Mylan’s ($MYL) EpiPen tornado is far from its first storm of controversy. It’s just the most mainstream. Over the past decade, its executives have caught fire for personal use of company aircraft, an unearned degree, outsized compensation and alleged conflicts of interest. They sued a newspaper for coverage of Mylan production problems to boot.
Let’s rewind to 2008, when the Pittsburgh Post-Gazette discovered that now-CEO Heather Bresch, then Mylan’s COO, had earned only 22 of the 48 credits required for the MBA on her resume. West Virginia University first confirmed that Bresch hadn’t completed the Executive MBA program. Then the school backtracked and said she had--and awarded the degree retroactively. Her transcript was amended.
Back and forth and back and forth ensued--Bresch, for one thing, told reporters that she had cut a deal with the MBA program’s director to sub work experience for coursework. WVU appointed a panel to investigate. The panel’s verdict? Bresch did not earn her degree and officials “acted improperly” to grant it retroactively. WVU rescinded the degree.
“I continue to believe that I did what I needed to do to earn my degree,” Bresch told the Wall Street Journal Health Blog at the time. “The administration allowed me to take an unconventional approach as part of what was then a program in its infancy.” She said she wouldn’t challenge WVU’s decision to take her degree back.
Less than a year later, then-CEO Robert Coury made headlines for using Mylan’s company jet for personal travel. Security reasons, the company said; not an uncommon excuse, but not a perk most drugmakers provide, either. Not only that, but the company paid the taxes he would have owed on the value of that aircraft use.
By 2012, Coury was catching fire for jetting his musician son to gigs all over the country: San Antonio, Cincinnati, Las Vegas, West Palm Beach. Perfectly fine, said Mylan at the time. "Mr. Coury's family members have occasionally been passengers on the corporate aircraft," spokeswoman Nina Devlin told the WSJ back then. The value of Coury’s personal aircraft use in 2011? $500,000. The company had stopped covering Coury’s tax bill for the perk, however.
The next out-of-the-ordinary scandal involved Vice Chairman Rodney Piatt and some questionable land deals. Mylan paid $2.9 million for a new headquarters site in a Pittsburgh business park, one day after Piatt sold the same tract to a business partner for $1. Then, Mylan shelled out $9.2 million for another parcel that Piatt had previously sold to the same partner for $10. Mylan didn’t disclose Piatt’s role in the land sales. It didn’t tell shareholders that it hired a company linked to Piatt to oversee some of the construction, either.
Securities regulators required that companies report significant transactions with “related persons,” including board members. And Mylan did disclose that the Securities and Exchange Commission launched an investigation into the land deals--and that the company was planning to reimburse Piatt for about $338,000 in expenses stemming from that probe.
Mylan said at the time that the board didn’t decide to buy the land, though it was aware of the deals. “Mr. Piatt was not a party to either transaction, had no direct or indirect material interest in the transactions, and did not profit from the sale of these properties to Mylan,” the company told the Pittsburgh Tribune-Review.
Those were all one-time scandals. Simmering underneath them all were questions about the company’s compensation plans. As CEO, Coury totted up compensation that outranked many pay packages in Big Pharma--companies with more sales, more employees and far bigger R&D budgets. In 2011, as CEO, he boasted a $22.9 million pay package, up from just over $8 million a few years before. Even after he moved into the executive chairman role, he racked up some serious pay--$25.8 million in 2014.
That figure even cropped up when Teva ($TEVA) was trying to buy Mylan--as a cultural difference that might make integration difficult. Teva’s exec pay approach "favors restraint and a pay-for-performance philosophy, a reflection of our fidelity to the interests of all stakeholders, and not just a select few," CEO Erez Vigodman wrote to Coury at the time.
Meanwhile, Bresch’s pay started out at $9.6 million in 2012, her first year at the helm. By 2014? Her compensation had grown to $25.82 million. Meanwhile, the company said it would not only accelerate executives’ equity pay to help them avoid tax penalties related to Mylan’s inversion move to the Netherlands--but also cover the excise taxes top managers would owe. Shareholders, however, got no such tax protection. We recently heard from one of them.
“I was one of those shareholders that experienced ‘sticker shock’ when I found out how much I owed all because of the conversion of Mylan stock when they shifted HQ from Canonsburg to the Netherlands,” the shareholder told us. “Your link to the FiercePharma article about Mylan handing out money to overpaid execs so they can pay their taxes is making me mad all over again.”
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