxy materials and voting. Mylan urges you to carefully read this entire Proxy Statement in addition to these questions and answers.
Unless the context expressly provides otherwise, these questions and answers and the Proxy Statement describe the rights of Mylan ordinary shareholders to attend and, if relevant, vote at the 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.
| 2018 Proxy Statement |
|
A-1 |
Table of Contents
APPENDIX A
| A-2 |
|
2018 Proxy Statement |
Table of Contents
APPENDIX A
| 2018 Proxy Statement |
|
A-3 |
Table of Contents
APPENDIX A
| A-4 |
|
2018 Proxy Statement |
Table of Contents
APPENDIX A
| 2018 Proxy Statement |
|
A-5 |
Table of Contents
APPENDIX A
| A-6 |
|
2018 Proxy Statement |
Table of Contents
APPENDIX A
| 2018 Proxy Statement |
|
A-7 |
Table of Contents
This Proxy Statement and Shareholder Letters 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 Mylan’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,” “pipeline,” “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: actions and decisions of healthcare and pharmaceutical regulators; failure to achieve expected or targeted future financial and operating performance and results; uncertainties regarding future demand, pricing and reimbursement for our products; any regulatory, legal, or other impediments to Mylan’s ability 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”); success of clinical trials and Mylan’s ability to execute on new product opportunities; any changes in or difficulties with our manufacturing facilities, supply chain or inventory or our ability to meet anticipated demand; the scope, timing and outcome of any ongoing legal proceedings, including government investigations, and the impact of any such proceedings on our financial condition, results of operations and/or cash flows; the ability to meet expectations regarding the accounting and tax treatments of acquisitions, including the EPD 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; any significant breach of data security or data privacy or disruptions to our information technology systems; the ability to protect intellectual property and preserve 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; the impact of competition; identifying, acquiring and integrating complementary or strategic acquisitions of other companies, products, or assets being more difficult, time-consuming or costly than anticipated; the possibility that Mylan may be unable to achieve expected synergies and operating efficiencies in connection with strategic acquisitions or restructuring programs within the expected time-frames or at all; uncertainties and matters beyond the control of management, including but not limited to general political and economic conditions and global exchange rates; 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 (“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’s Annual Report on Form 10-K for the year ended December 31, 2017, as amended, and our other filings with the SEC. You can access Mylan’s filings with the SEC through the SEC website at www.sec.gov or through our website, and Mylan strongly encourages you to do so. Mylan routinely posts information that may be important to investors on our website at investor.mylan.com, and we use this website address as a means of disclosing material information to the public in a broad, non-exclusionary manner for purposes of the SEC’s Regulation Fair Disclosure (Reg FD). The contents of our website are not incorporated by reference in this Proxy Statement or Shareholder Letters and shall not be deemed “filed” under the Exchange Act and are not part of our proxy solicitation materials. Mylan undertakes no obligation to update any statements herein for revisions or changes after the filing date of this Proxy Statement.
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Table of Contents
APPENDIX B
Reconciliation of Non-GAAP Financial Measures
This Proxy Statement and Shareholder Letters 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 EPS, adjusted free cash flow and ROIC, 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. We believe that non-GAAP financial measures are useful supplemental information for our investors and when considered together with our U.S. GAAP financial measures and the reconciliation to the most directly comparable U.S. GAAP financial measure, provide a more complete understanding of the factors and trends affecting our operations. The financial performance of the Company is measured by senior management, in part, using the adjusted metrics included herein, along with other performance metrics. Management’s annual incentive compensation is derived, in part, based on the adjusted EPS metric and the adjusted free cash flow metric. This Appendix B 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 this Appendix B, 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.
