While Bob Hugin at Celgene was taking a pay cut with his move to executive chairman, Mylan’s Robert Coury most decidedly did not.
In fact, Coury’s compensation skyrocketed. To $97 million.
Coury’s bonus of $20 million beat most of Big Pharma’s CEO hauls all by itself. His stock awards—$50 million-plus—would top the list.
To put it in another context: That $97 million is more than one-fifth the amount Mylan agreed to pay in a Medicaid rebate settlement with the Justice Department. It’s also worth 161,667 EpiPens at the $600-odd retail price that landed Mylan in so much hot water last summer.
However you explain the amount, it’s a golden parachute, with a couple of bells and whistles attached, as disclosed in the company's annual U.S. securities filing. Last June, Coury shrugged off the “executive” part of his title in favor of the nonexecutive chairman role. That switch triggered “transition” benefits—essentially payouts that were waiting till he made his exit as an employee.
Most of these benefits and awards have already been disclosed, Mylan is quick to note. In fact, the company’s proxy says, Coury’s “direct compensation” has actually been declining year after year—from $22.8 million in 2016 to $18.3 million last year to $10.5 million for 2017.
So, let’s take a look at these transition outlays.
The $20 million cash bonus: Back in 2014, Coury negotiated a new employment contract for his new job. This $20 million "performance incentive opportunity" was part of it.
If he “satisfactorily performed his key leadership responsibilities” and “remained employed” by Mylan through the end of 2016, Coury would collect.
Performance-wise, Mylan’s board decided that Coury had exceeded its expectations with his “strategic vision,” Mylan’s “short- and long-term value creation for shareholders,” and its $7.2 billion buyout of Meda, which closed last year, among other things.
The board does not mention the shareholder lawsuits over Mylan’s EpiPen pricing, the Federal Trade Commission’s antitrust investigation, Sanofi’s recent antitrust lawsuit, or any of the government hearings, subpoenas and probes Mylan disclosed last year. Nor did the proxy include analyst forecasts showing that Mylan’s key EpiPen franchise could lose $800 million in sales by 2018. Or the thousands of job cuts—up to 3,500—the company announced in December.
The board acknowledged that Coury took himself off the employee roster some months early. He ceased being a Mylan employee in June. But, the board decided Coury’s continued presence as a nonemployee chairman qualified for service-based vesting.
Another $22.9 million is made up of “separation payments”—three times his annual cash compensation (salary and bonus) plus three years’ worth of health benefits—$265,196—and aircraft use worth $4.58 million.
Then there’s that $50 million in stock awards, which don’t fall into the previously disclosed category. About $4.5 million are garden-variety performance shares. Most of the rest—$43.56 million—are a retention bonus of sorts.
When he bowed out as an employee, Coury struck a new deal with Mylan’s board, which wanted to keep him around for five more years as chairman. The instrument they settled on was a grant of 1 million restricted stock units, 75% to vest after three years, 25% after five. That’s $8.7 million per year.
The rest of Coury’s 2016 pay pales in comparison. There’s $1.63 million in base salary, $1.48 million in options and $947,398 in cash incentive pay.
CEO Heather Bresch, meanwhile, took in a comparatively modest $13.77 million.