DEF 14A 1 d478063ddef14a.htm DEF 14A DEF 14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.    )

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

Check the appropriate box:

 

¨    

Preliminary Proxy Statement

 

¨    

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

x    

Definitive Proxy Statement

 

¨    

Definitive Additional Materials

 

¨     Soliciting Material Pursuant to Rule 14a-12

MYLAN INC.

(Name of Registrant as Specified In Its Charter)

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

Payment of Filing Fee (Check the appropriate box):

 

x    

No fee required.

 

¨     Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

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(set forth the amount on which the filing fee is calculated and state how it was determined):
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¨     Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

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LOGO

April 12, 2013

 

          
         
  Dear Fellow Shareholder:  
         
          

I am pleased to invite you to join me, your Board of Directors, and the Company’s senior leadership at the 2013 Annual Meeting of Shareholders of Mylan Inc. on May 24, 2013, at the Sofitel Washington DC Lafayette Square, 806 15th Street, NW, Washington, D.C. 20005. The attached Notice of Annual Meeting of Shareholders and Proxy Statement, with a new format and an enhanced and expanded Compensation Discussion and Analysis, will serve as your guide to the business to be conducted.

Although I hope that you can join us in Washington, D.C., it is important that your shares be represented at the Annual Meeting, regardless of the number of shares you own, even if you cannot attend. Whether or not you currently plan to attend, you can ensure that your shares are represented and voted at the Annual Meeting by promptly signing, dating, and returning the enclosed proxy card. A return envelope, which requires no additional postage if mailed in the United States, is enclosed for your convenience. Alternatively, you may vote over the Internet or by telephone by following the instructions set forth on the enclosed proxy card.

Thank you for your continued trust and for your investment in Mylan. We look forward to seeing you in Washington D.C. on May 24th.

 

Sincerely,

 

LOGO
Heather Bresch
Chief Executive Officer


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Important Notice Regarding Admission To The Meeting

Each shareholder planning to attend the meeting will be asked to present valid photo identification,

such as a driver’s license or passport.

In addition, each shareholder must present his or her admission ticket, which is a portion

of the enclosed proxy card. Please tear off the ticket at the perforation.

If you are a shareholder, but do not own shares in your own name, you must bring proof of ownership

(e.g., a current broker’s statement) in order to be admitted to the meeting.

Admission to the meeting will be on a first-come, first-served basis. Registration will begin at

10:00 a.m., and seating will begin at 10:15 a.m. Cameras or other photographic equipment,

audio or video recording devices and other electronic devices will not be permitted at the meeting.

Please Join Us—A Continental Breakfast Will Be Served


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LOGO

 

NOTICE OF ANNUAL MEETING OF

SHAREHOLDERS

 

1500 Corporate Drive

Canonsburg, PA 15317

 

The 2013 Annual Meeting of Shareholders of Mylan Inc. (the “Company”) will be held at the Sofitel Washington DC Lafayette Square, 806 15th Street, NW, Washington, D.C. 20005, on Friday, May 24, 2013, at 10:30 a.m. (ET), for the following purposes:

 

  Ÿ  

To elect 13 Directors, each for a term of one year;

 

  Ÿ  

To ratify the selection of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2013;

 

  Ÿ  

To approve, on an advisory basis, the compensation of the Named Executive Officers of the Company;

 

  Ÿ  

To consider a shareholder proposal requesting the adoption of a mandatory policy requiring that the Chairman of the Board of Directors be an independent Director; and

 

  Ÿ  

To consider and act upon such other business as may properly come before the meeting or any adjournment or postponement thereof.

Shareholders of record of the Company’s common stock at the close of business on March 22, 2013 are entitled to notice of, and to vote at, the Annual Meeting and any adjournment or postponement thereof. We will make available at the Annual Meeting a complete list of shareholders entitled to vote at the Annual Meeting.

 

By order of the Board of Directors,

   LOGO

 

 

Joseph F. Haggerty

Corporate Secretary

April 12, 2013

Please promptly sign and date the enclosed proxy card and return it in the enclosed postage-paid envelope, or vote over the Internet or by telephone by following the instructions set forth on the enclosed proxy card. If you attend the Annual Meeting and wish to vote in person, you will be able to do so, and your vote at the Annual Meeting will revoke any proxy that you may have submitted before then.

Important notice regarding the availability of proxy materials for the shareholder meeting to be held on May 24, 2013:

The 2013 Proxy Statement and the 2012 Annual Report on Form 10-K are available at

http://investor.mylan.com under the heading “Financial and Other Information.”


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Proxy Summary

 

  

 

 

The summary below highlights information that is described in more detail elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider, and we urge you to review the complete document carefully before voting. For more information regarding the Company’s 2012 performance, please review the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

 

 

Introduction. 2012 marked a significant inflection point for your Company as Mylan entered a new stage of its business lifecycle and turned in the strongest financial performance in its history to date. In addition to this outstanding financial performance, the Board of Directors approved important enhancements to the management structure of the

Company that we believe further strengthened the leadership team and, at the same time, positioned Mylan well to capitalize on its global platform for years to come. The Board also approved numerous enhancements to its governance and compensation-related policies to further demonstrate the close alignment of the Board and management with shareholder interests.

Mylan’s Outstanding 2012 and Five Year Financial Performance. In 2012, Mylan had the strongest year in its history to date, with record revenues, adjusted earnings before interest, taxes, depreciation, and amortization (“EBITDA”), and adjusted diluted earnings per share (“EPS”). As the table below demonstrates, in addition to this outstanding 2012 performance, Mylan has had outstanding top and bottom line growth over the past 5 years.

 

 

 

 

   LOGO     

                         *

  2008 and 2009 total adjusted revenue, as well as adjusted EBITDA and adjusted diluted EPS differ from what is reported under accounting principles generally accepted in the United States (“GAAP”). See Appendix A for a reconciliation of non-GAAP financial measures to Mylan’s results reported under GAAP.  

                         (a) $ in millions.

 

 

 

 

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2013 Annual Meeting of Shareholders

 

Mylan also produced total shareholder return (“TSR”) that exceeded both the S&P 500 Index and the S&P 500 Pharmaceuticals Index over the past 1, 3, and 5 years.

 

 
 

LOGO

 
 

 

*   TSR data is from the S&P Research Insight database and reflects total returns (including price appreciation and reinvested dividends) as of December 31, 2012.

 

 

See pages 18 to 22 for a discussion of 2012 performance.

 

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Proxy Summary

 

Executive Compensation Closely Aligns with Performance. Mylan’s compensation philosophy is to incentivize performance that results in exceptional financial results and shareholder value. In 2012, the Company maintained its commitment to closely aligning compensation with Company performance and shareholder value. For example:

 

  CEO realizable pay and TSR performance over the last three years were strongly aligned relative to peers, as shown below:

 

 

Alignment of CEO Realizable Pay* with TSR Performance

 

 
  LOGO  
 

*    Realizable pay includes cumulative salary and short-term incentives paid for the most recent three years, plus current value (as of December 31, 2012) of options as well as both performance and time-based restricted shares/units granted during the most recent three years, plus change in pension value and all other compensation for the most recent three years. TSR data is from the S&P Research Insight database. Peer companies in this chart reflect the 2012 peer companies listed on page 30.

 

 

 

  Approximately 80% of target compensation for the Named Executive Officers was in the form of annual and long-term incentives and, therefore, linked to Company performance and/or stock performance.

 

  Targets for the short-term incentive plan were set at double digit growth from 2011 actual performance for adjusted diluted EPS and adjusted free cash flow, and based on the then-current product pipeline for global regulatory submissions.

 

 

2012 Short Term Incentive Plan Metrics and Actual Performance Achieved

 

 
 

LOGO

 

 

 

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2013 Annual Meeting of Shareholders

 

  2012 long-term incentive grants were composed of a mix of stock options, performance-based restricted stock units, and restricted stock units.

 

  In 2013, long-term incentive grants will again be composed of a mix of the same types of incentives, but with a greater emphasis on performance-based restricted stock units. Furthermore, the metrics used to measure performance for the performance-based restricted stock units will be return on invested capital and total relative shareholder return of Mylan’s common stock relative to peer companies. The result is that executives’ long-term incentive compensation is even further aligned with total shareholder returns.

 

 

2013 LTI Mix

 

 
 

LOGO

 

 

 

See pages 21 to 22 for a discussion of how CEO pay is strongly aligned with Mylan’s performance.

Corporate Leadership Evolved with the Company. Over the past decade, Mylan has transformed into a global, diversified, high-quality manufacturer of pharmaceuticals, with a footprint in approximately 140 countries and a workforce of over 20,000. Given this extraordinary growth, and with the goal of ensuring long-term sustainability, at the beginning of 2012, the Board, based in part on its intimate knowledge of and experience with the Company, its business, and management, implemented a new corporate leadership structure designed to further align the skills, expertise, and experience of its executives with the complexity and size of the Company that we have become and the anticipated challenges and opportunities of the future. Among other changes, the Board separated the positions of Chief Executive Officer and Chairman of the Board, and appointed Robert J. Coury as Executive Chairman of the Board and Heather Bresch as CEO.

The Board believes that separating the roles of Executive Chairman of the Board and Chief Executive Officer is a highly effective leadership

model for the Company at this time, and capitalizes on the respective skills, expertise, and experience of Mr. Coury and Ms. Bresch. The continued retention of Mr. Coury as Executive Chairman of the Board during this period of transition allows Ms. Bresch to focus on the on-going transformation of the business, continue to oversee the integration of new acquisitions, and enhance the operational performance and efficiency of our global platform, while Mr. Coury focuses on, among other matters, strategic merger and acquisition activity, ensuring an effective transition to the new enhanced management structure, and the continued mentorship of senior management, as well as his on-going leadership of the Board. The Board also believes that Mr. Coury is uniquely qualified to serve these leadership and mentoring roles as a result of his experience as Mylan’s CEO for nearly a decade. The Board further believes that the performance and accomplishments of the Company in 2012 clearly illustrate the power of this new leadership structure.

In addition to the appointments of Mr. Coury and Ms. Bresch, the Board also appointed Rajiv Malik as President and Harry Korman as Chief Operating Officer. With these appointments, the new executive leadership team, effective January 1, 2012 is:

 

 

 Executive   2011 Position   2012 Position
 Heather Bresch   President   Chief Executive Officer
 John D. Sheehan, C.P.A.   EVP and Chief Financial Officer   EVP and Chief Financial Officer
 Rajiv Malik   EVP and Chief Operating Officer   President
 Harry Korman   President, North America   EVP and Chief Operating Officer
 Robert J. Coury   Chairman and Chief Executive Officer   Executive Chairman of the Board

 

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Proxy Summary

 

To complement this new management structure, the Board appointed Rodney L. Piatt, the Vice Chairman of the Board, as Lead Independent Director. Mr. Piatt’s appointment was based on his long tenure and experience as a Director of the Company, outstanding business judgment, knowledge of the business and management, recognized leadership abilities, and strong independence, among other factors. The Board is confident that Mr. Piatt’s appointment will only further enhance the Board’s already strong independent oversight of the Company. As Lead Independent Director, Mr. Piatt’s authority includes, among other things:

 

  Presiding at executive sessions of the Board and at meetings of the Board where the Chairman is not present;

 

  Calling meetings of the non-employee Directors;

 

  Serving on the Executive Committee of the Board of Directors;

 

  Approving meeting agendas, schedules and information sent to the Board; and

 

  Serving as the point person for shareholders wishing to communicate with the Board and as a liaison between the Chairman and the independent Directors.

In addition to the noted changes in Board structure and the executive team, the Company maintained and enhanced its strong corporate governance practices, which include, among others:

 

  All Directors are elected annually by the shareholders;

 

  Ten of the thirteen Board members are independent;

 

  The Board has established and follows robust Corporate Governance Principles;
  Independent Directors meet in executive session, chaired by our Lead Independent Director, without members of management present; and

 

  All members of the Board’s Audit, Compensation, Compliance, Finance, and Governance and Nominating Committees are independent Directors.

See page 23 for a discussion of these changes in Mylan’s corporate leadership.

Mylan Engaged with Shareholders and Enhanced Compensation and Governance-Related Policies. Following the 2012 annual meeting and say-on-pay vote, the Board and management conducted thorough reviews of, and implemented significant changes to, governance and compensation-related policies. As part of this process, management met with shareholders representing over 30% of the Company’s outstanding voting shares to receive feedback regarding the say-on-pay vote and compensation policies, as well as other governance matters. We found these meetings to be extraordinarily helpful and plan to hold meetings of this nature in the future in order to continue these conversations with shareholders on compensation and governance-related matters.

Key enhancements to the Company’s governance and compensation-related policies adopted by the Board and/or the Compensation Committee since March 2012 include, among others, those listed and summarized in the table below. As indicated, the impact of many of the changes will not be reflected in the Summary Compensation Table until the 2014 Proxy Statement because they were made after the 2012 Annual Meeting and after certain 2012 compensation actions had already been decided and implemented.

 

 

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 Past Pay or

 Governance Practice

   Changes Going Forward    Effective    Referenced  
on Page 

 Compensation Committee permitted to  exercise positive discretion in determining  annual incentive cash payouts

 

  

Discontinued

 

   2012

 

   26

 

 LTI mix:

 35% performance RSUs

 35% stock options

 30% RSUs

 

  

LTI mix:

60% performance RSUs

20% stock options

20% RSUs

 

   2013

 

   27

 

 Both short and long-term incentive plans  used adjusted diluted EPS as the  performance metric

 

  

Will not use same metric for short and long-term incentives (long-term metrics are return on invested capital and relative shareholder return)

 

   2013

 

   27

 

 Single peer group of companies with  revenues greater than 2.5x and smaller
 than 0.5x of Company’s revenues

 

  

Developed two peer groups for pay and performance reference:

   Life sciences peers (with revenues 0.5x - 2.5x Mylan)

    Pharmaceutical business competitors

 

   2013

 

   30

 

 Single trigger vesting of equity awards on  change in control

 

  

Double trigger vesting for future equity awards

 

   2013

 

   27

 

 No clawback policy

 

   Adopted a clawback policy    2013    31

 No anti-hedging and pledging policy

 

   Adopted an anti-hedging and pledging policy    2013    31

 No related party transactions policy

 

   Adopted a related party transactions policy    2013    52

 No stock ownership requirements for
 non-employee Directors

 

   Adopted ownership requirements for non-employee Directors    2013    13

 Executive Chairman of the Board share  ownership requirement equal to 500% of  base salary

 

  

Increased to 600% of base salary

 

   2013

 

   31

 

 CEO share ownership requirement equal
 to 500% of base salary

 

  

Increased to 600% of base salary

 

   2013

 

   31

 

 Named Executive Officers with retirement  benefit agreements received Company  match on executive contributions to the
 401(k) Restoration Plan

 

  

Discontinued

 

   2013

 

   28

 

 No public disclosure of political
 contributions and trade association  memberships

 

  

Political contributions and trade association memberships to be disclosed on Company website

 

   2013

 

  

 

See pages 18 to 32 for a discussion of the changes to Mylan’s compensation and governance-related practices.

 

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Proxy Summary

 

Meeting Agenda and Voting Recommendations

 

 

 

     Board vote
recommendation
   Page reference 
for more detail 
Management Proposals          

1. Election of 13 Directors, each for a term of one year

   For    3

2. Ratification of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2013

   For    17

3. Advisory vote on compensation of the Named Executive Officers of the Company

   For    45
Shareholder Proposal          

4. Shareholder proposal for a mandatory policy requiring that the Chairman of the Board of Directors be an independent Director

   Against    46

5. Other business as may properly come before the meeting or any adjournment or postponement thereof

     

 

 

Item 1:  Election of Directors

Each Director nominee was selected based on his or her individual experience, expertise, and judgment. More detailed biographies begin on page 3. The Board of Directors recommends a vote “FOR” all nominees in Item 1.