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APPENDIX B
Reconciliation of Non-GAAP Financial Measures
(Unaudited; in millions except per share amounts and percentages)
| Year Ended December 31, |
Year Ended December 31, |
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| 2017 | 2016 | |||||||||||||||
| U.S. GAAP net earnings and U.S. GAAP diluted earnings per share | $ | 696 | $ | 1.30 | $ | 480 | $ | 0.92 | ||||||||
| Purchase accounting related amortization (primarily included in cost of sales) | 1,530 | 1,412 | ||||||||||||||
| Litigation settlements and other contingencies, net | (13 | ) | 673 | |||||||||||||
| Interest expense (primarily related to clean energy investment financing) | 20 | 23 | ||||||||||||||
| Interest expense related to the accretion of contingent consideration liabilities | 28 | 43 | ||||||||||||||
| Clean energy investments pre-tax (income) loss | 47 | 92 | ||||||||||||||
| Acquisition related costs (primarily included in SG&A and cost of sales) | 70 | 335 | ||||||||||||||
| Restructuring related costs | 188 | 150 | ||||||||||||||
| Other special items included in: |
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| Cost of sales |
64 | 45 | ||||||||||||||
| Research and development expense |
118 | 121 | ||||||||||||||
| Selling, general and administrative expense |
14 | 36 | ||||||||||||||
| Other expense, net |
14 | (18 | ) | |||||||||||||
| Tax effect of the above items and other income tax related items | (330 | ) | (844 | ) | ||||||||||||
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| Adjusted net earnings and adjusted EPS(a) | $ | 2,445 | $ | 4.56 | $ | 2,547 | $ | 4.89 | ||||||||
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| Weighted average diluted ordinary shares outstanding | 537 | 521 | ||||||||||||||
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| (a) | Adjusted EPS for the years ended December 31, 2017 and 2016 had a favorable foreign currency impact of $0.03 and $0.04, respectively. |
| Year Ended December 31, |
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| 2017 | 2016 | |||||||
| U.S. GAAP net cash provided by operating activities | $ | 2,065 | $ | 2,047 | ||||
| Add: | ||||||||
| Payment of litigation settlements |
533 | 69 | ||||||
| Restructuring related costs |
152 | — | ||||||
| Financing related expense |
— | 67 | ||||||
| Contingent consideration |
50 | — | ||||||
| Acquisition related costs |
30 | 244 | ||||||
| R&D expense |
55 | 123 | ||||||
| Income tax items |
— | (26 | ) | |||||
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| Adjusted net cash provided by operating activities | $ | 2,884 | $ | 2,524 | ||||
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| Add/(deduct): | ||||||||
| Capital expenditures |
(276 | ) | (390 | ) | ||||
| Proceeds from sale of certain property, plant and equipment |
19 | — | ||||||
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| Adjusted free cash flow | $ | 2,627 | $ | 2,134 | ||||
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Table of Contents
APPENDIX B
| Year Ended December 31, |
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| 2017 | 2016 | |||||||
| Adjusted net earnings attributable to Mylan N.V. | $ | 2,445 | $ | 2,547 | ||||
| Add/(Deduct): | ||||||||
| Tax effect of non-GAAP adjustments and other income tax related items |
330 | 844 | ||||||
| U.S. GAAP reported income tax (benefit) provision |
207 | (358 | ) | |||||
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| Adjusted pre-tax income | $ | 2,982 | $ | 3,033 | ||||
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| Year Ended December 31, |
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| 2017 | 2016 | |||||||
| U.S. GAAP interest expense | $ | 535 | $ | 455 | ||||
| Deduct: | ||||||||
| Interest expense related to clean energy investments |
(12 | ) | (14 | ) | ||||
| Accretion of contingent consideration liability |
(28 | ) | (41 | ) | ||||
| Acquisition related costs |
(0 | ) | (46 | ) | ||||
| Other special items |
(7 | ) | (10 | ) | ||||
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| Adjusted interest expense | $ | 487 | $ | 343 | ||||
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APPENDIX B
Return on Invested Capital
| Year Ended December 31, |
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| 2017 | 2016 | |||||||||||
