Even after Mylan’s investors re-elected the drugmaker’s entire board last week, some aren’t giving up on their demands for a housecleaning. The still-unappeased shareholders say Chairman Robert Coury and compensation chair Wendy Cameron have to go.
Mylan published vote totals in an 8-K filing with the SEC, disclosing that Cameron faced 56% opposition from shareholders. That's unacceptable to New York City comptroller Scott Stringer and others, who are criticizing an “obscure” company rule that requires a supermajority vote to remove a director.
Directors only need 34% of the vote to keep their seats, according to Stringer, who argued in a letter to the board that there’s no “defensible rationale” for the rule. About 90% of companies in the S&P 500 have majority voting rules, he says, asking that Mylan accept Cameron’s “immediate resignation.”
Further, shareholders overwhelmingly rejected exec pay packages at the drugmaker—83.5% recorded opposition votes—in what Stringer called an “astounding” result that reflects poorly on Cameron's performance as compensation chair.
In a statement, a Mylan spokesperson said the board “respectfully acknowledges the votes of shareholders on the Say-on-Pay Vote, as well as in respect of the re-election of its board members.”
In response, the drugmaker’s board “will engage in an extensive program of shareholder outreach over the coming months in order to elicit and understand the perspectives of Mylan’s shareholders,” according to a company statement. That process “will be the first stage of a careful review that the Mylan board will undertake going forward in response to the vote.”
Stringer made his request on behalf of the New York City Pension funds, and was joined in signing the letter by Thomas P. DiNapoli, New York State Comptroller, and Anne Sheehan, corporate governance director at the California State Teachers’ Retirement System. The group had campaigned against re-electing a slate of current directors, including Coury, and won backing from influential proxy advisers.
Among their numerous requests for more stringent oversight, the group called on Mylan to “negotiate a final separation agreement with current Chairman Robert Coury,” to adopt a “robust” clawback policy for exec pay and to hire a new compensation consultant.
Coury’s pay package for 2016, totaling nearly $100 million, made him the highest-paid pharma exec for the year, at a time when Mylan’s share price has faltered and the drugmaker has faced multiple controversies, investigations and new competition for its key EpiPen product. More recently, one U.S. watchdog agency calculated that Mylan overcharges cost taxpayers more than $1 billion.
“Let’s be clear about what happened here,” Stringer said in a statement. “From the EpiPen price-hiking debacle, to allegedly overcharging the government for life-saving drugs, to paying Chairman Coury nearly $100 million, this board’s oversight failures have hurt investors, consumers, and American taxpayers. We need to see change."