Mylan N.V.
Mylan N.V. (Form: PRE 14A, Received: 05/01/2017 16:56:45)
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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

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MYLAN N.V.

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LOGO

 

Mylan

a champion for

Better Health

June 2017

Proxy Statement

2017 Annual Meeting of Shareholders

Mylan

Better Health

For a Better World®


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Robert J. Coury  

 

Chairman  

  LOGO   LOGO  

 

Heather Bresch

 

Chief Executive Officer

 

 

To Our Shareholders, Employees, Customers, Patients, and Friends:

 

Mylan is a truly unique organization that has relentlessly executed its strategy over the last decade to create a highly differentiated global company capable of making high quality medicines available to the billions of patients who need them. As one of the world’s leading healthcare companies, Mylan markets more than 7,500 products globally and serves more than 165 countries and territories. As the second largest generics company in the U.S., our medicines filled one out of every 13 prescriptions in the U.S. – more than the total filled by Pfizer, GlaxoSmithKline, Johnson & Johnson, AstraZeneca, Merck, Sanofi, and Eli Lilly combined. Even more telling, those prescriptions represent more than 22 billion doses, whose price, on average, was just 25 cents per dose.

P IVOTAL Y EAR FOR M YLAN

2016 was an eventful and pivotal year for Mylan. We maintained our multiyear track record of delivering strong financial results. We completed two acquisitions – Meda AB and the non-sterile topicals-focused specialty and generics business of Renaissance Acquisition Holdings LLC – that further built our scale and breadth from a product and geographic perspective. We also continued executing on the many drivers of our organic growth. Further, we started a conversation in the U.S. about the pressing need for fundamental, meaningful reform of the healthcare system.

S TRONG FINANCIAL RESULTS

Revenues totaled $11 billion, an impressive increase of 18% compared to 2015. All of our regions – North America, Europe, and Rest of World – contributed double-digit sales increases. Further, consistent with Mylan’s emphasis on product and geographic diversity, six of our ten global therapeutic franchises each delivered revenues of approximately $1 billion: Central Nervous System and Anesthesia, Respiratory and Allergy, Infectious Disease, Cardiovascular, Gastroenterology, and Diabetes and Metabolism.

On a U.S. GAAP basis, our diluted earnings per share (EPS) in 2016 was $0.92, a decrease of 46% compared to 2015. This result was driven by reduced earnings from operations; higher non-operating expenses, including higher interest expense; and a higher average share count, among other items. Partially offsetting these items was our recognition of a $358 million income tax benefit. Adjusted diluted EPS in 2016 was $4.89, a 14% increase compared to 2015. This result was driven by expanded sales and earnings from operations in our core operations along with the contribution from acquisitions. The impact of higher interest expense, a higher average share count, and a higher effective tax rate partially offset the growth in earnings from operations.

 

 

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I NTEGRATING M YLAN

Through our organic and inorganic growth initiatives over the last several years, we have achieved broad diversity across our regions; scale across all key customer channels, including generics, brands, and over-the-counter, or OTC, products; and an unmatched commercial and operating platform. We now are focused on leveraging that scale, using our ONE Mylan approach, to continue expanding as we optimize our sales force, bring new products to new countries, and maximize high-potential brands. To make sure we identify and fully execute on synergy opportunities, our top priority through the end of 2018 is to “integrate Mylan.” So, rather than merely folding recent transactions into our existing structure and processes, we’re looking for ways to further organize, optimize, and operate our new and expanded company so we can maintain our strong financial track record.

C ONTINUED E XECUTION ON O RGANIC G ROWTH D RIVERS

We also will keep executing on multiple organic-growth drivers, which represent additional levers we can use to manage our business, successfully withstand headwinds, and deliver on our stated targets. This execution is evidenced, for instance, by the U.S. Food and Drug Administration’s (FDA) acceptance of our submissions for two of the 16 biosimilars products in our portfolios. We are targeting an additional six developed-markets biosimilars submissions in 2017, as well as more than 30 submissions for this portfolio in emerging markets. In addition, we continue to work toward getting approval from the FDA to market our generic Advair Diskus ® .