 

 Name   Director since   Occupation   Independent  

Other public company /

non-profit boards

 Heather Bresch   2011   CEO of Mylan    
 Wendy Cameron   2002   Co-Owner of Cam Land LLC   X  
 Robert J. Cindrich   2011   President, Cindrich Consulting, LLC   X   Allscripts Healthcare Solutions, Inc.
 Robert J. Coury   2002   Executive Chairman of the Board of Mylan    
 Neil Dimick, C.P.A.   2005   Former EVP and CFO of Amerisource Bergen Corporation (currently retired)   X   WebMD Health Corp.; Thoratec Corporation; and Resources Connection, Inc.
 Melina Higgins   2013   Former Partner and Managing Director at Goldman Sachs (currently retired)   X  
 Douglas J. Leech,  C.P.A.   2000   Founder and Principal of DLJ Advisors   X   United Bankshares, Inc.
 Rajiv Malik   2013   President of Mylan    
 Joseph C. Maroon, M.D.   2003  

Professor, Heindl Scholar in Neuroscience and Vice Chairman of the Department of Neurosurgery, UPMC;

Team neurosurgeon for the Pittsburgh Steelers

  X  
 Mark W. Parrish   2009   Chairman and CEO of Trident
USA
Health Services
  X   Omnicell, Inc.
 Rodney L. Piatt, C.P.A.   2004  

Lead Independent Director and Vice Chairman of Mylan;

President and owner of Horizon Properties Group, LLC;

CEO of Lincoln Manufacturing, Inc.

  X  
 C.B. Todd   1993   Former President and Chief Operating Officer of Mylan (currently retired)   X  
 Randall L. (Pete)  Vanderveen, Ph.D,  R.Ph   2002   Dean, John Stauffer Decanal Chair of the School of Pharmacy, University of Southern California   X  

See pages 3 to 7 for a discussion of the Director nominees, their backgrounds, and the Board’s reasons for nominating them.

 

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Proxy Summary

 

Item 2:  Ratification of Deloitte & Touche LLP as the Company’s Independent Registered Public Accounting Firm for 2013

The Board of Directors recommends a vote “FOR” shareholder ratification of Deloitte & Touche LLP as the Company’s independent auditor for 2013.

See page 17 for a discussion of the services provided by Deloitte & Touche LLP.

Item 3:  Advisory Vote on Executive Compensation

Our compensation programs are designed to attract, retain, and motivate the talented people who continue to lead your Company from success to success – and to pay for performance. Our compensation programs are described in detail in this Proxy. As demonstrated above, 2012 performance set new records for Mylan and compensation is highly aligned with total shareholder return. The Board of Directors recommends a vote “FOR” the Company’s executive compensation programs described in this Proxy Statement.

See pages 18 to 44 for a discussion of Mylan’s 2012 executive compensation.

Item 4:  Shareholder Proposal

A shareholder has submitted a proposal that the Board adopt a mandatory policy requiring a non-executive Chairman of the Board. As discussed below, the Board believes that this proposal is unsupported, without merit, and would serve to dismantle the very management team that has produced record performance and outstanding shareholder value. The Board recommends a vote “AGAINST” this proposal.

See pages 46 to 50 for a discussion of this shareholder proposal.

Reconciliation of Non-GAAP Financial Measures

This Proxy Statement includes the presentation and discussion of certain financial information that differs from what is reported under accounting principles generally accepted in the United States (“GAAP”). These non-GAAP financial measures, including adjusted revenue, adjusted net earnings, adjusted diluted EPS, adjusted EBITDA, adjusted pre-tax income, adjusted interest, return on invested capital, adjusted tax rate, and adjusted operating cash flow, are presented in order to supplement the reader’s understanding and assessment of the Company’s actual financial performance. Management uses these measures internally for forecasting, budgeting and measuring operating performance. Appendix A to this Proxy Statement contains reconciliations of such non-GAAP financial measures to Mylan’s results reported under GAAP. We encourage readers to review the related GAAP financial measures and the reconciliations of the non-GAAP measures to their most closely applicable GAAP measures set forth in Appendix A, and readers should consider these 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 GAAP.

 

 

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      Page  

Voting Rights, Proxies and Solicitation

     1   

   General

     1   

   Quorum

     1   

   Voting

     1   

   Revoking a Proxy

     1   

   Votes Required

     2   

   Multiple Shareholders Sharing the Same Address

     2   

   Proxy Solicitation

     2   
          

Item 1—Election of Directors

     3   

   Director Nominees

     3   

   Meetings of the Board

     8   

   Board Committees

     8   

   Consideration of Director Nominees

     9   

   Director Independence

     10   

   Board Education

     10   

   Board of Directors Leadership Structure

     11   

   Board of Directors Risk Oversight

     11   

   Code of Ethics; Corporate Governance Principles; Code of Business Conduct and Ethics

     12   
          

Non-Employee Director Compensation for 2012

     13   
          

Security Ownership of Certain Beneficial Owners and Management

     14   

   Security Ownership of Directors, Nominees and Executive Officers

     14   

   Security Ownership of Certain Beneficial Owners

     15   

   Section 16(a) Beneficial Ownership Reporting Compliance

     15   
          

Executive Officers

     16   
          
Item 2—Ratification of Selection of Deloitte & Touche LLP as the Company’s Independent Registered Public Accounting Firm      17   

   Independent Registered Public Accounting Firm’s Fees

     17   

   Audit Committee Pre-Approval Policy

     17   
          

Executive Compensation for 2012

     18   

   Compensation Discussion and Analysis

     18   


Table of Contents

 

 

 

      Page  

Compensation Committee Report

     33   

   Summary Compensation Table

     34   

   Grants of Plan-Based Awards in 2012

     36   

   Outstanding Equity Awards at the End of 2012

     37   

   Option Exercises and Stock Vested in 2012

     38   

   Pension Benefits

     39   

   Nonqualified Deferred Compensation

     39   

   Restoration Plan

     40   

   Retirement Benefit Agreements

     40   

   Employment Agreements

     41   

   Potential Payments Upon Termination or Change in Control

     42   
          

Item 3—Advisory Vote on Executive Compensation

     45   
          
Item 4—Shareholder Proposal—Adoption of Mandatory Policy Requiring an Independent Chairman of the Board      46   
          

Report of the Audit Committee of the Board of Directors

     51   
          

Compensation Committee Interlocks and Insider Participation

     52   
          

Certain Relationships and Related Transactions

     52   
          

Communications With Directors

     53   
          

2014 Shareholder Proposals

     53   
          

Other Matters; Directions

     53   
          

2012 Annual Report on Form 10-K

     54   
          

APPENDIX A: Reconciliation of Non-GAAP Measures (Unaudited)

     A-1   
  


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Voting Rights, Proxies and Solicitation

 

  

 

General

 

 

We are furnishing this Proxy Statement to shareholders of Mylan Inc., a Pennsylvania corporation (“Mylan” or the “Company”), in connection with the solicitation of proxies by our Board of Directors (the “Board”) for use at the 2013 Annual Meeting of Shareholders (the “Annual Meeting”) and at any adjournment or postponement thereof. The Annual Meeting is scheduled to be held on Friday, May 24, 2013, at 10:30 a.m. (ET), at the Sofitel Washington DC Lafayette Square, 806 15th Street, NW, Washington, D.C. 20005, for the purposes set forth in the accompanying Notice of Annual Meeting. We are mailing this Proxy Statement and the enclosed proxy card to shareholders on or about April 12, 2013.

Your Board has fixed the close of business on March 22, 2013 as the record date (the “Record Date”) for the determination of shareholders entitled to notice of, and to vote at, the Annual Meeting and any adjournment or postponement thereof. As of the close of business on the Record Date, there were 382,710,089 shares of Mylan common stock, par value $0.50 per share (“Common Stock”), outstanding and entitled to vote. Each share of Common Stock is entitled to one vote on each matter properly brought before the Annual Meeting. Shareholders do not have cumulative voting rights.

Quorum

 

 

Holders of a majority of the outstanding shares of Mylan Common Stock entitled to vote on the Record Date must be present in person or represented by proxy to constitute a quorum. Proxies marked as abstaining and proxies returned by brokers as “non-votes” because they have not received voting instructions from the beneficial owners of the shares each will be treated as shares present for purposes of determining the presence of a quorum.

Voting

 

Shareholders may cast their votes at the meeting, over the Internet, by submitting a printed proxy card, or by calling a toll-free number.

If you vote by proxy, the individuals named on the enclosed proxy card will vote your shares in the manner that you indicate. If you do not specify voting instructions, then the proxy will be voted in accordance with recommendations of the Board, as described in this Proxy Statement. If any other matter properly comes before the Annual Meeting, the designated proxies will vote on that matter in their discretion.

If your shares are held in the name of a brokerage firm, bank nominee or other institution, please sign, date and mail the enclosed instruction card in the enclosed postage-paid envelope or contact your broker, bank nominee or other institution to determine whether you will be able to vote over the Internet or by telephone.

If you come to the Annual Meeting to cast your vote in person and you are holding your shares in a brokerage account or through a bank or other nominee (“street name”), you will need to bring a legal proxy obtained from your broker, bank or nominee that authorizes you to vote your shares in person.

Your vote is important. We encourage you to sign and date your proxy card and return it in the enclosed postage-paid envelope, or to vote over the Internet or by telephone, so that your shares may be represented and voted at the Annual Meeting.

Revoking a Proxy

 

 

You may revoke your proxy at any time before it is voted by submitting another properly executed proxy showing a later date, by: filing a written notice of revocation with Mylan’s Corporate Secretary; casting a new vote over the Internet or telephone; or voting in person at the Annual Meeting. The contact information for the Company’s Corporate Secretary is provided in the section entitled “Communications With Directors” on page 53.

 

 

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2013 Annual Meeting of Shareholders

 

Votes Required

 

 

Election of Directors

A Director nominee must receive a majority of the votes cast; in other words, the number of shares voted “for” a Director must exceed 50% of the votes cast with respect to that Director. Abstentions and broker non-votes, if any, are not considered votes cast and will have no effect on the outcome of the vote.

If a Director receives less than a majority of the votes cast, the Director shall submit his or her resignation to the Chairman of the Board for consideration by the Governance and Nominating Committee. The Committee will then make a recommendation to the Board on whether to accept or reject the resignation or whether other action should be taken. The Board will act on the Committee’s recommendation and publicly disclose its decision and rationale within 90 days from the date of the certification of the election results.

You may vote either “FOR”, “AGAINST”, or “ABSTAIN” with respect to each nominee for the Board.

Plurality voting will apply to contested elections. For example, if there are more Director nominees than there are Board positions available, the nominees receiving the most votes cast regardless of whether they received a majority of votes cast will be elected to the available Board positions. There is no contested election at this year’s meeting.

Ratification of Selection of Deloitte & Touche LLP as the Company’s Independent Registered Public Accounting Firm; Advisory Vote on Executive Compensation; and Consideration of a Shareholder Proposal.

The ratification of the selection of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2013, the advisory non-binding vote on executive compensation, and the consideration of the shareholder proposal requesting adoption of a policy to have an independent Chairman of the Board will require the affirmative vote of a majority of the votes cast by shareholders entitled to vote. Abstentions and broker non-votes, if any, are not considered votes cast and will have no effect on the outcome of the vote on any of these proposals.

If the selection of Deloitte & Touche LLP is not ratified by shareholders, the Audit Committee will reconsider its recommendation.

Multiple Shareholders Sharing the

Same Address

 

 

In accordance with the notices previously sent to street name shareholders who share a single address, we are sending only one Proxy Statement to that address unless we have received contrary instructions from any shareholder at that address. This practice, known as “householding,” is designed to reduce printing and postage costs. However, if any shareholder residing at such an address wishes to receive a separate Proxy Statement, we will promptly deliver the requested documents upon written or oral request to Mylan’s Corporate Secretary. If you are receiving multiple copies of this Proxy Statement, you can request householding by contacting Mylan’s Corporate Secretary. The contact information for the Company’s Corporate Secretary is stated under the section entitled “Communications With Directors” on page 53.

Proxy Solicitation

 

 

Mylan will bear the cost of this solicitation, including the preparation, assembly, printing, and mailing of this Proxy Statement and any additional materials furnished by our Board to shareholders. Proxies may be solicited by Directors, officers and employees of Mylan and its subsidiaries without additional compensation. Copies of solicitation material will be furnished to brokerage firms, banks and other nominees holding shares in their names that are beneficially owned by others so that they may forward this solicitation material to these beneficial owners. If asked, we will reimburse these persons for their reasonable expenses in forwarding the solicitation material to the beneficial owners. The original solicitation of proxies by mail may be supplemented by telephone, telegram, facsimile, Internet, and personal solicitation by our Directors, officers or other employees. In addition, the Company has retained Morrow & Co., LLC, 470 West Ave., Stamford, CT 06902 to assist in soliciting proxies at a cost of approximately $10,000 plus expenses.

 

 

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Item 1—Election of Directors

 

  

 

Mylan’s Board currently consists of 13 members. All nominees listed below have previously been elected as Directors by shareholders, except for Ms. Higgins and Mr. Malik, who were appointed as Directors of the Company by the Board on February 6, 2013. Our Directors are elected to serve for a one-year term and until his or her successor is duly elected and qualified. Each of the 13 nominees listed below has consented to act as a Director of Mylan if elected. If, however, a nominee is unavailable for election at the time of the Annual Meeting, proxy holders will vote for another nominee proposed by the Board or, as an alternative, the Board may reduce the number of Directors to be elected at the Annual Meeting.

Director Nominees

 

 

Information about each Director nominee is set forth below, including the nominee’s principal occupation and business experience, other directorships, age and tenure on the Company’s Board.

 

 Name, Age and Year

 First Became a Director        

 

Principal Occupation and Business Experience;

Other Directorships and Qualifications

 Heather Bresch

 Age 43

 2011

 

  LOGO

 

 

Ms. Bresch has served as Mylan’s CEO since January 1, 2012. Throughout her 20-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 Mylan’s President from July 2009 and was responsible for the day-to-day operations of the Company. Before that, she served as Mylan’s Chief Operating Officer and Chief Integration Officer from October 2007 to July 2009, leading the successful integration of two transformational international acquisitions – Matrix Laboratories and Merck KGaA’s generics and specialty pharmaceuticals businesses. During her career, Ms. Bresch has championed initiatives aimed at improving product quality and removing barriers to patient access to medicine, including working to improve access to treatment for HIV/AIDS patients and better ensuring the quality of pharmaceutical products sold in the United States. Ms. Bresch’s extensive industry and leadership experience and abilities, as well as her judgment and unique and in-depth knowledge about the Company, led the Board to again nominate Ms. Bresch as a Director.

 

 

 Wendy Cameron

 Age 53

 2002

 

  LOGO

 

 

Ms. Cameron has served as Director and Co-Owner of Cam Land LLC, a harness racing business in Washington, Pennsylvania, since January 2003. From 1981 to 1998, she was Vice President, Divisional Sales & Governmental Affairs, Cameron Coca-Cola Bottling Company, Inc. Ms. Cameron served as Chairman of the Washington Hospital Board of Trustees and of the Washington Hospital Executive Committee until she stepped down in 2012. She had been a member of the hospital’s Board of Trustees since 1997 and a member of the Washington Hospital Foundation Board since 1993. In addition to being a business owner and having held an executive position with one of the nation’s largest bottlers for nearly 20 years, Ms. Cameron’s 11-year tenure on the Mylan Board has come during a period of massive growth at the Company, and Ms. Cameron gained invaluable experience regarding the business, platforms, strategies, challenges, opportunities, and management of the Company, among other matters. This experience, as well as her commitment to community service, leadership experience, and judgment, led the Board to again nominate Ms. Cameron as a Director.

 

 

 

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 2013 Annual Meeting of Shareholders

 

 Director Nominees (continued)

 

 Name, Age and Year

 First Became a Director        

 

Principal Occupation and Business Experience;

Other Directorships and Qualifications

 Robert J. Cindrich

 Age 69

 2011

 

  LOGO

 

 

Since February 2011, Mr. Cindrich has served as the President of Cindrich Consulting, LLC, a business and healthcare consulting company that advises clients on corporate governance, compliance, and business strategies. In May 2012, he joined the Board of Directors of Allscripts Healthcare Solutions, Inc., which provides healthcare information technology solutions. From 2004 through 2012, Mr. Cindrich served as a senior advisor to the Office of the President of the University of Pittsburgh Medical Center (“UPMC”), a global health enterprise. From 2004 through 2011, Mr. Cindrich was the Chief Legal Officer of UPMC. From 1994 through 2004, Mr. Cindrich served as a judge on the United States District Court for the Western District of Pennsylvania. Prior to that appointment, he was active as an attorney in both government and private practice, including positions as the Allegheny County Assistant Public Defender and Assistant District Attorney, and as the U.S. Attorney for the Western District of Pennsylvania. Mr. Cindrich’s extensive legal and leadership experience, as well as his in-depth knowledge of the healthcare industry and judgment, led the Board to again nominate Mr. Cindrich as a Director.