| Adjusted pre-tax income | $ | 2,982 | $ | 3,033 | ||||||||
| Adjusted interest expense |
487 | 343 | ||||||||||
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| Adjusted income before interest and tax | 3,469 | 3,376 | ||||||||||
| Estimated adjusted income tax expense(a) |
(624 | ) | (540 | ) | ||||||||
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| Adjusted net operating profit after tax | $ | 2,845 | $ | 2,835 | ||||||||
| As of December 31, | ||||||||||||
| 2016 | 2015 | |||||||||||
| Total assets |
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$ | 34,726 | $ | 29,003 | |||||||
| Cash and near cash items |
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(999 | ) | (2,211 | ) | |||||||
| Short-term investments |
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(113 | ) | (98 | ) | |||||||
| Deferred income taxes |
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(633 | ) | (460 | ) | |||||||
| Forward starting swaps |
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— | 40 | |||||||||
| Clean energy investments |
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(333 | ) | (363 | ) | |||||||
| Restricted cash |
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(148 | ) | (215 | ) | |||||||
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| Total invested assets | $ | 32,500 | $ | 25,697 | ||||||||
| Accounts payable |
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(1,348 | ) | (1,161 | ) | |||||||
| Other current liabilities |
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(3,259 | ) | (2,472 | ) | |||||||
| Income taxes payable |
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(98 | ) | (104 | ) | |||||||
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| Total invested capital | $ | 27,796 | $ | 21,959 | ||||||||
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| Intangible assets |
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14,448 | 10,456 | |||||||||
| Goodwill |
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9,232 | 7,128 | |||||||||
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| Operational invested capital | $ | 4,116 | $ | 4,375 | ||||||||
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| 2017 | 2016 | |||||||||||
| Cash Return on Total Invested Capital(b) | 10% | 13% | ||||||||||
| Cash Return on Operational Invested Capital(c) | 69% | 65% | ||||||||||
| (a) | Estimated adjusted income tax expense is the adjusted income tax rate multiplied by adjusted income before interest and tax. |
| (b) | Calculated using current year adjusted net operating profit after tax/prior year total invested capital. This is the ROIC metric used for awards granted in 2016 and 2017. |
| (c) | Calculated using current year adjusted net operating profit after tax/prior year operational invested capital. This is the ROIC metric used for awards granted before 2016. |
| 2018 Proxy Statement |
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B-5 |
Table of Contents
Mylan Better Health for a Better world
Copyright
2018 Mylan N.V. All Rights Reserved
The Mylan Better Health Better World logo is a registered trademark of Mylan Inc.
Table of Contents
YOUR VOTE IS IMPORTANT
Please take a moment prior to the Cut-Off Time specified in the proxy statement
(5:00 p.m. Central European Summer Time (CEST) / 11:00 a.m. Eastern Time (ET) on June 28, 2018)
to vote your ordinary shares of Mylan N.V. for the upcoming annual general meeting of shareholders.
PLEASE REVIEW THE PROXY STATEMENT AND VOTE TODAY IN ONE OF THREE WAYS:
| 1. | Vote by Telephone — Please call toll-free in the U.S. or Canada at 1-866-242-2716, on a touch-tone phone. If outside the U.S. or Canada, call 1-646-880-9092. Please follow the simple instructions. You will be required to provide the unique control number printed below. |
OR
| 2. | Vote by Internet — Please access https://www.proxyvotenow.com/myl, and follow the simple instructions. Please note you must type an “s” after http. You will be required to provide the unique control number printed below. |
|
You may vote by telephone or Internet 24 hours a day, 7 days a week. Your telephone or Internet vote authorizes the named proxies to vote your shares in the same manner as if you had marked, signed and returned a proxy card.