C ATALYST FOR H EALTHCARE S YSTEM REFORM

While Mylan saw many successes in 2016, our business also faced challenges, particularly in the U.S., where the healthcare system is undergoing extraordinary change. The rapid rise of high-deductible health plans, for instance, has shifted significant out-of-pocket costs to consumers, prompting intense interest in – and outrage over – the complexities of pharmaceutical pricing. We have been living this reality firsthand with our EpiPen ® Auto-Injector.

Americans are rightfully concerned about rising drug prices. This is precisely why we took decisive action with our EpiPen product, launching an authorized generic version at less than half of the brand’s wholesale acquisition cost. Our unprecedented action, along with enhancements we made to our patient-access programs, will help consumers and provide substantial savings to payors.

Providing people access to high quality pharmaceuticals has been our mission since Mylan was founded in West Virginia more than 55 years ago. We remain committed to doing our part to fight for changes to our healthcare system that make a positive difference in patients’ lives. And we hope that our experience with EpiPen can serve as a catalyst for change and illuminate the conversation about the need for better transparency and reform throughout the healthcare sector.

D OING WHAT S RIGHT , NOT WHAT S EASY

In addition to doing well, we focus on doing good, through our social commitment to addressing the world’s challenges. Learn more about our commitment in Social Responsibility at Mylan. The publication is available on our website, Mylan.com.

Making the world a better place takes courage and persistence. So on behalf of Mylan’s Board of Directors and senior leadership team, we would like to extend our sincere appreciation to our most valuable asset of all: the more than 35,000 talented individuals who make up our global workforce. Each and every one of them knows Mylan for who we really are – champions for better health.

 

 

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Finally, we would like to invite our shareholders to attend the company’s 2017 annual general meeting of shareholders, which will be held on June 22, 2017, at [ ] (CET) at [ ].

Sincerely,

 

LOGO

Robert J. Coury

Chairman

 

LOGO

Heather Bresch

CEO

 

 

M YLAN B Y T HE N UMBERS

 

   More than 7,500 marketed products

 

   More than 1,800 additional new product submissions are pending regulatory approval; more than 6,100 more submissions are planned.

 

   Serve more than 165 countries and territories

 

   Approximately 3,000 scientists and regulatory affairs experts; multiple state-of-the-art R&D centers

 

   Annual production capacity of approximately 80 billion oral solid doses, 1.5 billion complex-product units, and 500 million injectables units

 

   Total investment 2008-2016: ~$2.5 billion in capital expenditure and ~$4.2 billion in U.S. GAAP R&D

 

   Global workforce of more than 35,000

 

   2016 revenues: $11 billion

 

   Therapeutic franchises whose 2016 revenues totaled approximately $1 billion: Central Nervous System and Anesthesia, Respiratory and Allergy, Infectious Disease, Cardiovascular, Gastroenterology, and Diabetes and Metabolism

 

   Ticker: MYL (NASDAQ, TASE)

 

 

 

LOGO

 

 

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To Our Shareholders:

 

2016 was a momentous year for Mylan with a key senior leadership transition and two large acquisitions. As independent stewards of Mylan, we are privileged and honored to have overseen these important events and participated in the strategic development behind management’s decision to continue driving long-term value in this manner.

V ALUE - DRIVING LEADERSHIP TRANSITION

Our Board views leadership succession planning as a core responsibility and in 2016 the Board executed on a multi-year plan that began in 2012. In June 2016, our long-time Executive Chairman Robert Coury ended his role as an executive officer. During the 15-year period in which Mr. Coury led the Company as both Executive Chairman and, prior to that role, as Chief Executive Officer, he has served as a key architect in helping Mylan become a global leader in the generic and specialty pharmaceutical industry. Shareholders have conveyed their support for the Board’s belief that his continued role as non-executive Chairman of the Board is important to the Company’s efforts to drive shareholder value and grow our voice in the important evolution of the U.S. healthcare system.