 

 Robert J. Coury

 Age 52

 2002

 

  LOGO

 

Mr. Coury has served as Chairman of the Board of Mylan since May 2009, and as Executive Chairman since January 1, 2012. Prior to serving as Chairman, he served as Vice Chairman of the Board commencing in March 2002. Mr. Coury also served as Mylan’s Chief Executive Officer from September 2002 to December 31, 2011. Under Mr. Coury’s direction, the Company has experienced outstanding growth and performance and has transformed into a global industry leader and a supplier of high-quality pharmaceutical products. Under his leadership, the Company executed the transformational acquisitions of Matrix Laboratories Limited and Merck KGaA’s generics and specialty pharmaceutical businesses, and has grown from a 2,500 employee, U.S.-based company to a world-renowned global company with a workforce of over 20,000 employees operating in approximately 140 countries. Before joining Mylan, he was Chief Executive Officer and principal owner of Coury Consulting, L.P., a Pittsburgh, Pennsylvania corporate advisory firm that he founded in 1989. Mr. Coury’s prior business experience, his in-depth knowledge of the Company, its businesses, and management, and his leadership experience as the Company’s CEO, as well as his judgment, strategic vision, and service as Vice Chairman and then Chairman of the Board for over ten years – the most transformational time in the Company’s history – led the Board to again nominate Mr. Coury as a Director.

 

 Neil Dimick, C.P.A.*

 Age 63

 2005

 

  LOGO

 

 

 

Currently retired, Mr. Dimick previously served as Executive Vice President and Chief Financial Officer of Amerisource Bergen Corporation, a wholesale distributor of pharmaceuticals, from 2001 to 2002. From 1992 to 2001, he was Senior Executive Vice President and Chief Financial Officer of Bergen Brunswig Corporation, a wholesale drug distributor. Prior to that experience, Mr. Dimick served as a partner with Deloitte & Touche LLP for 8 years. Mr. Dimick also serves on the Boards of Directors of WebMD Health Corp., Thoratec Corporation, and Resources Connection, Inc. Mr. Dimick served on the Board of Directors of HLTh Corporation from 2002 to 2009, at which time it was merged into WebMD Health Corp. Mr. Dimick’s 8-year tenure on the Mylan Board has come during a period of massive growth at the Company, and Mr. Dimick gained invaluable experience regarding the business, platforms, strategies, challenges, opportunities, and management of the Company, among other matters. This experience, as well as his substantial industry experience, business and accounting background, and judgment, led the Board to again nominate Mr. Dimick as a Director.

 

 

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Item 1—Election of Directors

 

 Director Nominees (continued)

 

 Name, Age and Year

 First Became a Director        

 

Principal Occupation and Business Experience;

Other Directorships and Qualifications

 Melina Higgins

 Age 45

 2013

 

  LOGO

 

Currently retired, Ms. Higgins previously served as a Partner and Managing Director, and in other senior roles at Goldman Sachs during her nearly 20-year career at the firm. During her tenure at Goldman Sachs, Ms. Higgins served as a member of the Investment Committee of the Principal Investment Area, which oversaw and approved global private equity and private debt investments and was one of the largest alternative asset managers in the world. She also served as head of the Americas as well as co-chairperson of the Investment Advisory Committee for the GS Mezzanine Partners funds, which managed over $30 billion of assets and was the global leader in its industry. This experience, as well as her broader experience in finance and judgment, led the Board to nominate Ms. Higgins as a Director.

 

 

 Douglas J. Leech, C.P.A.*

 Age 58

 2000

 

  LOGO

 

 

Mr. Leech is the founder and principal of DLJ Advisors. From 1999 to 2011, he was Founder, Chairman, President and Chief Executive Officer of Centra Bank, Inc. and Centra Financial Holdings, Inc., prior to which he was Chief Executive Officer and President of Huntington National Bank. Mr. Leech is also on the Board of Directors of United Bankshares, Inc. Mr. Leech’s public accounting, audit and professional experience has provided him both financial and business expertise and leadership experience. In addition, his 13-year tenure on the Mylan Board has come during a period of massive growth at the Company, and Mr. Leech gained invaluable experience regarding the business, platforms, strategies, challenges, opportunities, and management of the Company, among other matters. This experience, as well as his years of business experience and judgment, led the Board to again nominate Mr. Leech as a Director.

 

 

 Rajiv Malik

 Age 52

 2013

 

  LOGO

 

 

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

 

 

 

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 2013 Annual Meeting of Shareholders

 

 Director Nominees (continued)

 

 Name, Age and Year

 First Became a Director        

 

Principal Occupation and Business Experience;

Other Directorships and Qualifications

 Joseph C. Maroon, M.D.

 Age 72

 2003

 

  LOGO

 

 

 

Dr. Maroon is currently Professor, Heindl Scholar in Neuroscience and Vice Chairman of the Department of Neurosurgery, University of Pittsburgh Medical Center, and has held other positions at UPMC since 1998. He has also served as the team neurosurgeon for the Pittsburgh Steelers since 1981. From 1995 to 1998, Dr. Maroon was Professor and Chairman of the Department of Surgery at Allegheny General Hospital, and from 1984 to 1999 he was Professor and Chairman of the Department of Neurosurgery at Allegheny General Hospital. Dr. Maroon has earned numerous awards for his contributions to neurosurgery from various national and international neurological societies throughout his career, and patients travel from all over the world to seek his care. In addition, his 10-year tenure on the Mylan Board has come during a period of massive growth at the Company, and Dr. Maroon gained invaluable experience regarding the business, platforms, strategies, challenges, opportunities, and management of the Company, among other matters. This experience, as well as Dr. Maroon’s exceptional medical and leadership experience and judgment, led the Board to again nominate Dr. Maroon as a Director.

 

 

 

 Mark W. Parrish

 Age 57

 2009

 

  LOGO

 

 

 

Mr. Parrish has served as Chairman and CEO of Trident USA Health Services, a provider of mobile X-ray and laboratory services to the long-term care industry, since 2008. Since January 2013, Mr. Parrish has served on the Board of Directors of Omnicell, Inc., a company that specializes in healthcare technology. From 2001 to 2007, Mr. Parrish held management roles of increasing responsibilities with Cardinal Health Inc. and its affiliates, including Chief Executive Officer of Healthcare Supply Chain Services for Cardinal Health from 2006 to 2007. Mr. Parrish also serves as President of the International Federation of Pharmaceutical Wholesalers, an association of pharmaceutical wholesalers and pharmaceutical supply chain service companies, and senior adviser to Frazier Healthcare Ventures, a healthcare oriented growth equity firm. Mr. Parrish’s extensive industry, business, and leadership experience, knowledge of the healthcare industry, and judgment, led the Board to again nominate Mr. Parrish as a Director.

 

 

 

 Rodney L. Piatt, C.P.A.*

 Age 60

 2004

 

  LOGO

 

 

Mr. Piatt is the Lead Independent Director and has served as Vice Chairman of the Board of Mylan since May 2009. Since 1996, he has also been President and owner of Horizon Properties Group, LLC, a real estate and development company. Since 2003, Mr. Piatt has also served as Chief Executive Officer and Director of Lincoln Manufacturing Inc., a steel and coal manufacturing company. Mr. Piatt brings extensive experience to the Board as an auditor and a successful business owner. In addition, his 9-year tenure on the Mylan Board has come during a period of massive growth at the Company, and Mr. Piatt gained invaluable experience regarding the business, platforms, strategies, challenges, opportunities, and management of the Company, among other matters. This experience, as well as his financial and business expertise, leadership experience, and judgment, led the Board to again nominate Mr. Piatt as a Director.

 

 

 

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Item 1—Election of Directors

 

 Director Nominees (continued)

 

 Name, Age and Year

 First Became a Director        

 

Principal Occupation and Business Experience;

Other Directorships and Qualifications

 C.B. Todd

 Age 79

 1993

 

  LOGO

 

 

Currently retired, Mr. Todd served as President and Chief Operating Officer of Mylan from 2001 to 2002. From 1970 until his initial retirement from Mylan in 1999, he served Mylan in various capacities, including Senior Vice President (1987-1999), President, Mylan Pharmaceuticals (1991-1999), Senior Vice President, Mylan Pharmaceuticals (1987-1991), and Vice President-Quality Control, Mylan Pharmaceuticals (1978-1987). In addition to his long-term experience with and commitment to the Company as both an executive officer and Director spanning over 30 years, his most recent tenure on the Mylan Board has come during a period of massive growth at the Company, and Mr. Todd gained invaluable experience regarding the business, platforms, strategies, challenges, opportunities, and management of the Company, among other matters. This experience, as well as Mr. Todd’s years of experience in the industry and his judgment, led the Board to again nominate Mr. Todd as a Director.

 

 

 Randall L. (Pete)

 Vanderveen, Ph.D., R.Ph

 Age 62

 2002

 

  LOGO

 

 

Dr. Vanderveen has served as Dean, John Stauffer Decanal Chair of the School of Pharmacy, University of Southern California since September 2005. From 1998 to 2005, he served as Dean of the School of Pharmacy and Graduate School of Pharmaceutical Science and Professor of Pharmacy at Duquesne University, Pittsburgh, Pennsylvania, before which he was Assistant Dean and Associate Professor at Oregon State University, in Portland, Oregon from 1988 to 1998. Dr. Vanderveen has an extensive pharmaceutical and academic background. In addition, his 11-year tenure on the Mylan Board has come during a period of massive growth at the Company, and Dr. Vanderveen gained invaluable experience regarding the business, platforms, strategies, challenges, opportunities, and management of the Company, among other matters. This experience, as well as Dr. Vanderveen’s pharmaceutical and leadership experience and judgment, led the Board to again nominate Dr. Vanderveen as a Director.

 

 

 *   All C.P.A. distinctions in this Proxy Statement refer to “inactive” status.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR THE ELECTION OF EACH OF THE NOMINEES DISCUSSED ABOVE.

 

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2013 Annual Meeting of Shareholders

 

 

Meetings of the Board

 

 

Your Board met 15 times in 2012. In addition to meetings of the Board, Directors attended meetings of individual Board Committees. All of the Directors attended at least 75% of the Board meetings and meetings of Board Committees of which they were a member during the periods for which he or she served. In addition to Board and Committee meetings, all members of the Board attended the 2012 Annual Meeting of Shareholders, except for Ms. Higgins, who was not a member of the Board at that time (Mr. Malik attended the 2012 Annual Meeting of Shareholders, but not as a member of the Board).

Non-management members of the Board meet in executive session from time to time. Neither the Chief Executive Officer nor any other member of management attends such meetings of non-management Directors. Rodney Piatt, the Vice Chairman of the Board, has been designated as the Lead Independent Director and presides at such executive sessions. For information regarding how to

communicate with non-employee Directors as a group and one or more individual members of the Board, see “Communications With Directors” on page 53.

Board Committees

 

 

The standing Committees of the Board include the Audit Committee, the Compensation Committee, the Compliance Committee, the Executive Committee, the Finance Committee, the Governance and Nominating Committee, and the Science and Technology Committee. Each Committee operates under a written charter, current copies of which are available on the Company’s corporate website at http://investor.mylan.com under the heading “Corporate Governance.” Copies of the charters are also available in print to shareholders upon request, addressed to Mylan’s Corporate Secretary at 1500 Corporate Drive, Canonsburg, Pennsylvania 15317.

The table below provides 2012 membership and meeting information for the noted Board Committees.

 

 

  Director

    Audit       Compensation        Compliance        Executive        Finance     Governance
and

   Nominating  

  Science and
  Technology  

  Heather Bresch

 

              X

 

  Wendy Cameron

 

    X

 

        X

 

 

  Robert J. Cindrich

 

      X

 

        X

 

  Robert J. Coury

 

        C

 

     

  Neil Dimick, C.P.A.

 

  C

 

      X

 

  C

 

   

  Douglas J. Leech,

  C.P.A.

  X         X   C  

  Joseph C. Maroon,

  M.D.

    X           C

  Mark W. Parrish

 

      C

 

    X

 

   

  Rodney L. Piatt, C.P.A.

 

  X

 

  C

 

    X

 

  X

 

  X

 

 

  C.B. Todd

 

      X

 

       

  Randall L. (Pete)

  Vanderveen, Ph.D.,

  R.Ph

      X         X

  Meetings during 2012

 

  7

 

  8

 

  3

 

  3

 

  10

 

  4

 

  1

 

  Ms. Higgins and Mr. Malik

  joined the Board in 2013 and

  are not included in the above

  chart.

  C = Chairperson

X = Member

       

 

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Audit Committee and Audit Committee Financial Expert. The Audit Committee’s responsibilities include, among others, the appointment, compensation, retention and oversight of the Company’s independent registered public accounting firm; reviewing with the independent registered public accounting firm the scope of its audit plan and related fees and the results of its audit; reviewing the Company’s internal audit scope, plan and ongoing results; and reviewing with management both the Company’s financial statements and related disclosures and its assessment of the Company’s internal control over financial reporting. All of the members of the Audit Committee are independent Directors, as required by and as defined in the audit committee independence standards of the Securities and Exchange Commission (the “SEC”) and the NASDAQ listing standards. The Board has determined that each of the Audit Committee members—Mr. Dimick, Mr. Leech, and Mr. Piatt—is an “audit committee financial expert,” as that term is defined in the rules of the SEC. The Board has determined with regard to Mr. Dimick, who serves on the audit committees of more than three public companies, that such simultaneous service does not impair his ability to effectively serve on Mylan’s Audit Committee.

Compensation Committee. The Compensation Committee approves and reviews the Company’s compensation philosophy, strategy, and objectives, and oversees and approves the compensation program for the Company’s executive officers. The Compensation Committee plays a very active role, including the review of the Company’s compensation programs in light of industry practices, the Company’s strategic goals and emerging trends, executive retention needs, and performance, and seeks to ensure alignment with shareholder interests and strong links between executive pay and performance. The Compensation Committee also oversees the Company’s equity compensation and benefit plans. All of the members of the Compensation Committee are independent Directors as defined in the applicable NASDAQ listing standards.

Compliance Committee. The Compliance Committee oversees and makes recommendations to the Board regarding the implementation, maintenance, and monitoring of the Company’s Corporate Compliance Program and Code of Business Conduct and Ethics. All of the members of the Compliance Committee are independent Directors as defined in the applicable NASDAQ listing standards.

Executive Committee. The Executive Committee exercises those powers of the Board not otherwise limited by a resolution of the Board or by law during the intervals between meetings of the Board.

Finance Committee. The Finance Committee advises the Board with respect to material financial matters and transactions of the Company including, but not limited to, material mergers, acquisitions, and combinations with other companies; the establishment of credit facilities; potential financings with commercial lenders; the issuance and repurchase of the Company’s debt and equity securities; and swaps and other derivatives transactions. All of the members of the Finance Committee are independent Directors as defined in the applicable NASDAQ listing standards.

Governance and Nominating Committee. The Governance and Nominating Committee (the “G&N Committee”) is responsible for, among other matters, recommending to the Board candidates for nomination to the Board and principles of the Company’s corporate governance. All of the members of the G&N Committee are independent Directors as defined in the applicable NASDAQ listing standards.

Science and Technology Committee. The Science and Technology Committee serves as a sounding board for management and, at the Board’s request, reviews management and third-party presentations regarding emerging scientific developments, reviews new technology in which the Company is investing, and reviews the overall strategy and direction of the Company’s research and development program.

Consideration of Director Nominees

 

 

For purposes of identifying individuals qualified to become members of the Board and consistent with the Company’s Corporate Governance Principles, the G&N Committee has adopted the following criteria with regard to traits, abilities and experience that the Board looks for in determining candidates for election to the Board:

 

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

 

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

 

  Directors should have relevant expertise and experience and be able to offer advice and guidance to executive management based on that expertise and experience.

 

  Directors should have the ability to exercise sound business judgment.
 