|
OR
| 3. | Vote by Mail — If you do not wish to vote by telephone or over the Internet, please complete, sign, date and return the proxy card in the envelope provided, or mail to: Mylan N.V., c/o Innisfree M&A Incorporated, FDR Station, P.O. Box 5155, New York, NY 10150-5155. |
q TO VOTE BY MAIL, PLEASE DETACH PROXY CARD HERE AND SIGN, DATE AND RETURN IN THE POSTAGE-PAID ENVELOPE PROVIDED q
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To vote, mark blocks below in blue or black ink as follows |
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| THE MYLAN N.V. BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH DIRECTOR IN ITEM 1 AND “FOR” ITEMS 2, 3, 4, 5 AND 6. | ||||||||||||||||||||||||||||
| Date: | , 2018 | |||||||||||||||||||||||
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| NOTE: Please sign exactly as your name(s) appear(s) hereon. When shares are held jointly, joint owners should each sign. Executors, administrators, trustees, etc., should indicate the capacity in which signing. If a corporation, please sign in full corporate name by an authorized officer. If a partnership, please sign in partnership name by authorized person. |
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Table of Contents
PLEASE VOTE TODAY!
SEE REVERSE SIDE
FOR THREE EASY WAYS TO VOTE.
|
Important Notice Regarding the Availability of Proxy Materials |
| for the Shareholder Meeting To Be Held on Friday, June 29, 2018 |
| The Notice of the Meeting, Proxy Statement, Proxy Card, Annual Report on Form 10-K (as amended) and |
|
the Dutch Board Report are available at investor.mylan.com
|
q TO VOTE BY MAIL, PLEASE DETACH PROXY CARD HERE, AND SIGN, DATE AND RETURN IN THE ENVELOPE PROVIDED q
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MYLAN N.V.
PROXY FOR THE ANNUAL GENERAL MEETING OF SHAREHOLDERS
To Be Held on June 29, 2018 at 12:00 p.m. Central European Summer Time (CEST) at Hotel Okura Amsterdam, Ferdinand Bolstraat 333, 1072 LH Amsterdam, the Netherlands
This Proxy is Solicited on Behalf of the Board of Directors of Mylan N.V. (the “Board”)
PROXY VOTING DEADLINE: 5:00 P.M. CENTRAL EUROPEAN SUMMER TIME (CEST) / 11:00 A.M. EASTERN TIME (ET), JUNE 28, 2018
The undersigned hereby appoints Robert J. Coury and Mark W. Parrish, and each with full power to act without the other, as proxies, with full power of substitution, for and in the name of the undersigned to vote and act with respect to all ordinary shares of MYLAN N.V. (“Mylan” or the “Company”) which the undersigned is entitled to vote and act at the Annual General Meeting of Shareholders of Mylan to be held on June 29, 2018, with all the powers the undersigned would possess if personally present, and particularly, but without limiting the generality of the foregoing:
This proxy, when properly executed, will be voted in the manner directed herein. This proxy will be voted “FOR” each director in Item 1 and “FOR” Items 2, 3, 4, 5 and 6 if no choice is specified. The proxies are hereby authorized to vote in their discretion upon such other matters as may properly come before the meeting.
(Continued and to be signed on the reverse side) |
Table of Contents
YOUR VOTE IS IMPORTANT
Please take a moment prior to 8:00 a.m. Eastern Time (ET) on June 26, 2018 to vote your
ordinary shares of Mylan N.V. for the upcoming annual general meeting of shareholders.
PLEASE REVIEW THE PROXY STATEMENT AND VOTE TODAY IN ONE OF THREE WAYS:
| 1. | Vote by Telephone — Please call toll-free in the U.S. or Canada at 1-866-598-8805, on a touch-tone phone. If outside the U.S. or Canada, call 1-646-880-9093. Please follow the simple instructions. You will be required to provide the unique control number printed below. |
OR
| 2. | Vote by Internet — Please access https://www.proxyvotenow.com/myl-plans, and follow the simple instructions. Please note you must type an “s” after http. You will be required to provide the unique control number printed below. |
|
You may vote by telephone or Internet 24 hours a day, 7 days a week. Your telephone or Internet vote authorizes the named proxies to vote your shares in the same manner as if you had marked, signed and returned a proxy card.