We thank Mr. Coury for his years of dedicated service as a Mylan executive and are reassured by his commitment to remain active at the Company as non-executive Chairman. Under our new arrangement, Mr. Coury has agreed to serve as Chairman for at least five years and will intently focus, with the Mylan Board and in collaboration with the management team, on the strategy for Mylan for the next decade and beyond.

C OMMITMENT TO SHAREHOLDER ENGAGEMENT

As Mylan continues to drive long-term shareholder value and benefit all its stakeholders in an evolving healthcare environment, our Board has made shareholder engagement a priority. To hear our shareholders’ perspectives and answer questions about our leadership change, corporate governance, executive compensation, and sustainability initiatives, both our Chairman and certain independent directors engaged directly with several of our top investors during 2016. The Board continues to find this initiative enlightening and informative and, as such, plans to continue shareholder outreach in 2017.

More information about our engagement with shareholders can be found in the Compensation Discussion and Analysis section of the proxy.

C REATING ALIGNMENT AND RETURN ON LEADERSHIP

The key philosophy behind Mylan’s compensation programs is to drive maximum returns for Company stakeholders on leadership. Our Board has overseen the design and execution of the compensation programs to drive focus on long-term, sustainable value creation. This compensation strategy has been deliberately undertaken by the Board with the full understanding that it has sometimes been different from “conventional” practices and is not rigidly tied to standard market data and policies. During the important transition year of 2016, our Board was focused on ensuring Mr. Coury’s continued commitment to the Company for at least five years and designed long-term compensation for him that further strengthens his alignment with our long-term shareholders. With respect to our top executives, we structured executive compensation to be strongly performance-based against relevant and rigorous short- and long-term financial, business, and market metrics.

Additional details of our compensation programs are found in the Compensation Discussion and Analysis.

 

 

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B OARD COMPOSITION AND NEW DIRECTORS

We are committed to maintaining a skilled and engaged Board that reflects principles of diversity and independence. Our Board’s average tenure is close to that of other large publicly traded companies. Further, the varied experience and tenure on the Board ensures that we have a blend of newer and more seasoned directors who bring valuable perspectives to our boardroom. The current composition of our Board demonstrates our commitment to gender and ethnic diversity, with women and ethnic minorities holding 5 of 13 Board seats. We continue to seek and attract new director candidates who will keep our Board’s skillset strong and its overall composition diverse.

Thank you for the trust you place in us. We are honored and appreciative of the opportunity to serve Mylan as independent directors.

Sincerely,

Independent Directors of Mylan N.V.

 

 

O UR M ISSION

 

At Mylan, we are committed to setting new standards in healthcare. Working together around the world to provide 7 billion people access to high quality medicine, we:

 

  Innovate to satisfy unmet needs

 

  Make reliability and service excellence a habit

 

  Do what’s right, not what’s easy

 

  Impact the future through passionate global leadership

 

A U NIQUE G LOBAL C OMPANY

 

Relentless execution of Mylan’s strategy over the last decade has produced a highly differentiated global company capable of making high quality medicines available to everyone who needs them. Among our many strengths:

 

   Extensive product portfolio: We have one of the industry’s broadest and most diverse portfolios, with more than 7,500 marketed products.

 

   Expansive commercial footprint: We offer our products in more than 165 countries and territories. Our global sales force of more than 5,000 calls on approximately 60,000 customers.

 

   World-class supply chain: Our proven supply chain helps ensure that our medicines are available whenever and wherever needed – from large cities to rural outposts, and in developed and developing nations alike. We credit it with helping us, for instance, supply affordable antiretroviral medicine to approximately half of all people on treatment for HIV/AIDS in developing countries.

 

   Substantial research and development capabilities: We have a strong track record of developing new products, particularly complex and difficult-to-formulate medicines. We employ approximately 3,000 scientists and regulatory affairs experts globally who continually innovate, and we partner with other leading companies to augment our expertise.