 

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In addition, a majority of the members of the Board should be “independent,” not only as that term may be defined legally or mandated by the applicable NASDAQ listing standards, but also without the appearance of any conflict in serving as a Director. For a Director to be considered independent, the Board must determine that he or she does not have any material relationship with the Company, either directly or indirectly (other than in his or her capacity as a Director).

While the G&N Committee does not have a formal policy with respect to diversity, the Committee and the Board as a whole believe that it is important for Board members to represent diverse viewpoints, and further that the backgrounds and qualifications of the Directors, considered as a group, should provide a significant composite mix of experience, knowledge and abilities.

The G&N Committee identifies new potential nominees by, among other things, asking current Directors and executive officers to notify the G&N Committee if they become aware of persons, meeting the criteria described above, who would be good candidates for service on the Board. The G&N Committee may, from time to time, engage firms that specialize in identifying Director candidates.

The G&N Committee also will consider Director candidates properly submitted by shareholders. In considering candidates submitted by shareholders, the G&N Committee will take into consideration the needs of the Board and the qualifications of the candidate, including, among other things, those traits, abilities, and experiences described above. Any submission to the G&N Committee of a proposed candidate for consideration must include the name of the proposing shareholder and evidence of such person’s ownership of Mylan stock, and the name of the proposed candidate, his or her resume or a listing of his or her qualifications to be a Director of the Company, and the proposed candidate’s signed consent to be named as a Director if recommended by the G&N Committee and elected by the Board. Such information will be considered by the Chairman of the G&N Committee, who will present the information on the proposed candidate to the entire G&N Committee and subsequently, if recommended by the Committee, to the Board.

Any shareholder recommendation of a proposed candidate must be sent to Mylan’s Corporate Secretary at 1500 Corporate Drive, Canonsburg, Pennsylvania 15317, not later than 120 days prior to the anniversary date of the Company’s most recent annual meeting of shareholders.

Once a person has been identified by the G&N Committee as a potential candidate, the G&N Committee may collect and review publicly available information regarding the person to assess whether the person should be considered further. If the G&N Committee determines that the candidate warrants further consideration, the Chairman or another member of the G&N Committee will contact the person. Generally, if the person expresses a willingness to be considered and to serve on the Board, the G&N Committee will request information from the candidate, review the candidate’s accomplishments and qualifications, including in light of any other candidates that the G&N Committee might be considering, and conduct one or more interviews with the candidate. In certain instances, G&N Committee members may contact one or more references provided by the candidate or may contact other members of the business community or other persons that may have greater first-hand knowledge of the candidate’s accomplishments. The G&N Committee’s evaluation process does not vary based on whether or not a candidate is recommended by a shareholder.

Ms. Higgins was recommended for consideration by the Governance and Nominating Committee by a current member of the Board.

Director Independence

 

 

The Board has determined that Ms. Cameron, Mr. Cindrich, Mr. Dimick, Ms. Higgins, Mr. Leech, Dr. Maroon, Mr. Parrish, Mr. Piatt, Mr. Todd, and Dr. Vanderveen have no material relationships with the Company, and has concluded that they are independent Directors under the applicable NASDAQ listing standards. With respect to Messrs. Leech, Piatt, and Todd, the Board considered their past relationships with the Company, which relationships are no longer in existence, and determined that such past relationships are not material. Mr. Coury, Ms. Bresch, and Mr. Malik are not independent Directors due to their current service as the Company’s Executive Chairman, Chief Executive Officer, and President, respectively.

Board Education

 

 

From time-to-time the Board or individual Board members participate in Director educational programs. Most recently, in February 2013, all Board members participated in several days of educational programs conducted by senior management and external advisors.

 

 

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Item 1—Election of Directors

 

Board of Directors Leadership Structure

 

 

Mylan’s Board annually elects one of its own members as the Chairman of the Board. Mr. Coury has served as the Chairman of the Board since being appointed in May 2009. The independent Directors on the Board believe that Mr. Coury’s extensive knowledge of the industry, Mylan’s businesses and global platform, management, and the opportunities and challenges anticipated in the future make him the ideal person to lead the Board at this time in the Company’s history. Mr. Coury previously served as Chief Executive Officer of the Company from September 2002 to the end of 2011. Effective January 1, 2012, Mr. Coury was elected as Executive Chairman of the Board. At that time, the Board also appointed Ms. Bresch as Chief Executive Officer. See “Compensation Discussion and Analysis” on page 18 for a discussion of these enhancements to the Company’s corporate leadership structure.

Although the Board has no fixed policy with respect to the separation of the offices of Chairman of the Board and Chief Executive Officer, the Board strongly believes that this new, enhanced management structure is ideal for Mylan at this time in its history, and that it has produced outstanding results for shareholders. The Board believes that the Company and its shareholders have benefited and continue to benefit from the respective leadership, judgment, and experience of the Executive Chairman, Mr. Coury, and the Chief Executive Officer, Ms. Bresch, both of whom share a vision for the Company that is consistent with the Board’s philosophy.

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

In addition to the enhanced management structure, in 2012, the Board appointed Mr. Piatt as Lead Independent Director based on, among other factors, Mr. Piatt’s long tenure as a Director of the Company, outstanding business judgment, recognized leadership abilities, and strong independence. The Board believes that this appointment only further enhances the Board’s already strong independent oversight of the Company. As Lead Independent Director, Mr. Piatt has authority to preside at executive sessions of the Board and at meetings of the Board where the Chairman is not

present; has the authority to call meetings of the non-employee Directors; and he serves on the Executive Committee of the Board of Directors. In addition, the Lead Independent Director has authority to approve meeting agendas, schedules, and information sent to the Board, and serves as the point person for shareholders wishing to communicate with the Board and as a liaison between the Chairman and independent Directors.

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

 

  Ten of the thirteen members of our Board are independent;

 

  The Board has established robust corporate governance principles, which are publicly available on our website;

 

  The Audit, Compensation, Compliance, Finance and G&N Committees are all composed entirely of independent Directors; and

 

  The Board has unrestricted access to management and can retain subject matter experts and advisors to consult on any matter brought before the Board or any of its committees.

Board of Directors Risk Oversight

 

 

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

 

 

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2013 Annual Meeting of Shareholders

 

In addition, the independent Compensation Committee is responsible for overseeing the Company’s compensation risk as discussed further beginning on page 32 under “Consideration of Risk in Company Compensation Policies.”

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

Code of Ethics; Corporate Governance Principles; Code of Business Conduct and Ethics

 

 

The Board has adopted a Code of Ethics for the Chief Executive Officer, Chief Financial Officer, and Corporate Controller. The Board also has adopted Corporate Governance Principles as well as a Code of Business Conduct and Ethics applicable to all Directors, officers, and employees. Current copies of the Code of Ethics, the Corporate Governance Principles, and the Code of Business Conduct and Ethics are posted on the Company’s website at http://investor.mylan.com under the heading “Corporate Governance.” Copies of the Code of Ethics, the Corporate Governance Principles, and the Code of Business Conduct and Ethics are also available in print to shareholders upon request, addressed to Mylan’s Corporate Secretary at 1500 Corporate Drive, Canonsburg, Pennsylvania 15317. The Company intends to post any amendments to or waivers from the Code of Ethics on its website.

 

 

 

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Non-Employee Director Compensation for 2012  

 

  

 

 

The following table sets forth information concerning the compensation earned by the non-employee Directors for 2012. Directors who are also employees of the Company do not receive any consideration for their service on the Board. A discussion of the elements of non-employee Director compensation follows the table.

 

 Name (1)     

 

Fees Earned

or  Paid

in Cash ($)

      

Option

Awards

($) (2)

    

RSUs

($) (2)

    

All Other
Compensation

($)

 

Total

($)

   

 Wendy Cameron

       85,000              87,501      109,368        281,869  

 Robert J. Cindrich

       80,000              87,501      109,368        276,869  

 Neil Dimick, C.P.A.

       105,000              87,501      109,368        301,869  

 Douglas J. Leech, C.P.A.

       92,500              87,501      109,368        289,369  

 Joseph C. Maroon, M.D.

       90,000              87,501      109,368        286,869  

 Mark W. Parrish

       85,000              87,501      109,368        281,869  

 Rodney L. Piatt, C.P.A.

       112,500              87,501      109,368        309,369  

 C.B. Todd

       77,500              87,501      109,368      11,749 (3)   286,118  

 Randall L. (Pete) Vanderveen, Ph.D.,

 R.Ph

       80,000              87,501      109,368        276,869  

 

(1)   Ms. Higgins joined the Board in February 2013 and did not receive compensation as a Director of the Company in 2012.

 

(2)   Represents the grant date fair value of the specific award granted to the Director. Option awards and restricted stock unit (“RSU”) awards granted in 2012 vest on May 4, 2013. For information regarding assumptions used in determining such amount, please refer to Note 11 to the Company’s Consolidated Financial Statements contained in its Annual Report for the year ended December 31, 2012 on Form 10-K (the “Form 10-K”), filed with the SEC. The aggregate shares subject to stock options held by the non-employee Directors as of December 31, 2012 are as follows: Ms. Cameron, 109,928; Mr. Cindrich, 24,022; Mr. Dimick, 69,928; Mr. Leech, 65,648; Dr. Maroon, 109,928; Mr. Parrish, 47,795; Mr. Piatt, 109,928; Mr. Todd, 109,928; and Dr. Vanderveen, 109,928. The aggregate, unvested RSUs held by each of the non-employee Directors as of December 31, 2012, were 5,208.

 

(3)   Represents the aggregate incremental cost to the Company of the personal use of Company-owned aircraft. For a summary of how this amount is calculated, please see footnote (b) to the Summary Compensation Table on page 35.

 

The non-employee Directors receive $75,000 per year in cash compensation for their service on the Board. Non-employee Directors are also reimbursed for actual expenses relating to meeting attendance.

In addition:

 

  The Chairperson of the Audit Committee receives an additional fee of $25,000 per year;

 

  The Chairperson of the Compensation Committee receives an additional fee of $15,000 per year;

 

  The Chairpersons of the Finance Committee, the G&N Committee, the Compliance Committee, and the Science and Technology Committee each receive an additional fee of $7,500 per year;

 

  Each member of the Audit Committee and the Compensation Committee receives an additional fee of $7,500 per year;

 

  Each member of the Finance Committee, the G&N Committee, and the Compliance Committee and each independent member of the Science and Technology Committee receives an additional fee of $2,500 per year, for each Committee on which they serve; and

 

  Mr. Piatt, as the Lead Independent Director, receives an additional fee of $15,000 per year.

Non-employee Directors, at the discretion of the full Board, are eligible to receive stock options or other awards under the 2003 Long-Term Incentive Plan (the “2003 Plan”). At the Board’s annual meeting following the Annual Meeting of Shareholders in May 2012, each non-employee Director was granted an option to purchase 13,158 shares of Common Stock, at an exercise price of $21.00 per share, the closing price per share of the Company’s Common Stock on the date of grant, which option vests on the first anniversary of the date of grant, and 5,208 restricted stock units, also vesting on the first anniversary of the grant date.

In 2013, the Board adopted stock ownership requirements for non-employee Directors. Directors are required to hold shares valued at three times their annual retainer as long as they remain on the Board. Board members have five years from the later of the adoption of the policy and their election to the Board to achieve this requirement. The policy was adopted to further demonstrate the alignment of Directors’ interests with shareholders for the duration of their service. All Directors, except for Mr. Cindrich and Ms. Higgins, are in compliance with the requirement. Mr. Cindrich joined the Board in March 2011, and he has until January 2018 to satisfy these ownership requirements. Ms. Higgins joined the Board in February 2013, and she has until February 2018 to satisfy these ownership requirements.

 

 

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Security Ownership of Certain Beneficial Owners

and Management

 

  

 

Security Ownership of Directors, Nominees and Executive Officers

 

 

The following table sets forth information regarding the beneficial ownership of Mylan Common Stock as of March 26, 2013 by the Company’s Chief Executive Officer, Chief Financial Officer, and the three other most highly compensated executive officers of the Company who were serving at the end of 2012, as well as by our Directors, and by all Directors and executive officers of the Company as a group (based on 380,871,467 shares of Common Stock outstanding as of such date). For purposes of this table, and in accordance with the rules of the SEC, shares are considered “beneficially owned” if the person, directly or indirectly, has sole or shared voting or investment power over such shares. A person is also considered to beneficially own shares that he or she has the right to acquire within 60 days of March 26, 2013. To the Company’s knowledge, the persons in the following table have sole voting and investment power, either directly or through one or more entities controlled by such person, with respect to all of the shares shown as beneficially owned by them, unless otherwise indicated in the footnotes below.

 

 

Name of Beneficial Owner

    

 

 

 

Amount and

Nature  of

Beneficial

Ownership

  

  

  

  

      

 

 

 

Options  Exercisable

and Restricted

Shares Vesting

within 60 Days

    

 

Percent of

Class

  

  

 

Heather Bresch

     230,956        (1)      618,448           *       
 

Wendy Cameron

     40,928             115,136      (2)            *       
 

Robert J. Cindrich

     4,576             29,230      (3)            *       
 

Robert J. Coury

     1,087,411        (4)      879,333           *       
 

Neil Dimick, C.P.A.

     26,928             75,136      (5)            *       
 

Melina Higgins

     —                       *       
 

Harry Korman

     117,396        (6)      64,195           *       
 

Douglas Leech, C.P.A.

     31,848             70,856      (7)            *       
 

Rajiv Malik

     231,758             511,242           *       
 

Joseph C. Maroon, M.D.

     28,228             115,136      (7)            *       
 

Mark W. Parrish

     16,101             53,003      (7)            *       
 

Rodney L. Piatt, C.P.A.

     57,228             115,136      (7)            *       
 

John D. Sheehan, C.P.A.

     31,133             180,670      (8)            *       
 

C.B. Todd

     224,428        (9)      115,136      (10)            *       
 

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

     22,228             115,136      (11)            *       
  All Directors, nominees and executive officers as a group (17 persons, including Anthony Mauro and Daniel C. Rizzo, Jr., C.P.A.)      2,237,538        (12)      3,176,369      (13)            1.41%       
* Less than 1%
(1)   

Includes 1,157 shares held in Ms. Bresch’s 401(k) account.

(2)   

Includes 5,208 restricted stock units (vesting on May 4, 2013) and 13,158 stock options (vesting on May 4, 2013), all of which were granted under the 2003 Plan.

(3)   

Includes 5,208 restricted stock units (vesting on May 4, 2013) and 13,158 stock options (vesting on May 4, 2013), all of which were granted under the 2003 Plan.

(4)   

Includes 4,957 shares held in Mr. Coury’s 401(k) account.

(5)   

Includes 5,208 restricted stock units (vesting on May 4, 2013) and 13,158 stock options (vesting on May 4, 2013), all of which were granted under the 2003 Plan.

(6)   

Includes 1,001 shares held in Mr. Korman’s 401(k) account.

(7)   

Includes 5,208 restricted stock units (vesting on May 4, 2013) and 13,158 stock options (vesting on May 4, 2013), all of which were granted under the 2003 Plan.

(8)   

Includes 5,333 restricted stock units (vesting on April 1, 2013), all of which were granted under the 2003 Plan.

(9)   

Includes (i) 37,500 shares held by the C.B. Todd Revocable Trust and (ii) 168,747 shares held by the Mary Lou Todd Trusts B, C and C-1. As of April 12, 2013, the shares held by the C.B. Todd Revocable Trust were pledged as partial security for the guaranty of a loan made on November 5, 2009. Mr. Todd’s pledge meets the requirements of Mylan’s Anti-Hedging and Pledging Policy.

(10)   

Includes 5,208 restricted stock units (vesting on May 4, 2013) and 13,158 stock options (vesting on May 4, 2013), all of which were granted under the 2003 Plan.

(11)   

Includes 5,208 restricted stock units (vesting on May 4, 2013) and 13,158 stock options (vesting on May 4, 2013), all of which were granted under the 2003 Plan.

(12)   

See notes (1), (4), (6) and (12). Includes 13,071 shares held in the executive officers’ 401(k) accounts.

(13)   

See notes (2), (3), (5), (7), (8), (9), (10), (12), and (13). Includes 52,205 restricted stock units, 118,422 stock options, and 20,322 performance stock units granted under the 2003 Plan which will vest within 60 days of March 26, 2013.