|
OR
| 3. | Vote by Mail — If you do not wish to vote by telephone or over the Internet, please complete, sign, date and return the proxy card in the envelope provided, or mail to: Mylan N.V., c/o Innisfree M&A Incorporated, FDR Station, P.O. Box 5155, New York, NY 10150-5155. |
q TO VOTE BY MAIL, PLEASE DETACH PROXY CARD HERE AND SIGN, DATE AND RETURN IN THE POSTAGE-PAID ENVELOPE PROVIDED q
|
|
To vote, mark blocks below in blue or black ink as follows |
|||||||||||||||||||||||||||
| THE MYLAN N.V. BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH DIRECTOR IN ITEM 1 AND “FOR” ITEMS 2, 3, 4, 5 AND 6. | ||||||||||||||||||||||||||||
| Date: | , 2018 | |||||||||||||||||||||||
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| Signature | ||||||||||||||||||||||||
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| Signature (if held jointly) | ||||||||||||||||||||||||
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| NOTE: Please sign exactly as your name(s) appear(s) hereon. When shares are held jointly, joint owners should each sign. Executors, administrators, trustees, etc., should indicate the capacity in which signing. If a corporation, please sign in full corporate name by an authorized officer. If a partnership, please sign in partnership name by authorized person. |
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Table of Contents
PLEASE VOTE TODAY!
SEE REVERSE SIDE
FOR THREE EASY WAYS TO VOTE.
|
Important Notice Regarding the Availability of Proxy Materials |
| for the Shareholder Meeting To Be Held on Friday, June 29, 2018 |
| The Notice of the Meeting, Proxy Statement, Proxy Card, Annual Report on Form 10-K (as amended) and |
|
the Dutch Board Report are available at investor.mylan.com
|
q TO VOTE BY MAIL, PLEASE DETACH PROXY CARD HERE, AND SIGN, DATE AND RETURN IN THE ENVELOPE PROVIDED q
|
MYLAN PROFIT SHARING 401(K) PLAN MYLAN PUERTO RICO PROFIT SHARING EMPLOYEE SAVINGS PLAN VOTING INSTRUCTION FORM
For the Annual General Meeting of Shareholders of Mylan N.V. To Be Held on June 29, 2018 This Voting Instruction Form is Solicited on Behalf of the Board of Directors of Mylan N.V. (the “Board”)
PLAN VOTING DEADLINE: 8:00 A.M. Eastern Time (ET), June 26, 2018
The undersigned hereby directs Bank of America, N.A., as trustee for the Mylan Profit Sharing 401(k) Plan, and Banco Popular de Puerto Rico, as trustee for the Mylan Puerto Rico Profit Sharing Employee Savings Plan (together, the “Trustees”), to appoint Robert J. Coury and Mark W. Parrish, and each with full power to act without the other, as proxies, with full power of substitution, for and in the name of the Trustees to vote and act with respect to all ordinary shares of MYLAN N.V. (“Mylan” or the “Company”) credited to the accounts of the undersigned under the above-named plans which the Trustees are entitled to vote and act on behalf of the undersigned at the Annual General Meeting of Shareholders of Mylan to be held on June 29, 2018, with all the powers the Trustees would possess if personally present, and particularly, but without limiting the generality of the foregoing:
IF PROPERLY EXECUTED AND RECEIVED BY THE RELEVANT TRUSTEE PRIOR TO THE PLAN VOTING DEADLINE, THIS VOTING INSTRUCTION FORM WILL BE VOTED “FOR” EACH DIRECTOR IN ITEM 1 AND “FOR” ITEMS 2, 3, 4, 5 AND 6 UNLESS A CONTRARY VOTE IS INDICATED, IN WHICH CASE THE PROXY WILL BE VOTED AS DIRECTED.
(Continued and to be signed on the reverse side) |