 

   Powerful, high quality manufacturing platform: Our 50 plants around the world manufacture tens of billions of doses of medicine annually, and each site adheres to stringent quality standards, regardless of location. Further, our platform is significantly vertically integrated – meaning we produce nearly all of our active pharmaceutical ingredients and finished products – allowing us to rigorously manage per-dosage costs. We currently make internally 80% of the volumes we sell.

 

 

 

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LOGO

 

Mylan Proxy Statement

 

2017 Annual General Meeting of Shareholders

 

 
   

 

June 22, 2017                

 

 

 


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PRELIMINARY – SUBJECT TO COMPLETION

 

LOGO

 

 

Dear Mylan N.V. Shareholders:

 

You are cordially invited to attend the annual general meeting of shareholders of Mylan N.V. (“Mylan” or the “Company”), which will be held on Thursday, June 22, 2017, at [ ] Central European Time (CET), [ ].

During the annual general meeting, shareholders will be asked to vote on the appointment of directors; the adoption of the Dutch annual accounts for fiscal year 2016; the ratification of the selection of Deloitte & Touche LLP as Mylan’s independent registered public accounting firm for fiscal year 2017; the instruction to Deloitte Accountants B.V. for the audit of Mylan’s Dutch statutory annual accounts for fiscal year 2017; the approval, on an advisory basis, of the compensation of the named executive officers of the Company (the “Say-on-Pay Vote”); the frequency, on an advisory basis, of the Say-on-Pay Vote; and authorization of Mylan N.V.’s Board of Directors to acquire ordinary shares and preferred shares in the capital of Mylan (each a “Proposal” and together the “Proposals”).

The enclosed Notice of Annual General Meeting of Shareholders and Proxy Statement contain details regarding each of the Proposals, the annual general meeting and other matters. We encourage you to review these materials carefully.

Thank you for your continued support of Mylan. We look forward to seeing you on June 22nd.

 

 

Very truly yours,

 

LOGO   LOGO

Robert J. Coury Chairman

Mylan N.V.

 

Heather Bresch

Chief Executive Officer

Mylan N.V.

The accompanying proxy statement is dated [ ], 2017 and is first being mailed to the shareholders of Mylan on or about [ ], 2017.

 

 


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Mylan N.V.

Building 4, Trident Place

Mosquito Way, Hatfield,

Hertfordshire, AL10 9UL England

+44 (0) 1707 853 000

   LOGO

NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS

To Be Held On June 22, 2017

On behalf of the Mylan N.V. Board of Directors (the “Mylan Board”), we are pleased to convene the annual general meeting of shareholders of Mylan N.V. (“Mylan” or the “Company”), which will be held at [ ] on June 22, 2017 at [ ] Central European Time (CET), with the following agenda:

 

    Opening of the annual general meeting

 

    Appointment of directors (voting items)

 

    Explanation of remuneration policy for the Mylan Board (discussion item)

 

    Mylan Board report for fiscal year 2016 (discussion item)

 

    Adoption of the Dutch statutory annual accounts for fiscal year 2016 (voting item)

 

    Ratification of the selection of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for fiscal year 2017 (voting item)

 

    Instruction to Deloitte Accountants B.V. for the audit of the Company’s Dutch statutory annual accounts for fiscal year 2017 (voting item)

 

    Approval, on an advisory basis, of the compensation of the named executive officers of the Company (the “Say-on-Pay Vote”) (voting item)

 

    Advisory vote on the frequency of the Say-on-Pay Vote (voting item)

 

    Authorization of the Mylan Board to acquire ordinary shares and preferred shares in the capital of the Company (voting item)

 

    Questions

 

    Closing of the annual general meeting

 

 


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No business will be voted on at the annual general meeting except such items as stated in the above-mentioned agenda. Please refer to the accompanying proxy statement for further information with respect to the items as stated in the above-mentioned agenda.