 

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Security Ownership of Certain Beneficial Owners and Management

 

Security Ownership of Certain Beneficial Owners

 

 

The following table lists the names and addresses of the shareholders known to management to own beneficially more than five percent of the Company’s Common Stock as of February 14, 2013:

 

 Name and Address of Beneficial Owner   

Amount and Nature

of

Beneficial
Ownership

  

Percent  

of Class  

 BlackRock, Inc. (1)

   32,913,067    8.08%

40 East 52nd Street, New York, NY 10022

     

 The Vanguard Group, Inc. (2)

   26,070,166    6.39%

100 Vanguard Blvd., Malvern, PA 19355

     

 Paulson & Co. Inc. (3)

   24,503,400    6.01%

1251 Avenue of the Americas, New York, NY 10020

     

 

 

(1)

   As reported in Form 13G/A filed by BlackRock, Inc. with the SEC on February 1, 2013. BlackRock, Inc. has sole voting and dispositive power over all 32,913,067 shares.
 

(2)

   As reported in Form 13G/A filed by The Vanguard Group, Inc. with the SEC on February 12, 2013. The Vanguard Group, Inc. has sole dispositive power over 25,394,205 shares, and sole voting power over 718,761 shares, and shared dispositive power over 675,961 shares.
 

(3)

   As reported in Form 13G filed by Paulson & Co. Inc. with the SEC on February 14, 2013. Paulson & Co. Inc. has sole voting and dispositive power over all 24,503,400 shares.

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

 

Section 16(a) of the Exchange Act requires all Directors and certain executive officers and persons who own more than 10% of a registered class of Mylan’s equity securities to file with the SEC within specified due dates reports of ownership and reports

of changes of ownership of Mylan Common Stock and other equity securities. These persons are required by SEC regulations to furnish us with copies of all Section 16(a) reports they file. Based on reports and written representations furnished to us by these persons, we believe that all Mylan Directors and relevant executive officers complied with these filing requirements during 2012.

 

 

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Executive Officers

 

  

 

 

The names, ages, and positions of Mylan’s executive officers and Named Executive Officers as of March 22, 2013, are as follows:

 

Heather Bresch

 

    

 

43

 

  

 

    

Chief Executive Officer

 

John D. Sheehan, C.P.A.

 

    

 

52

 

  

 

    

Executive Vice President, Chief Financial Officer

 

Rajiv Malik

 

    

 

52

 

  

 

    

President

 

Harry Korman

 

    

 

55

 

  

 

    

Executive Vice President and Chief Operating Officer

 

Daniel C. Rizzo, Jr., C.P.A.

 

    

 

50

 

  

 

    

Senior Vice President, Chief Accounting Officer, Corporate Controller

 

Anthony Mauro

 

    

 

40

 

  

 

    

President, North America

 

Robert J. Coury

 

    

 

52

 

  

 

    

Executive Chairman of the Board

 

 

See “Item 1—Election of Directors—Director Nominees” for a description of the business experience of Ms. Bresch, Mr. Malik, and Mr. Coury.

Mr. Sheehan has served as Mylan’s Executive Vice President, Chief Financial Officer, and principal financial officer since April 2010. Prior to joining Mylan, he served as Chief Financial Officer of Delphi Automotive LLP (“Delphi”). In addition to serving as the Chief Financial Officer for Delphi, Mr. Sheehan held several senior management positions, including Chief Restructuring Officer, Chief Accounting Officer, and Controller after joining that company in 2002. Prior to joining Delphi, Mr. Sheehan was a partner at KPMG LLP, a global professional accounting firm.

Mr. Korman has served as Mylan’s Executive Vice President and Chief Operating Officer since January 1, 2012. Prior to that, he was the Senior Vice President and President, North America of Mylan since October 2007. From February 2005 to December 2009, he served as President of Mylan Pharmaceuticals Inc. Since joining Mylan through its acquisition of UDL Laboratories (n/k/a Mylan Institutional) in 1996, Mr. Korman has held several other positions of increasing responsibility, including President of UDL and Vice President of Sales and Marketing for Mylan Pharmaceuticals.

Mr. Rizzo has served as the Company’s Corporate Controller since June 2006, and as principal financial officer from October 2009 to March 2010. He joined the Company as Vice President, Chief Accounting Officer and Corporate Controller in June 2006. Prior to that time, he served as Vice President and General Controller of Hexion Specialty Chemicals, Inc. from October 2005 to May 2006, and from September 1998 to September 2005 he served as Vice President and Corporate Controller (and principal accounting officer) at Gardner Denver, Inc.

Mr. Mauro has served as President, North America of Mylan since January 1, 2012. He served as President of Mylan Pharmaceuticals Inc. from 2009 through February 5, 2013. In his 16 years at Mylan, Mr. Mauro has held roles of increasing responsibility including President of Mylan Pharmaceuticals Inc., Chief Operating Officer for Mylan Pharmaceuticals ULC in Canada, Vice President of Strategic Development, North America, and Vice President of Sales, North America.

Officers of Mylan who are appointed by the Board can be removed by the Board, and officers appointed by the Chief Executive Officer can generally be removed by her.

 

 

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Item 2—Ratification of Selection of Deloitte & Touche LLP

as the Company’s Independent Registered Public

Accounting Firm

 

 

The Board has selected Deloitte & Touche LLP as the Company’s independent registered public accounting firm to audit the Company’s consolidated financial statements for the year ending December 31, 2013, and has directed that management submit the selection of Deloitte & Touche LLP as the independent registered public accounting firm for ratification by the shareholders at the Annual Meeting. A representative of Deloitte & Touche LLP is expected to be present at the Annual Meeting and will be available to respond to appropriate questions from shareholders, and will be given an opportunity to make a statement if he or she desires to do so.

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

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” RATIFICATION OF THE SELECTION OF DELOITTE & TOUCHE LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.

Independent Registered Public

Accounting Firm’s Fees

 

 

Deloitte & Touche LLP served as Mylan’s independent registered public accounting firm during 2012 and 2011, and no relationship exists other than the usual relationship between independent registered public accounting firm and client. Details about the nature of the services provided by, and the fees the Company paid to, Deloitte & Touche LLP for such services during 2012 and 2011 are set forth below.

       Dollars in Millions    
     2012        2011    

Audit Fees (1)

   $    5.6         $    6.2     
           

Audit-Related Fees (2)

   0.2         0.1     
           

Tax Fees (3)

   0.2         0.2     
           

All Other Fees (4)

   —         0.1     
           

Total Fees

   $    6.0         $    6.6     
           

 

  (1)    Represents fees for professional services provided for the audit of the Company’s annual consolidated financial statements, the audit of the Company’s internal control over financial reporting as required by Section 404 of the Sarbanes-Oxley Act of 2002, reviews of the Company’s quarterly condensed consolidated financial statements, audit services provided in connection with other statutory or regulatory filings, and consultation on accounting, reporting and disclosure matters.
  (2)    Represents fees for assurance services related to the audit of the Company’s annual consolidated financial statements, including the audit of the Company’s employee benefit plans, comfort letters, certain SEC filings and other agreed upon procedures.
  (3)    Represents fees related primarily to tax return preparation and tax compliance support services.
  (4)    Represents fees related primarily to advisory services performed in 2011.

Audit Committee Pre-Approval Policy

 

 

The Audit Committee has adopted a policy regarding pre-approval of audit, audit-related, tax, and other services that the independent registered public accounting firm may perform for the Company. Under the policy, the Audit Committee must pre-approve on an individual basis any requests for audit, audit-related, tax, and other services not covered by certain services that are pre-approved annually by the Audit Committee. The policy also prohibits the engagement of the independent registered public accounting firm for non-audit related financial information systems design and implementation, for certain other services considered to have an impact on independence, and for all services prohibited by the Sarbanes-Oxley Act of 2002. All services performed by Deloitte & Touche LLP during 2012 and 2011 were pre-approved by the Audit Committee in accordance with its policy.

 

 

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Executive Compensation for 2012    

 

 

Compensation Discussion and Analysis

 

 

 

 

The Board believes that the outstanding growth and performance of Mylan during the past decade is directly related to the extraordinary talents of Mylan’s senior executives and the other members of the Company’s global workforce. Our compensation program is designed to attract highly qualified employees, support retention, and inspire continued performance, as well as to align compensation with performance and shareholder interests. The following discussion addresses:

 

  The Company’s Outstanding Financial Performance Over the Past Five Years (p. 18).

 

  The Company’s Record Financial Performance in 2012 (p. 20).

 

  The Strong Alignment Between Executive Pay and Performance in 2012 (p. 21).
  The Rationale for and Benefits of Key Business and Leadership Changes in 2012 (p. 22-23).

 

  Our Comprehensive Response to the 2012 Say-on-Pay Vote (p. 24).

 

  The Company’s 2012 Elements of Compensation (p. 25-29).

The Company’s Named Executive Officers for 2012 were:

 

Executive    Current Position

Heather Bresch

 

  

Chief Executive Officer

 

John D. Sheehan, C.P.A.

 

  

EVP and Chief Financial Officer

 

Rajiv Malik

 

  

President

 

Harry Korman

 

  

EVP and Chief Operating Officer

 

Robert J. Coury

 

  

Executive Chairman of the Board

 

 

 

Outstanding Financial Performance

Consistent Performance Over The Past Five Years. Mylan has achieved outstanding short-term and long-term growth over the past 5 years.

 

 

 

LOGO

                    *

  2008 and 2009 total adjusted revenue, as well as adjusted EBITDA and adjusted diluted EPS differ from what is reported under GAAP. See Appendix A for a reconciliation of non-GAAP financial measures to Mylan’s results reported under GAAP.  
                    (a) $ in millions.  

 

 

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Executive Compensation for 2012

 

In addition, the Company’s total shareholder return (“TSR”) has dramatically outperformed both the S&P 500 Index and the S&P 500 Pharmaceuticals Index over the past 1, 3, and 5 years.

 

 

LOGO

 

 

*  TSR data is from the S&P Research Insight database and reflects total returns (including price appreciation and reinvested dividends) as of December 31, 2012.

 

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2013 Annual Meeting of Shareholders

 

Mylan also has continued to enhance shareholder value by increasing returns on invested capital.

Increasing Return on Invested Capital*

 

 

 

LOGO

 

                *

  See Appendix A for a reconciliation of this non-GAAP financial measure to Mylan’s results reported under GAAP.  

 

Outstanding 2012 Performance. In 2012, Mylan had the strongest year in its history to date, with significant year-over-year growth and record revenues, adjusted EBITDA, adjusted earnings per share, and adjusted free cash flow.

 

 

 

LOGO

 

 

                *

 

 

 

Adjusted EBITDA, adjusted diluted EPS, and adjusted free cash flow differ from what is reported under GAAP. See Appendix A for a reconciliation of non-GAAP financial measures to Mylan’s results reported under GAAP.

 

                (a) $ in millions.

 

 

 

 

 

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Table of Contents

Executive Compensation for 2012

 

With a dedicated focus on operational execution, Mylan generated a record of approximately $1.1 billion of adjusted operating cash flows in 2012. The Company also bought back $1 billion of the Company’s stock, representing more than 10% of outstanding shares. As a result of strong balance sheet management, during 2012 the Company was raised to investment-grade credit status by the major U.S. credit-rating agencies.

Mylan’s consistency of execution and financial accomplishments were clearly recognized by investors, as Mylan’s stock price rose to an all-time historical high in 2012.

Strong Alignment of CEO Pay with Company Performance

Compensation in 2012 was highly aligned with performance.

 

  Outstanding performance against goals: Outstanding performance on adjusted diluted EPS, global regulatory submissions, and adjusted free cash flow yielded short-term incentive payouts for NEOs at 190% of target for 2012. This is discussed in more detail on page 26.

 

  Strong alignment between realizable pay and performance relative to peers: The total compensation realizable to Mylan’s CEO (currently Ms. Bresch and formerly Mr. Coury) over a three-year period is fully aligned with Mylan’s total shareholder return relative to the peer group, as shown below.

 

  Alignment of CEO Realizable Pay* with TSR Performance  
  LOGO  
 

*   Realizable pay includes cumulative salary and short-term incentives paid for the most recent three years, plus current value (as of December 31, 2012) of options as well as both performance and time-based restricted shares/units granted during the most recent three years, plus change in pension value and all other compensation for the most recent three years. TSR data is from the S&P Research Insight Database. Peer companies in this chart reflect the 2012 peer companies listed on page 30.

 

 

  Strong alignment between CEO total direct compensation and Mylan TSR: The total direct compensation of Mylan’s CEO (base salary plus short-term incentive and grant date fair value of long term incentives) over the past five years is well aligned with Company stock performance, as shown below. It should be noted that the 2012 CEO compensation in the following table reflects the fact that Ms. Bresch is new in her role as CEO:

 

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Table of Contents

2013 Annual Meeting of Shareholders

 

 

 

 

 

LOGO

 

Indexed TSR reflects the hypothetical value of a $100 investment in the Company, assuming reinvestment of dividends.

 

 

 

Business Transformation

The outstanding performance described above culminated in record results in 2012. In addition to exceptional execution, this outstanding performance was achieved in part as a result of the strong global foundation created with the transformation of Mylan’s business over the past 10 years, and the enhancement of Mylan’s corporate leadership in 2012. For over a decade, Mylan has focused on building its global, diversified, and high-quality manufacturing and commercial platform of scale. During this time, principally through the transformational acquisitions of Matrix Laboratories Limited and Merck Generics, Mylan has evolved from a U.S.-based company to a world-renowned company with a global footprint in approximately 140 countries and territories. Mylan has come to be recognized as a quality leader in the pharmaceuticals industry not only in the United States but around the world, helping to establish new standards in the industry with respect to product quality, customer service, and regulatory oversight. Key elements of Mylan’s evolution over the past ten years include:

 

  Ÿ  

Transformed into a global, diversified, vertically integrated and high-quality product development, manufacturing and commercial platform.

 

  Ÿ  

Grew from operating 6 facilities in the U.S. (including Puerto Rico) to operating 23 facilities around the world.

 

  Ÿ  

Grew from overseeing a 2,500 employee U.S.-focused company that primarily sold oral solids to a global company with a workforce of over 20,000 employees.

 

  Ÿ  

Grew from a product portfolio of 115 to a world renowned supplier of approximately

   

1,100 products across a broad range of dosage forms and therapeutic categories, including oral solids, transdermals, inhalants, nasal, ophthalmics, injectables, and topicals, among others.

 

  Ÿ  

In addition to the Company’s substantial organic growth, Mylan also grew through the external acquisitions of Matrix Laboratories Limited, Merck Generics (including its Specialty division), and Bioniche Pharma, and we established innovative partnerships, such as that with Pfizer in Japan, to drive sustained growth.

 

  Ÿ  

Became a global industry leader through efforts such as advancing one global quality standard; building an antiretroviral (ARV) business, which treats people who have HIV/AIDS, to a point where nearly 40% of those being treated for the disease in the developing world depend on our ARV products; and expanding access to treatments for life-threatening allergic reactions.

Following this decade of expansion and accomplishment, by 2011, Mylan had reached an inflection point in its business lifecycle. Having established a highly regarded global footprint, the Company increased its focus on building a more sustainable, fully-integrated platform designed to provide the opportunity for continued growth and shareholder value creation. Mylan intends to continue to build this platform and work towards achieving its mission of providing the world’s 7 billion people access to high quality medicine by seeking to maximize the potential and profitability of its existing global assets, investing in the drivers of its future growth, attracting and retaining a highly-talented and motivated workforce, and continuing to take a global leadership role in the healthcare industry.

 

 

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Executive Compensation for 2012

 

Corporate Leadership Changes

Recognizing that ensuring the long-term sustainability of Mylan’s success starts with leadership, the Board spent a considerable amount of time evaluating the new size and complexity of the Company, the continuing evolution of the business and the healthcare industry, as well as the leaders within the Company who are best able to oversee and manage that sustainability. In 2011, based upon our extensive and intimate interactions with and observations of management, among other factors, the Board initiated a management transition designed to best align the skills, expertise, and experience of its executives with the complexity and size of the Company that we have become and the challenges and opportunities of the future.

