Four pension funds are urging shareholders of pharmaceutical company Mylan to reject the re-election of six of the company’s board members, and to vote against a management proposal to ratify 2016 executive compensation.
The New York State Pension Funds, New York City Pension Funds, the California State Teachers’ Retirement System, and Dutch pension fund PGGM sent a letter to Mylan shareholders calling on them to vote against director nominees Wendy Cameron, Robert Cindrich, Robert Coury, Neil Dimick, Mark Parrish, and Randall Vanderveen. They also asked the shareholders to deny Chairman Coury $97.6 million in proposed compensation for 2016.
The shareholders will vote on the proposals at its annual meeting on June 22.
“We believe the time has come to hold Mylan’s board accountable for its costly record of compensation, risk, and compliance failures,” said the pension funds in the letter. “While the entire board bears some responsibility, we believe accountability and refreshment must begin with the six above-named directors.”
Collectively, the pension funds own approximately 4.3 million shares of Mylan valued at $170 million based on the stock’s most recent closing price.
The pension funds said that Mylan’s board “reached new lows in corporate stewardship in 2016, when it agreed to make extraordinary and egregious payments in 2016 and over the next five years to chairman and former CEO Coury. “
Coury’s compensation totaled $97.6 million in 2016, but the funds said this understated his total pay. “Including vesting and payments triggered in part by inconsistent Board determinations, Mr. Coury received more than $160 million in 2016.”
Mylan said in a statement that Coury’s compensation “was granted and earned over his 15-year tenure as CEO and then Executive Chairman or directly relates to his retirement as an executive in 2016 and transition to Non-Executive Chairman.”
The funds said the level of compensation was particularly unseemly as it came amid public and regulatory accusations of price-hiking Mylan’s EpiPen, which was marked up by 400%. Mylan agreed to a $465 million settlement with the Department of Justice in 2016 for five years of overcharging for the EpiPen.
“Mylan has since suffered significant reputational and financial harm; been the subject of multiple federal and state investigations, as well as civil litigation,” said the letter. “This controversy also caused investors—including several of us—to urge the board to strengthen its oversight of Mylan’s drug-pricing strategy and risks, requests that have been largely ignored.”
The pension funds concluded that “Mylan’s management and board leadership structures are out of line with best practices and its self-designated compensation peer companies,” and that “Mylan’s Board must be refreshed to be strongly independent and to protect investor value.”
The letter was signed by New York City Comptroller Scott Stringer; New York State Comptroller Thomas DiNapoli,; Anne Sheehan, director of corporate governance for California State Teachers’ Retirement System; and Margriet Stavast-Groothuis, advisor, responsible investment for PGGM.