The annual general meeting will be held on June 22, 2017, and May 25, 2017 is the record date ( registratiedatum ) (the “Record Date”). The Mylan Board has determined that Mylan’s shareholders’ register (the “Register”) is the relevant register for determination as of the Record Date of the holders of Mylan shares and others with meeting rights who are entitled to attend and, if relevant, vote at the Mylan annual general meeting. The Mylan Board has chosen to apply the Record Date to all Mylan shares, including preferred shares. Those who are holders of Mylan shares or who otherwise have such meeting rights with respect to Mylan shares on the Record Date and who are registered as such in the Register may attend the annual general meeting of shareholders and, if relevant, vote at such meeting in person, or authorize a third party to attend and, if relevant, vote at the meeting on their behalf through the use of a proxy card.

Holders of Mylan ordinary shares and others with meeting rights with respect to Mylan ordinary shares who are not registered in the Register may request, if eligible for registration, to be registered in the Register not later than the Record Date by means of a request sent to Mylan either in writing (such notice to be sent to Mylan’s office address as set out above to the attention of Mylan’s Corporate Secretary) or by sending an e-mail to corporatesecretary@mylan.com.

Unless the context otherwise requires, references to (a) “Mylan ordinary shareholders” refer to both (i) shareholders who on the Record Date are registered in the Register as holders of Mylan ordinary shares and (ii) others with meeting rights under Dutch law with respect to Mylan ordinary shares, who on the Record Date are registered as such in the Register, (b) “Mylan preferred shareholders” refer to both (i) shareholders who on the Record Date are registered in the Register as holders of Mylan preferred shares and (ii) others with meeting rights under Dutch law with respect to Mylan preferred shares who, on the Record Date, are registered as such in the Register, and (c) “Mylan shareholders” refer to Mylan ordinary shareholders and Mylan preferred shareholders. As of [ ], 2017, no Mylan preferred shares were outstanding. The invitation to attend and vote at the annual general meeting is being extended to such persons and also to the beneficial owners of Mylan ordinary shares held through a broker, bank, trust company, or other nominee.

Beneficial owners of Mylan ordinary shares that are not traded through the Tel Aviv Stock Exchange (“TASE”) and held through a broker, bank, trust company, or other nominee may not vote the underlying ordinary shares at the Mylan annual general meeting of shareholders unless they first obtain (where appropriate, through the relevant broker, bank, trust company, or other nominee) a signed proxy card from the relevant shareholder who is registered in the Register as the holder on the Record Date of the underlying ordinary shares. In addition, beneficial owners of Mylan ordinary shares must provide proof of ownership, such as a recent account statement or letter from a brokerage firm, bank nominee, or other institution proving ownership on the Record Date.

Beneficial owners of Mylan ordinary shares that are traded through the TASE may not vote the underlying ordinary shares at the Mylan annual general meeting of shareholders unless they first obtain an ownership certificate from the Tel Aviv Stock Exchange Clearing House Ltd. (the “TASE Clearing House”) member through which the underlying ordinary shares are registered (which you can obtain from your TASE broker) indicating the beneficial ownership of those ordinary shares on the Record Date.

Mylan shareholders and holders of a proxy card to vote Mylan shares who wish to attend and, if relevant, vote in person at the annual general meeting of shareholders must notify Mylan of their plan to attend the meeting no later than [ ] Central European Time (CET) on [ ], 2017 (the “Cut-Off Time”), in writing (such notice to be sent to Mylan’s office address set out above to the attention of Mylan’s Corporate Secretary). In addition, proper identification, such as a driver’s license or passport, must be presented at the meeting. Failure to comply with such notification and identification requirements may result in not being admitted to the meeting.

Proxy cards to vote ordinary shares and preferred shares, in person or otherwise, must be completed and received by Mylan no later than the Cut-Off Time.

 

 


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For more information, see “The Annual General Meeting” beginning on page [ ] of the accompanying proxy statement.