The Board believes that the ongoing development of the existing management and personnel, and integration and optimization of the Company’s highly complex global infrastructure and platforms are crucial to Mylan’s continued growth and success. Successfully integrating a rapidly expanding company such as Mylan – particularly after two global, transformational acquisitions – requires exceptional organizational skills, discipline, and a deep understanding of the workforce and the combined company’s assets and platforms. Ms. Bresch not only has demonstrated her ability to integrate organizations, systems, and people quickly and with success, but she also has clearly demonstrated an outstanding ability to drive change, manage cultural challenges within organizations, and identify key personnel and provide them with the motivation and opportunities to remain with Mylan. For these and many other reasons, the Board determined, heading into 2012, that Ms. Bresch was the right leader to be appointed to the CEO position at this important point in the Company’s history.

In addition to determining that Ms. Bresch was the right executive to lead the Company as Chief Executive Officer in this next phase of its business lifecycle, the Board also determined that it was in Mylan’s best interests to retain Mr. Coury, in a new capacity as Executive Chairman of the Board, to provide continued executive strategic vision, direction, and leadership to the Board as well as management. The Board believed then, and believes

now, that Mr. Coury’s extensive experience in the industry, his deep knowledge of the Company and its personnel, his role in the development of a distinct corporate culture, and his unique and successful strategic vision and leadership abilities and style ensure that he will continue to provide critical and essential insight and leadership to both the Board and executive management of the Company. Although Ms. Bresch has assumed the role of Chief Executive Officer, Mr. Coury, as Executive Chairman, remains and will remain both instrumental and highly active in developing ongoing global strategy, mentoring the leadership team, and leading the Company as it addresses significant opportunities and challenges in the future, in addition to his leadership of the Board of Directors.

Accordingly, effective January 1, 2012, Mr. Coury was elected as Executive Chairman of the Board and Ms. Bresch was appointed as Chief Executive Officer. In addition, Rajiv Malik was promoted and appointed to President of the Company, Harry Korman was promoted and appointed to Chief Operating Officer, and Anthony Mauro was promoted and appointed to President of the North American generics business. The Board based this new management structure on, among other considerations, its extensive individual and collective experience with the Company, its interactions with and oversight of management, and the considerable time spent by the Board observing and evaluating the Company’s leadership, including their respective accomplishments, talents, and potential, and how those leaders could best serve the Company in the future.

Now, more than one year after implementation of the management transition and with the performance of the Company under this new management structure, the Board remains convinced of the strength and value of this new structure to Mylan and its shareholders. With now the Executive Chairman of the Board and the Chief Executive Officer, together with the promotions of Messrs. Malik, Korman, and Mauro, the Board believes that the Company has a powerful, unique, and highly effective leadership team that has demonstrated stability during a transitional period while it continues to focus on strategic development and execution, as well as a blueprint for success in the future.

 

 

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2013 Annual Meeting of Shareholders

 

 

Response to 2012 Say-on-Pay Vote – Key Changes to the Company’s

Compensation and Governance Practices

 

2012 brought about a fundamental shift in Mylan’s compensation structure and certain governance and pay-related policies. These changes reflected the new phase of the Company’s business lifecycle, the results of last year’s say-on-pay advisory vote, and discussions with shareholders.

 

    Investor Outreach. In 2012, slightly less than half (48%) of the votes cast were in favor of the advisory vote on executive compensation. In response, the Board of Directors and the Compensation Committee completed an in-depth analysis of our compensation and governance policies, with the assistance of external experts. In addition, management was directed by the Compensation Committee to contact shareholders in order to better understand the reasons behind the vote outcome. These discussions included in-person meetings between senior management and investment firms and institutional shareholders representing in excess of 30% of the Company’s outstanding voting shares at that time. Mylan participants included the Executive Chairman of the Board and Chief Financial Officer. Matters discussed included governance and compensation matters (including most of the items in the following table), operational achievements, and the new leadership structure. Mylan found the meetings to be very helpful and intends to continue to hold meetings of this nature and welcomes feedback on compensation and governance matters from shareholders.

 

    Changes to Executive Compensation and Governance Policies. The principal changes to our executive compensation program and governance policies that have been adopted by the Compensation Committee and/or the Board since March 2012 are summarized in the table below. As indicated, the impact of many of the changes will not be reflected in the Summary Compensation Table until the 2014 Proxy Statement because they were made after the 2012 Annual Meeting and after certain 2012 compensation actions had already been decided and implemented.

 

 
    Past Pay or Governance Practice    Changes Going Forward    Effective    Referenced
on Page
   
  Compensation Committee permitted to exercise positive discretion in determining annual incentive cash payouts    Discontinued    2012    26  
 

LTI mix:

35% performance RSUs

35% stock options

30% RSUs

  

LTI mix:

60% performance RSUs

20% stock options

20% RSUs

   2013    27  
  Both short and long-term incentive plans used adjusted diluted EPS as the performance metric    Will not use same metric for short and long-term incentives (long-term metrics are return on invested capital and relative shareholder return)    2013    27  
  Single peer group of companies with revenues greater than 2.5x and smaller than 0.5x of Company’s revenues   

Developed two peer groups for pay and performance reference:

    Life sciences peers (with revenues 0.5x - 2.5x Mylan)

   Pharmaceutical business competitors

   2013    30  
  Single trigger vesting of equity awards on change in control    Double trigger vesting for future equity awards    2013    27  
 

No clawback policy

   Adopted a clawback policy    2013    31  
 

No anti-hedging and pledging policy

   Adopted an anti-hedging and pledging policy    2013    31  
 

No related party transactions policy

   Adopted a related party transactions policy    2013    52  
  No stock ownership requirements for non-employee Directors    Adopted ownership requirements for non-employee Directors    2013    13  
  Executive Chairman of the Board share ownership requirement equal to 500% of base salary    Increased to 600% of base salary    2013    31  
  CEO share ownership requirement equal to 500% of base salary    Increased to 600% of base salary    2013    31  
  Named Executive Officers with retirement benefit agreements received Company match on executive contributions to the 401(k) Restoration Plan    Discontinued    2013    28  
  No public disclosure of political contributions and trade association memberships    Political contributions and trade association memberships to be disclosed on the Company website    2013     
 

 

In addition to the enhancements summarized above, we continue to maintain the following compensation practices, which are consistent with our commitment to strong corporate governance, including the following:

 

     Rigorous performance goals for annual and long-term incentive awards.

 

     Stock ownership requirements that align executives’ interests with those of shareholders.

 

     No tax gross-ups provided on income associated with perquisites.

 

    No new agreements with executive officers that contain an excise tax gross-up for golden parachute payments or an income tax gross-up other than for policies that apply similarly to all employees of the Company, such as tax-equalization and relocation policies.

 

     Compensation policies and practices designed to discourage excessive risk-taking, including qualitative factors that we believe restrain the influence of an overly formulaic approach, as well as an annual risk assessment of the Company’s pay practices.

 

 

 

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Executive Compensation for 2012

 

 

2012 Elements of Compensation

Our 2012 compensation reflected another strong year of Company performance. The Board continues to strive to further align executive compensation with Company performance and, in 2012, we delivered on that goal, as demonstrated by the close correlation between our TSR performance and CEO realizable pay relative to our peer group. The Named Executive Officers (“NEOs”) were compensated through base salary, an annual short-term incentive, an annual long-term incentive, employee benefits, and perquisites.

 

Approximately 80% of Named Executive Officer target compensation is tied to the Company’s stock price or the achievement of key financial and operational performance goals, thereby aligning compensation with both the success of the Company’s business strategy and objectives, as well as the value realized by shareholders. The following graphs show the relative weight of the base salary, target annual short-term incentive, and annual long-term incentive (based on grant date fair value) components:

 

 

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

 

 

 

Base Salary Compensation

Base salaries for executive officers are paid in accordance with Executive Employment Agreements approved by the Compensation Committee, and may be reviewed and modified by the Committee from time to time as considered necessary.

The Committee considers a variety of factors in deciding base salary, including, among others, the new management structure, marketplace practices, internal equity considerations, Company performance, and the executive’s experience, tenure, leadership, and individual performance. The Committee also considers what the marketplace would require in terms of the replacement costs to

retain a qualified individual to replace an executive, including that the new executive would lack the critical knowledge base regarding the Company as compared to the executive he or she would be replacing. See also considerations discussed on page 31.

In October 2011, in connection with the Company’s management transition, the Compensation Committee approved the following changes in the Named Executive Officers’ base salaries to reflect the new roles, effective January 1, 2012. Overall, total base salary compensation for the five Named Executive Officers declined in 2012 compared to 2011.

 

 

   Executive    2011 Position    2012  Position   

2011 Base

Salary

  

2012 Base

Salary

   Change  in  
Salary

  Heather Bresch

   President    Chief Executive Officer      $ 900,000        $ 1,000,000          11.1 %

  John D. Sheehan(1)

   EVP and Chief Financial Officer    EVP and Chief Financial Officer      $ 625,000        $ 650,000          4.0 %

  Rajiv Malik

   EVP and Chief Operating Officer    President      $ 700,000        $ 800,000          14.3 %

  Harry Korman

   President, North America    EVP and Chief Operating Officer      $ 500,000        $ 575,000          15.0 %

  Robert J. Coury

   Chairman and Chief Executive Officer    Executive Chairman of the Board      $ 1,800,000        $ 1,350,000          (25.0 )%

  Total

               $ 4,525,000        $ 4,375,000          (3.3 )%

 

(1)

The change to Mr. Sheehan’s base salary became effective on March 5, 2012 and was determined in February 2012, independent of the management transition.

 

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2013 Annual Meeting of Shareholders

 

Short-Term Incentive Compensation

The Company’s short-term incentive compensation for its executive officers consists of performance-based annual short-term incentive cash awards that are intended to balance the interests of executives and investors by providing incentives based on a set

of operational and financial measures critical to the successful execution of the Company’s business strategy.

Opportunities. Set forth below are the 2012 threshold, target, and maximum award opportunities for the Named Executive Officers:

 

 

  Executive   Threshold (% of Salary)   Target (% of Salary)   Maximum (% of Salary)

  Heather Bresch

  62.5%   125%   250%

  John D. Sheehan

     50%   100%   200%

  Rajiv Malik

     50%   100%   200%

  Harry Korman

     50%   100%   200%

  Robert J. Coury

  62.5%   125%   250%

 

No short-term incentives are paid if threshold performance is not achieved.

Performance measures. For 2012, short-term incentives were based on adjusted diluted EPS, global regulatory submissions, and adjusted free cash flow. These measures represent key performance indicators of the current and future strength of our business.

Adjusted diluted EPS is an important metric for Mylan and its shareholders because earnings typically have a direct relationship with the price of the Company’s common stock.

Global regulatory submissions measures the number of filings submitted to global regulatory agencies for new products. Approval and commercialization of new products yields new revenue sources for Mylan and are therefore fundamental to our short and long-term strategy and growth.

Adjusted free cash flow replaced reduction in adjusted net working capital, a measure used in prior years. This change was made to capture the potential impact of all types of business transactions on the generation of adjusted operating cash flow, not just changes in working capital. Adjusted free cash flow is defined as adjusted operating cash flow less net capital expenditures.

We set adjusted diluted EPS and adjusted free cash flow targets at double digit increases over prior year performance. We set the global regulatory submissions target based on our then current pipeline and expectations for 2012. The following tables show the 2012 threshold, target, and maximum goals, and results achieved:

 

 

Goal    Weighting   Threshold    Target    Maximum  

  Adjusted diluted earnings per share

   50%   $2.04    $2.40    $2.64

  Global regulatory submissions

   25%     119      140      154

  Adjusted free cash flow (millions)

   25%   $468    $550    $605

Incentive payouts. The short-term incentives earned for 2012 were determined based on the annual performance criteria, relative weightings, and Company results set forth in the table below:

 

Goal    Weighting   Outcome    Weighted Score  

  Adjusted diluted earnings per share

   50%   $2.59    90%

  Global regulatory submissions

   25%     171    50%

  Adjusted free cash flow (millions)

   25%   $829    50%

  2012 Company Performance Score

            190%

 

The dollar amounts of short-term incentive compensation earned by each of the Named Executive Officers for 2012 are set forth in the column entitled “Non-Equity Incentive Plan Compensation” in the Summary Compensation Table on page 34.

In response to concerns raised by shareholders in connection with the 2012 say-on-pay vote, the Committee committed to not using its discretion to adjust bonus award amounts generated by the performance metrics.

 

 

 

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Executive Compensation for 2012

 

Long-Term Incentive Compensation

We believe that long-term incentives should be directly related to common stock performance, as well as other operational and financial measures. The long-term equity grants awarded to the Named Executive Officers in 2012 under the Company’s 2003 Long-Term Incentive Plan (the “2003 Plan”) included:

 

  Ÿ  

Stock options with an exercise price equal to the closing price of the Company’s common stock on the date of grant that vest annually over a period of three years, provided that the executive remains continually employed by the Company.

 

  Ÿ  

RSUs that vest annually over a three-year period, provided that the executive remains continually employed by the Company.

  Ÿ  

Performance-based RSUs that cliff-vest after a three-year period, assuming specified performance criteria are met – in this case, average adjusted diluted earnings per share in 2012 and 2013 of at least $2.57, subject to continued employment through February 22, 2015.

In 2012, the Named Executive Officers awards under the 2003 Plan were allocated 35% to time vested Restricted Stock Units, 30% to time vested Options, and 35% to Performance Based Restricted Stock Units. Equity grants made to our Named Executive Officers in 2012 are set forth and described in the table below entitled “Grants of Plan-Based Awards in 2012.”

As described in the following table, these metrics have been modified for 2013.

 

 

 

2013 Modifications to Long-Term Incentive Compensation

 

For 2013, the Committee has made several substantive changes to the long-term equity awards granted to Named Executive Officers (and other executives of the Company) to further increase the alignment between the Company’s performance and shareholders’ returns.

 

Increased Percentage of Performance Based Award

 

For 2013, the Named Executive Officers awards under the 2003 Plan were allocated 20% to time vested Restricted Stock Units, 20% to time vested Options and 60% to Performance-Based Restricted Stock Units (“PRSU’s”). The Committee believes that, by increasing the percentage of the total Named Executive Officer’s award that is specifically performance based, the executive’s compensation is even more closely tied to the Company’s performance.

 

2013 LTI Mix

 

 

 

LOGO

 

 

 

Changes in Performance Metrics: Return on Invested Capital and Total Shareholder Return

 

For 2013, the Committee determined that the metrics used to measure performance for the PRSU’s will be Return on Invested Capital (“ROIC”) and Total Shareholder Return (“TSR”) of Mylan’s stock relative to peer companies. ROIC and TSR are each weighted 50% in the determination of an executive’s performance.

 

Double Trigger Vesting for Equity Awards

 

Effective for equity awards granted beginning March 1, 2013, equity awards will contain “double trigger” vesting provisions that provide for accelerated vesting only if (1) there has been a change in control and (2) an involuntary termination without cause or a voluntary resignation for good reason occurs within two years following the change in control, unless otherwise specifically determined by the Committee.

 

 

 

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2013 Annual Meeting of Shareholders

 

Equity grant practices. The Compensation Committee currently approves annual equity grants in the first quarter of the fiscal year, following the release of year-end audited financial results, with exceptions for new hires and promotions. There is no exact date for the making of these equity grants each year, but the Committee reviews its equity grant policy from time to time to ensure that it is in line with corporate best practices.

Other Benefits and Agreements

The Company provides additional benefits in the form of:

 

  Ÿ  

Perquisites

 

  Ÿ  

Retirement Benefits

Perquisites. Perquisites include the following:

 

  Ÿ  

Each Named Executive Officer receives the use of a Company car or a car allowance. The executives are responsible for paying any taxes they incur from this perquisite.

 

  Ÿ  

The Company owns two aircraft the purpose of which is to assist in the management of the Company’s global platform and provide for a more secure traveling environment, personally and where sensitive business issues may be discussed or reviewed, as well as maximum flexibility for our executives’ time. For reasons of business efficiency and security-related concerns (personal security, especially given the global nature of the Company’s business, as well as privacy of business information and communications), we require Mr. Coury to use the Company aircraft for business and personal purposes. During 2012, other executives from time to time were also authorized to have personal use of the corporate aircraft for similar considerations. To the extent any travel on the corporate aircraft results in imputed income to a Named Executive Officer, the Company does not provide gross-up payments to cover the officer’s personal income tax obligation due to such imputed income. For a summary of how this imputed income, if any, is calculated, please see footnote (b) to the Summary Compensation Table on page 35.

Retirement Benefits. The Company has entered into Retirement Benefit Agreements (“RBAs”) with four of the Named Executive Officers – Ms. Bresch and Messrs. Malik, Sheehan and Coury – in recognition of their service to the Company and to provide a supplemental form of retirement and death benefit. For a detailed description of the RBAs, see the section below entitled “Retirement Benefit Agreements” beginning on page 40. The Company also maintains a 401(k) Restoration Plan (the “Restoration Plan”) and an Income Deferral Plan permitting senior

level employees to elect to defer the receipt of a portion of their compensation and, in the case of the Restoration Plan, providing matching contributions to employees that make such an election.

 

 

2013 Modifications to Matching
Contributions Under Restoration Plan

 

Effective April 1, 2013, Ms. Bresch and Messrs. Malik, Sheehan and Coury will no longer receive matching contributions under the Restoration Plan.

 

The Compensation Committee approved an amendment to Mr. Coury’s RBA in October 2011, in connection with his retention and the executive management transition, to provide an additional retention incentive in his newly-created role as Executive Chairman of the Board. As reflected in the Summary Compensation Table, to reflect Mr. Coury’s transition to Executive Chairman, effective January 1, 2012, Mr. Coury’s base salary was reduced, thereby also reducing his annual and long-term incentive opportunities. However, among other considerations, the Board recognized Mr. Coury’s substantial accomplishments and his commitment to continued leadership, which helped to fuel the creation of Mylan’s powerful global platform and the momentum that continues to build over time; the qualitative value of his oversight, mentoring and vision; as well as his considerable experience and opportunities to seek new challenges elsewhere. Accordingly, the Board determined, in light of its intimate familiarity with both the Company and senior management, as well as the other considerations noted herein, that it was in the best interest of the Company to further incentivize Mr. Coury to remain with Mylan to help lead and ensure a seamless transition into the new management structure and a new business lifecycle. Accordingly, the Compensation Committee determined to incentivize Mr. Coury in the form of enhancements to his retirement benefit agreement, which will vest over the transition period. For a detailed description of the RBAs, see the section below entitled “Retirement Benefit Agreements” on page 40.

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

 

 

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Executive Compensation for 2012

 

The Summary Compensation Table includes changes in pension values calculated based on certain actuarial assumptions regarding discount rates and mortality. The change in Mr. Coury’s benefit from 2011 to 2012 is primarily the result of two factors: (1) Mr. Coury vested in approximately one-half of his supplemental retirement benefit under the Amended Retirement Benefit Agreement (“Amended RBA”) during 2012, and no such benefit existed for 2011, as Mr. Coury is fully vested in his Retirement Benefit Agreement, and (2) a decline in the discount rate that is required to be used to determine his reportable benefit amount as of December 31, 2012. The increases for Ms. Bresch and Messrs. Malik and Sheehan were principally the result of an additional year of credited service along with the same impact of the decline in discount rates. In computing these amounts, we used the same assumptions that were used to determine the expense amounts recognized in our 2012 financial statements. In 2012, the impact of the change in the applicable discount rates led to an increase in the present value of accumulated benefits of approximately $0.8 million for Ms. Bresch, $0.2 million for Mr. Malik, $0.1 million for Mr. Sheehan, and $5.9 million for Mr. Coury.

Employment Agreements. We believe it is important to have employment agreements with our executive officers and other key employees. These agreements memorialize critical terms of employment, including termination rights and obligations, non-competition and other restrictive covenants and compensation and perquisites, and thereby enhance the stability and continuity of our employment relationships. Each of the Named Executive Officers is party to an Executive Employment Agreement. For a detailed description, see the section below entitled “Employment Agreements” on page 41.

Transition and Succession Agreements. The Company is party to Transition and Succession Agreements with each Named Executive Officer and certain other officers, with an aim to assuring that the Company will have the officer’s full attention and dedication to the Company during the pendency of a possible change in control transaction and to provide the officer with compensation and benefits in connection with a change in control. These agreements are independent of each Named Executive Officer’s employment agreement. For a detailed description of those Transition and Succession Agreements, see below, under “Transition and Succession Agreements” on page 44. As noted above, the Company has adopted a policy that the Company will not enter into any new agreement with an executive officer that contains an excise tax gross-up for golden parachute payments. The Transition and Succession Agreements in effect are not subject to this new policy.

Use of Peer Groups

Our culture and our success in recent years have centered on our ability to attract and retain talented people in critical roles. The Board believes that the remarkable growth and performance of the Company during the past decade is directly related to the unique leadership of Mr. Coury and Ms. Bresch and the talents of Mylan’s other senior executives, as well as Mylan’s workforce around the world.

Compensation Committee Considerations In Evaluating Compensation. The Board’s and the Compensation Committee’s decisions relating to executive compensation each year reflect a variety of subjective considerations, over and above raw metrics. Our determinations reflect our individual and collective experience and business judgment, and are based on our extensive and intimate interactions with and observations of management and our assessment of the following factors, among others:

 

  Ÿ  

Company performance (relative to peers and budget);

 

  Ÿ  

Individual performance and contributions to the financial and other success of the Company;

 

  Ÿ  

Short, medium, and long-term personnel needs of the Company;

 

  Ÿ  

The need to reward and retain the Named Executive Officers;

 

  Ÿ  

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

 

  Ÿ  

Peer group pay levels and published survey data.

We consider these and other qualitative and quantitative factors each year in determining whether our compensation philosophy and approach should be revised or altered, in addition to using these factors to make individual compensation decisions. The Board and Compensation Committee believe that while peer groups may be helpful reference points, they cannot substitute for the individual and collective judgment and experience of Directors who are intimately familiar with the Company, its business, its strategies, and the executives who drive performance.

 

 

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

For 2012, the peer group consisted of the following 13 companies, including companies in both the generic and branded sectors:

 

Actavis, Inc.

   Bristol-Myers Squibb Company    Genzyme Corporation

Allergan, Inc.

   Celgene Corp    Gilead Sciences, Inc.

C.R. Bard, Inc.

   Eli Lilly and Company    Merck & Co., Inc.

Becton Dickinson & Co.

   Forest Laboratories    Warner Chilcott Plc.

Biogen Idec Inc.

     

We had used this group for several years. As shown in the table below, after careful consideration, the Compensation Committee has revised the peer groups for 2013.

 

  

 

2013 Enhancements to Peer Groups

 

During 2012, we reviewed the peer group in light of certain considerations including, but not limited to:

 

  Ÿ    Our increased revenue size and complexity, as well as the evolving global nature of our business platform;

 

  Ÿ    An analysis of companies with a similar business mix and customer base, including companies within the
        healthcare sector with a similar GICS code; and

 

  Ÿ    An evaluation of the companies that analysts and investors consider to be our competitors.

 

Following this review, we developed two peer groups for 2013:

 

  Ÿ    A life sciences group with revenues comparable to Mylan’s revenues; and

 

  Ÿ    A pharmaceutical competitors group that reflects the companies with which we compete for business and
        talent around the world, regardless of revenue size.

 

The Compensation Committee will refer to both peer groups as reference points when evaluating executive pay
and performance. As was the case in 2012, pay will not be formulaically tied to a particular percentile of either
peer group or the blended group. Instead, those groups will be considered as part of the overall mix of

subjective, qualitative, and quantitative information considered by the Committee.

 

Life sciences peer group

 

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

  
  

Actavis, Inc.*

   Biogen Idec Inc.*    Hospira Inc.   
  

Agilent Technologies Inc.

   Boston Scientific Corp    Medtronic Inc.   
  

Allergan Inc.*

   Celgene Corp*    St Jude Medical Inc.   
  

Amgen Inc.

   Covidien Plc    Stryker Corp   
  

Baxter International Inc.

   Forest Laboratories*    Thermo Fisher Scientific Inc.   
  

Becton Dickinson & Co*

   Gilead Sciences Inc.*    Zimmer Holdings Inc.   
  

 

*    Companies included in the prior peer group. Companies dropped were generally eliminated because their revenues fell outside of the 0.5x - 2.5x
      corridor.

 

Pharmaceutical competitors peer group

 

This group includes companies with substantial generic pharmaceutical portfolios with which we compete for
business and talent on a global basis:

 

  
  

Actavis, Inc.

   Hospira Inc.    Sanofi-Aventis   
  

Endo Health Solutions Inc.

   Novartis AG    Teva Pharmaceutical Industries Ltd   
  

Forest Laboratories

   Pfizer Inc.    Warner-Chilcott   
           

 

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Table of Contents

Executive Compensation for 2012

 

  

 

2013 Adoption of Clawback Policy

 

The Board has approved a clawback policy relating to incentive compensation programs. The provisions allow Mylan, beginning with 2013 awards to Named Executive Officers (“NEOs”) and other executives, to recoup incentive based bonus and equity compensation gains resulting from certain misconduct that causes a financial restatement. To the extent that in the future the SEC adopts rules for clawback policies that require changes to our policy, we will revise our policy accordingly.

 

2013 Adoption of Anti-Hedging and Pledging Policy

 

The Board has approved a securities trading policy that prohibits Named Executive Officers and Directors from engaging in any hedging transaction in which they may profit from short-term speculative swings in the value of our securities. This includes “short sales” (selling borrowed securities which the seller hopes can be purchased at a lower price in the future) or “short sales against the box” (selling owned, but not delivered securities), “put” and “call” options (publicly available rights to sell or buy securities within a certain period of time at a specified price or the like), such as zero-cost collars, and forward sale contracts. The policy also restricts the placement of Mylan securities in margin accounts and pledging of Mylan stock as collateral for loans, with certain exceptions approved by the Compensation Committee, effective as of March 31, 2013. To the extent that in the future the SEC adopts rules for anti-hedging and pledging policies that require changes to our policy, we will revise our policy accordingly.

 

2013 New Share Ownership Requirements

 

The Board previously approved stock ownership requirements for executive officers to encourage them to have a long-term equity stake in Mylan, demonstrate alignment of their interests with shareholders, and mitigate potential compensation-related risk. These requirements were amended in December 2012 to increase the multiple for the Executive Chairman of the Board and the CEO from 5x to 6x. The ownership requirements are expressed as a multiple of base salary as follows:

 

  
           Position   Ownership Requirement
(multiple of base salary)
        
     Executive Chairman of the Board   6x     
    

CEO

  6x     
    

President

  4x     
    

Other NEOs

  3x     
  

 

In addition to the NEOs, Mylan’s stock ownership policy covers the top 130 executives in the Company to promote an ownership culture among the broader leadership team. Each executive generally has five years to achieve the minimum ownership requirement. Shares actually owned by the executive (including shares held by the executive in the Company’s 401(k) and Profit Sharing Plan), as well as unvested RSUs and Performance RSUs count toward compliance with these requirements.

 

As of December 31, 2012, all of the NEOs were in compliance with these requirements.

 

  

 

Role of Committee, Consultants and Management

In 2012, as in prior years, the Compensation Committee retained Meridian Compensation Partners, LLC (Meridian) to provide advice and information regarding design and implementation of the Company’s executive compensation programs. Meridian also provided information and updates to the Compensation Committee about regulatory and other technical developments that may affect the Company’s executive compensation programs. In addition, Meridian provided the Compensation Committee with competitive market information, analyses and trends on executive base salary, short-term incentives, long-term incentives, benefits and perquisites. The Compensation Committee takes this information and analyzes overall compensation to ensure that we are recognizing subjective factors

such as responsibilities, position and individual performance including such qualities as leadership, strategic vision, demonstrated skill-sets, and execution of corporate initiatives, as well as other considerations noted above.

We have developed the following safeguards to ensure that Meridian provided to the Committee independent and objective advice:

 

  Ÿ  

Meridian did not provide any other services to the Company.

 

  Ÿ  

The Compensation Committee directly retained and has the sole authority to terminate Meridian.

 

  Ÿ  

The Compensation Committee solely determined the terms and conditions of Meridian’s engagement, including the fees charged.

 

 

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2013 Annual Meeting of Shareholders

 

  Ÿ  

Meridian reports directly to the Compensation Committee and its Chairman.

 

  Ÿ  

Meridian meets as needed with the Compensation Committee in executive sessions that are not attended by any personnel of the Company.

 

  Ÿ  

Meridian has direct access to all members of the Compensation Committee during and between meetings.

 

  Ÿ  

Interactions between Meridian and management generally are limited to discussions on behalf of the Compensation Committee and information presented to the Compensation Committee for approval.

 

  Ÿ  

In addition to the foregoing, the Compensation Committee evaluated Meridian’s independence against the six independence factors adopted by the SEC. Based on this evaluation and our independence safeguards, the Compensation Committee determined that Meridian is independent of management, had no conflicts and provided the Compensation Committee objective and candid advice.

 

  Ÿ  

The Chairman of the Compensation Committee has requested that Meridian notify the Compensation Committee if any potential conflicts of interest arise that could cause Meridian’s independence to be questioned.

The Committee and management also receive advice from outside counsel including, but not limited to, Skadden, Arps, Slate, Meagher & Flom LLP and Cravath, Swaine & Moore LLP.

The Committee also receives input from management; however, decisions on these matters are made solely by the Committee.

During 2012, management retained Mercer LLC to provide consulting services related to executive compensation for consideration by the Compensation Committee. Management worked with Mercer to develop revised peer groups for pay and performance comparisons for 2013, review the Company’s compensation philosophy, and assist the Company’s decision-making following the 2012 say-on-pay vote. These matters were then submitted to and approved by the Compensation Committee.

Consideration of Risk in Company Compensation Policies

Management and the Compensation Committee have considered and discussed the risks inherent in our business and the design of our compensation plans, policies and programs that are intended to drive the achievement of our business objectives. We believe that the nature of our business, and the material risks we face, are such that the compensation plans, policies and programs we have put in place are not reasonably likely to give rise to risks that would have a material adverse effect on our business. In addition, we believe that the mix and design of the elements of executive compensation do not encourage management to assume excessive risks. Finally, as described in this Compensation Discussion and Analysis, our compensation programs and decisions include qualitative factors which we believe restrain the influence that an overly formulaic approach may have on excessive risk taking by management.

Deductibility Cap on Executive Compensation

Section 162(m) of the Internal Revenue Code restricts the deductibility for federal income tax purposes of the compensation paid to the Chief Executive Officer and each of the other Named Executive Officers (other than our Chief Financial Officer) for any fiscal year to the extent that such compensation for such executive exceeds one million dollars and does not qualify as “performance-based” compensation as defined under Section 162(m) of the Code. The Board and the Compensation Committee have taken actions, including the grant of performance-based annual incentive opportunities, stock options, and performance RSUs, intended to enhance our opportunity to deduct compensation paid to executive officers for federal income tax purposes. The Compensation Committee, however, reserves the right to grant compensation to our executives that is not deductible, as determined by the Compensation Committee based on its business judgment, intimate familiarity with the Company and management, and in light of a variety of considerations noted above, or as necessary to comply with contractual commitments, or to maintain the flexibility needed to attract talent, promote retention, or to recognize and reward desired performance.

 

 

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Executive Compensation for 2012

 

 

 

Compensation Committee Report        

 

  
 

 

 

We have reviewed and discussed the Compensation Discussion and Analysis with management. Based on such review and discussions, we recommended to the Board that the Compensation Discussion and Analysis be included in the Company’s Form 10-K and this Proxy Statement on Schedule 14A.

 

Respectfully submitted,  
Rodney L. Piatt, C.P.A. Wendy Cameron Joseph C. Maroon, M.D.  

 

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Table of Contents

The following Summary Compensation Table sets forth the cash and non-cash compensation paid to or earned by the Named Executive Officers for 2012, 2011, and 2010.