If you do not expect to attend the annual general meeting in person, you may vote your ordinary shares after the Record Date but no later than the Cut-Off Time by (1) accessing the following Internet website: [ ], or (2) calling the following toll-free number: [ ], or (3) marking, signing, dating, and returning a proxy card for all of the shares you may vote (for which purpose you may use the postage-paid envelope provided), so that your shares may be represented and voted at the annual general meeting. If you beneficially own Mylan ordinary shares that are traded through the TASE, you may after the Record Date but no later than the Cut-Off Time sign and date, and deliver by mail, e-mail, or fax a proxy card in the form filed by us on MAGNA, the distribution site of the Israeli Securities Authority, at www.magna.isa.gov.il, on [ ], 2017, together with a certificate of ownership from the TASE Clearing House member through which your Mylan ordinary shares are registered (which you can obtain from your TASE broker). In each case, if your shares are held through and/or in the name of a broker, bank, trust company, or other nominee, please follow the instructions on the voting instruction card furnished by such broker, bank, trust company, or other nominee, or, if your ordinary shares are traded through the TASE, on the proxy card in the form filed by us on MAGNA.

Please note that if you hold shares in different accounts, it is important that you vote the shares represented by each account.

The Mylan Board unanimously recommends that Mylan shareholders vote “FOR” the appointment of each director; “FOR” the adoption of the Dutch annual accounts for fiscal year 2016; “FOR” the ratification of the selection of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for fiscal year 2017; “FOR” the instruction to Deloitte Accountants B.V. for the audit of the Company’s Dutch statutory annual accounts for fiscal year 2017; “FOR” the approval, on an advisory basis, of the compensation of the named executive officers of the Company; and “FOR” , on an advisory basis, one year as the frequency for the Say-on-Pay Vote; and “FOR” the authorization of the Mylan Board to acquire ordinary shares and preferred shares in the capital of the Company.

Please note that this Notice of Annual General Meeting does not purport to address all of the information relevant to the meeting or the voting items. The Mylan Board therefore encourages you to read the accompanying proxy statement carefully and in its entirety . If you have any questions concerning the voting items, would like additional copies or need help voting your Mylan shares, please contact Mylan’s proxy solicitor:

Innisfree M&A Incorporated

501 Madison Avenue

New York, NY 10022

+1 (877) 750-9499 (toll free)

+1 (212) 750-5833 (banks and brokers)

 

By Order and on behalf of the Mylan N.V. Board,
LOGO

Joseph F. Haggerty

Corporate Secretary

Mylan N.V.

Important notice regarding the availability of proxy materials for the shareholder meeting to be held on June 22, 2017:

The 2017 Proxy Statement, the 2016 Annual Report on Form 10-K and the amendment thereto, the Mylan Board report for fiscal year 2016 and the Dutch annual accounts for fiscal year 2016 are available at mylan.com/investors.

 

 


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Proxy Statement

 

 

This proxy statement (the “Proxy Statement”) is dated [ ], 2017 and is being furnished (together with the enclosed proxy card) in connection with the solicitation of proxies at the direction of the Board of Directors (the “Mylan Board”) of Mylan N.V. (“Mylan” or the “Company”) for use at the annual general meeting of shareholders of Mylan to be held on June 22, 2017 in connection with the appointment of directors; the adoption of the Dutch annual accounts for fiscal year 2016; ratification of the selection of Deloitte & Touche LLP (“Deloitte”) as the Company’s independent registered public accounting firm for fiscal year 2017; instruction to Deloitte Accountants B.V. for the audit of the Company’s Dutch statutory annual accounts for fiscal year 2017; approval, on an advisory basis, of the compensation of the named executive officers of the Company (the “Say-on-Pay Vote”); the advisory vote on the frequency of the Say-on-Pay Vote; and authorization of the Mylan Board to acquire ordinary shares and preferred shares in the capital of the Company (each a “Proposal” and together the “Proposals”).