Summary Compensation Table

 

 

 

Name  and
Principal
Position
   
 
Fiscal
Year
 
   
   
 
Salary
($)
 
   
   
 
Bonus
($)
 
   
   
 
 
Stock
Awards
($) (1)
 
 
  
   
 
 
Option
Awards
($) (2)
 
 
  
   
 
 
 
 
Non-Equity
Incentive
Plan
Compensation
($) (3)
 
 
 
 
  
   
 
 
 
 
 
 
 
 
Changes in
Pension
Value  and
Non-
qualified
Deferred
Compensation
Earnings
($) (4)
 
 
 
 
 
 
 
 
  
   
 
 
All Other
Compensation
($) (5)
 
 
  
   
 
Total
($)
 
  
   
 
 
 
 
 
Total
without
Changes in
Pension
Value
($) (6)
 
 
 
 
 
  

Heather Bresch

Chief Executive Officer

    2012        998,077               2,843,741        1,378,127        2,375,000        1,959,617        405,683        9,960,245        8,000,628   
    2011        884,615        360,000        5,143,746        973,516        1,440,000        489,645        406,157        9,697,679        9,208,034   
    2010        787,019               1,800,001        963,003        1,240,000        296,150        196,680        5,282,853        4,986,703   

John D. Sheehan

Executive Vice President and Chief Financial Officer

    2012        645,192               1,320,305        639,844        1,235,000        235,333        202,554        4,278,228        4,042,895   
    2011        621,154        250,000        1,425,790        563,379        1,000,000        190,797        119,698        4,170,818        3,980,021   
    2010        443,077               841,218        635,928        930,000               370,260        3,220,483        3,220,483   

Rajiv Malik

President

    2012        784,615               1,949,997        945,003        1,520,000        703,658        3,843,617        9,746,890        9,043,232   
    2011        691,667        280,000        3,371,869        630,987        1,120,000        464,225        390,283        6,949,031        6,484,806   
    2010        645,833               1,218,736        652,033        1,007,500        359,343        151,264        4,034,709        3,675,366   

Harry Korman

Executive Vice President and Chief Operating Officer

    2012        573,558               934,365        445,258        1,092,500               175,272        3,220,953        3,220,953   
    2011        500,000        135,000        1,106,240        180,278        615,000               163,477        2,699,995        2,699,995   
    2010        491,346               375,015        200,629        628,125               146,398        1,841,513        1,841,513   

Robert J. Coury

Executive Chairman

    2012        1,346,654               4,387,499        2,126,251        3,206,250        15,890,041        1,076,075        28,032,770        12,142,729   
    2011        1,784,615        900,000        6,750,006        2,596,054        3,600,000        4,550,033        1,157,062        21,337,771        16,787,738   
    2010        1,700,000               6,099,999        2,728,516        3,293,750        7,960,701        1,152,970        22,935,936        14,975,235   

 

(1) 

Represents the grant date fair value of the stock awards granted to the Named Executive Officer in 2012, 2011 and 2010, as applicable. For information regarding assumptions used in determining such expense, please refer to Note 11 to the Company’s Consolidated Financial Statements included in its Form 10-K filed with the SEC.

 

(2) 

Represents the grant date fair value of the option awards granted to the Named Executive Officer in 2012, 2011 and 2010, as applicable. For information regarding assumptions used in determining such expense, please refer to Note 11 to the Company’s Consolidated Financial Statements included in its Form 10-K filed with the SEC.

 

(3) 

Represents amounts paid under the Company’s non-equity incentive compensation plan. For a discussion of this plan, see the Compensation Discussion and Analysis set forth above.

 

(4) 

Represents the aggregate change in present value of the applicable Named Executive Officer’s accumulated benefit under his or her respective Retirement Benefit Agreement (“RBAs”) or the Amended Retirement Benefit Agreement (“Amended RBA”) for Mr. Coury. The change in Mr. Coury’s benefit from 2011 to 2012 is primarily the result of two factors: (1) Mr. Coury vested in approximately one-half of his supplemental retirement benefit under the Amended RBA during 2012 and no such benefit existed for 2011, as Mr. Coury is fully vested in his Retirement Benefit Agreement, and (2) a decline in the discount rate required to be used to determine his reportable benefit amount as of December 31, 2012. The increases for Ms. Bresch and Messrs. Malik and Sheehan were principally the result of an additional year of credited service along with the same impact of the decline in discount rates. In computing these amounts, we used the same assumptions that were used to determine the expense amounts recognized in our 2012 financial statements. In 2012, the impact of the change in the applicable discount rates led to an increase in the present value of accumulated benefits of approximately $0.8 million for Ms. Bresch, $0.2 million for Mr. Malik, $0.1 million for Mr. Sheehan and $5.9 million for Mr. Coury. For further information concerning the Retirement Benefit Agreements, see the Pension Benefits table set forth below and the discussion under “Retirement Benefit Arrangements” on page 40.

 

(5) 

Amounts shown in this column are detailed in the chart on the next page.

 

(6) 

In order to show the effect that the year-over-year change in pension value had on total compensation, as determined under applicable SEC rules, we have included an additional column to show total compensation less the change in pension value. The amounts reported in the Total without Changes in Pension Value column differ substantially from the amounts reported in the Total column required under SEC rules and are not a substitute for total compensation. Total without Changes in Pension Value represents total compensation, as determined under applicable SEC rules, less the change in pension value reported in the Changes in Pension Value and Non-qualified Deferred Compensation Earnings column. The change in pension value is subject to many external variables that are not related to Company performance, such as interest rates. Therefore, we, believe shareholders may find the accumulated pension benefits in the Pension Benefits table on page 39 a useful calculation of the pension benefits provided to the Named Executive Officers.

 

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Table of Contents

Compensation Committee Report

 

  Name  

Fiscal

Year

   

Use of

Company

Provided

Automobile

($) (a)

   

Personal

Use of

Company

Aircraft

($) (b)

   

Lodging

Reimbursement

($) (c)

   

Relocation
Reimbursement

($)

    Expatriate
Benefits
($) (d)
   

401(k) and

Profit

Sharing

Plan

Matching

and Profit
Sharing
Contributions

($) (e)

   

Restoration

Plan

Contribution

($) (f)

   

Other

($) (g)

 

  Heather

  Bresch

    2012        19,200        133,346                             27,150        225,987          
    2011        19,200        86,448                             26,950        214,626        58,933   
    2010        19,200        9,239                             29,400        136,958        1,883   

  John D.

  Sheehan

    2012        19,200                                    27,150        156,204          
    2011        19,200        184               750               29,627        66,112        3,825   
    2010        14,400                      236,543               3,569        14,154        101,594   

  Rajiv

  Malik

    2012        19,200        7,965        50,000        44,258        3,360,574                      361,620   
    2011        27,328               59,874        117,797        64,311                      120,973   
    2010        28,131               33,206                                    89,927   

  Harry

  Korman

    2012        19,200               20,690                      27,150        100,949        7,283   
    2011        12,834               21,502                      26,950        101,569        622   
    2010        854               25,195                      29,400        87,900        3,049   

  Robert

  J. Coury

    2012        27,080        473,231                             27,150        541,915        6,699   
    2011        28,819        500,779                             26,950        592,684        7,830   
    2010        29,868        535,590                             29,400        463,895        94,217   

 

(a) 

In the case of Ms. Bresch, Mr. Malik, Mr. Sheehan and Mr. Korman, these numbers represent a vehicle allowance. For Mr. Coury, this number represents automobile leasing and insurance costs.

 

(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 aircraft 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 Named Executive Officer. In certain instances where there are both business and personal passengers, the incremental costs per hour are pro-rated.

 

(c) 

Represents a housing allowance afforded to Mr. Malik. For Mr. Korman, this represents the costs associated with his temporary housing in the Pittsburgh area in 2012 and Morgantown in 2010 and 2011.

 

(d) 

Expatriate Benefits for Mr. Malik represent income taxes paid by the Company in connection with Mr. Malik’s expatriate assignment to the United States from India effective January 1, 2012. Specifically, Mr. Malik is responsible for, and has continued to pay taxes equal to those he would have been obligated for had he maintained his principal work location and residence in India rather than having transferred, at the Company’s request, to the United States while the Company has responsibility for all additional taxes, including Mr. Malik’s tax obligations on the inputed income associated with the Company’s payment of taxes on his behalf.

 

(e) 

In 2012, amounts disclosed for Ms. Bresch and Messrs. Sheehan, Korman and Coury included the total of a $10,000 matched contribution of each executive and a $17,150 profit sharing contribution from the Company. In 2011, the amounts disclosed for Ms. Bresch and Messrs. Korman and Coury included $9,800 as a matched contribution and $17,150 in Company profit sharing. For Mr. Sheehan, the amounts disclosed included $12,477 as a matched contribution and $17,150 in Company profit sharing. In 2010, the amounts disclosed for Ms. Bresch and Messrs. Korman and Coury included $9,800 as a matched contribution and $19,600 in Company profit sharing. Mr. Sheehan received only matching contributions in the amount of $3,569 in 2010 due to the fact that his employment with the Company began during the 2010 calendar year. Effective April 1, 2013, Ms. Bresch and Messrs. Malik, Sheehan and Coury are no longer eligible to receive matching contributions under the Restoration Plan.

 

(f) 

See page 40 for further information regarding Restoration Plan contributions.

 

(g) 

Represents reimbursement of out-of-pocket medical, vision expenses, and insurance premiums. For Mr. Malik, it also represents employer contributions to the Provident Fund, a statutory contributory pension fund in India. For Mr. Korman, it also represents the reimbursement of certain personal travel expenses. For Mr. Sheehan in 2010 and 2011, it represents tax gross-ups paid in respect of his relocation expenses as set forth in this table. For Mr. Coury in 2010, it represents income tax gross-up paid in respect of perquisites set forth in columns (a), (b), and/or this column (f). As discussed in the Compensation Discussion and Analysis, Mr. Coury waived his right to an income tax gross-up on perquisites in 2011. For Ms. Bresch in 2011, it also represents amounts in tax equalization payments. The Company discontinued tax equalization payments effective January 1, 2012.

 

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Table of Contents

    2013 Annual Meeting of Shareholders

 

Grants of Plan-Based Awards in 2012

 

 

The following table summarizes grants of plan-based awards made to each Named Executive Officer during 2012.

 

  Name    Grant
Date
     Date  of
Comp
Comm
Action
         
Estimated Future  Payments
Under Non-Equity Incentive
Plan Awards (1)
     Estimated Future
Payments Under
Equity  Incentive
Plan Awards (2)
     All Other
Stock
Awards:
Number of
Shares of
Stock  or
Units
(#) (3)
     All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#) (4)
     Exercise
or Base
Price of
Option
Awards
($/Sh)
     Grant Date
Fair Value
of Stock
and Option
Awards
($) (5)
 
         Threshold
($)
     Target
($)
     Maximum
($)
     Threshold
(#)
     Target
(#)
             
Heather
Bresch
             2/16/2012         625,000         1,250,000         2,500,000                                                   
     2/22/2012                                             32,663         65,326         55,994                         2,843,741   
     2/22/2012                                                                     176,006         23.44         1,378,127   
John D.
Sheehan
             2/16/2012         325,000         650,000         1,300,000                                                   
     2/22/2012                                             15,165         30,330         25,997                         1,320,305   
     2/22/2012                                                                     81,717         23.44         639,844   
Rajiv
Malik
             2/16/2012         400,000         800,000         1,600,000                                                   
     2/22/2012                                             22,398         44,795         38,396                         1,949,997   
     2/22/2012                                                                     120,690         23.44         945,003   
Harry
Korman
             2/16/2012         287,500         575,000         1,150,000                                                   
     2/22/2012                                             10,732         21,464         18,398                         934,365   
     2/22/2012                                                                     57,830         23.44         445,258   
Robert J.
Coury
             2/16/2012         843,750         1,687,500         3,375,000                                                   
     2/22/2012                                             50,395         100,789         86,391                         4,387,499   
     2/22/2012                                                                     271,552         23.44         2,126,251   

 

(1) 

The performance goals under the short-term incentive compensation program applicable to the Named Executive Officers during 2012 are described above in the Compensation Discussion and Analysis.

 

(2) 

Consist of performance-based restricted stock units awarded under the 2003 Plan. The vesting terms applicable to these awards are described below following the table entitled “Outstanding Equity Awards at End of 2012.” The Named Executive Officers may not receive any more than the target number of performance-based restricted stock units granted.

 

(3) 

Consist of time-based restricted stock units awarded under the 2003 Plan. The vesting terms applicable to these awards are described below following the table entitled “Outstanding Equity Awards at the End of 2012.”

 

(4) 

Represents the grant of ten-year stock options awarded under the 2003 Plan during 2012 to the Named Executive Officers at an exercise price equal to the closing price of the Company’s common stock on the date of grant. The vesting terms applicable to these awards are described below following the table entitled “Outstanding Equity Awards at the End of 2012.” Subject to applicable employment agreement provisions, following termination of employment, vested stock options will generally remain exercisable for 30 days following termination, except that (i) in the case of termination because of disability, 100% of options become vested and vested options will remain exercisable for two years following termination; (ii) in the case of a termination due to a reduction in force, vested options will remain exercisable for one year following termination; and (iii) in the case of death or retirement, or a participant’s death within two years following termination because of disability, 100% of options become vested and vested options will remain exercisable for the remainder of the original term.

 

(5) 

Represents the grant date fair value of the specific award granted to the Named Executive Officer. For information regarding assumptions used in determining such value, please refer to Note 11 to the Company’s Consolidated Financial Statements included in its 2012 Form 10-K filed with the SEC.

 

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Table of Contents

Compensation Committee Report

 

Outstanding Equity Awards at the End of 2012

 

 

The following table sets forth information concerning all of the outstanding equity-based awards held by each Named Executive Officer as of December 31, 2012.

 

    

 

Option Awards

   Stock Awards
  Name   

Number of

Securities

Underlying

Unexercised

Options (#)

Exercisable

  

Number of

Securities

Underlying

Unexercised

Options (#)

Unexercisable
(1)

  

Option

Exercise

Price

($)

  

Option

Expiration

Date

  

Number of

Shares or

Units of

Stock That

Have

Not  Vested

(#) (2)

  

Market

Value of

Shares
or

Units of

Stock

That

Have Not

Vested

($) (3)

  

Equity

Incentive

Plan

Awards:

Number

of

Unearned

Shares,

Units or

Other

Rights

That

Have Not

Vested

(#) ($) (4)

  

Equity

Incentive

Plan

Awards:

Market or

Payout

Value of

Unearned

Shares,

Units or

Other

Rights

That

Have Not

Vested

($) (5)

  Heather

  Bresch

       100,000                   22.1400          1/31/2017                                      
       160,000                   15.8000          7/27/2017                                      
       94,815          47,407          21.1300          3/3/2020                                      
       41,279          82,556          22.6600          3/2/2021                                      
                176,006          23.4400          2/22/2022                                      
                                           9,465          259,814          56,791          1,558,913  
                                           29,788          817,681          71,988          1,976,071  
                                           116,496          3,197,815                    
                                           55,994          1,537,035          65,326          1,793,199  

  John D.

  Sheehan

       53,333          26,667          23.1600          4/1/2020                                      
       23,888          47,776          22.6600          3/2/2021                                      
                81,717          23.4400          2/22/2022                                      
                                           5,333          146,391          20,322          557,839  
                                           17,238          473,183          37,063          1,017,379  
                                           25,997          713,618          30,330          832,559  

  Rajiv

  Malik

       120,000                   22.1400          1/31/2017                                      
       80,000                   15.8000          7/27/2017                                      
       121,207                   13.2500          3/27/2019                                      
       64,197          32,099          21.1300          3/3/2020                                      
       26,755          53,509          22.6600          3/2/2021                                      
                120,690          23.4400          2/22/2022                                      
                                           6,409          175,927          38,452          1,055,507  
                                           19,307          529,977          49,233          1,351,446  
                                           74,557          2,046,590                    
                                           38,396          1,053,970          44,795          1,229,623  

  Harry

  Korman

       19,753          9,877          21.1300          3/3/2020                                      
       7,644          15,288          22.6600          3/2/2021                                      
                57,830          23.4400          2/22/2022                                      
                                           1,972          54,131          11,832          324,788  
                                           5,516          151,414          15,170          416,417  
                                           26,794          735,495                    
                                           18,398          505,025          21,464          589,187  

  Robert J.

  Coury

       165,700                   23.27          4/5/2016                                      
       268,642          134,321          21.13          3/3/2020                                      
       110,076          220,152          22.66          3/2/2021                                      
                271,552          23.44          2/22/2022                                      
                                           42,593          1,169,178          160,909          4,416,952  
                                           79,435          2,180,491          178,729          4,906,111