 

 

Forward-Looking Statements

 

 

This Proxy Statement and Shareholder Letter contain “forward-looking statements.” These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may include, without limitation, statements about the acquisition of Meda AB (publ.) (“Meda”) by Mylan (the “Meda Transaction”), Mylan’s acquisition (the “EPD Transaction”) of Mylan Inc. and Abbott Laboratories’ (“Abbott”) non-U.S. developed markets specialty and branded generics business (the “EPD Business”), the potential benefits and synergies of the EPD Transaction and the Meda Transaction, future opportunities for Mylan and products, and any other statements regarding Mylan’s future operations, anticipated business levels, future earnings, planned activities, anticipated growth, market opportunities, strategies, competition, and other expectations and targets for future periods. These may often be identified by the use of words such as “will,” “may,” “could,” “should,” “would,” “project,” “believe,” “anticipate,” “expect,” “plan,” “estimate,” “forecast,” “potential,” “intend,” “continue,” “target,” and variations of these words or comparable words. Because forward-looking statements inherently involve risks and uncertainties, actual future results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: the ability to meet expectations regarding the accounting and tax treatments of the EPD Transaction and the Meda Transaction; changes in relevant tax and other laws, including but not limited to changes in the U.S. tax code and healthcare and pharmaceutical laws and regulations in the U.S. and abroad; actions and decisions of healthcare and pharmaceutical regulators; the integration of the EPD Business and Meda being more difficult, time-consuming, or costly than expected; operating costs, customer loss, and business disruption (including, without limitation, difficulties in maintaining relationships with employees, customers, clients, or suppliers) being greater than expected following the EPD Transaction and the Meda Transaction; the retention of certain key employees of the EPD Business and Meda being difficult; the possibility that Mylan may be unable to achieve expected synergies and operating efficiencies in connection with the EPD Transaction, the Meda Transaction, and the December 2016 announced restructuring program in certain locations, within the expected time-frames or at all and to successfully integrate the EPD Business and Meda; with respect to the Company agreeing to the terms of a $465 million settlement with the U.S. Department of Justice and other government agencies related to the classification of the EpiPen ® Auto-Injector and EpiPen Jr ® Auto-Injector (collectively, “EpiPen ® Auto-Injector”) for purposes of the Medicaid Drug Rebate Program, the inability or unwillingness on the part of any of the parties to finalize the settlement, any legal or regulatory challenges to the settlement, and any failure by third parties to comply with their contractual obligations; expected or targeted future financial and operating performance and results; the capacity to bring new products to market, including but not limited to where Mylan uses its business judgment and decides to manufacture, market, and/or sell products, directly or through third parties, notwithstanding the fact that allegations of patent infringement(s) have not been finally resolved by the courts (i.e., an “at-risk launch”); any regulatory, legal, or other impediments to Mylan’s ability to bring new products to market; success of clinical trials and Mylan’s ability to execute on new product opportunities; any changes in or difficulties with our inventory of, and our ability to manufacture and distribute, the EpiPen ® Auto-Injector to meet anticipated demand; the potential impact of any change in patient

 

 


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access to the EpiPen ® Auto-Injector and the introduction of a generic version of the EpiPen ® Auto-Injector; the scope, timing, and outcome of any ongoing legal proceedings, including government investigations, and the impact of any such proceedings on financial condition, results of operations, and/or cash flows; the ability to protect intellectual property and preserve intellectual property rights; the effect of any changes in customer and supplier relationships and customer purchasing patterns; the ability to attract and retain key personnel; changes in third-party relationships; the impact of competition; changes in the economic and financial conditions of the businesses of Mylan; the inherent challenges, risks, and costs in identifying, acquiring, and integrating complementary or strategic acquisitions of other companies, products, or assets and in achieving anticipated synergies; uncertainties and matters beyond the control of management; and inherent uncertainties involved in the estimates and judgments used in the preparation of financial statements, and the providing of estimates of financial measures, in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and related standards or on an adjusted basis. For more detailed information on the risks and uncertainties associated with Mylan’s business activities, see the risks described in Mylan’s Annual Report on Form 10-K for the year ended December 31, 2016, as amended, and our other filings with the Securities and Exchange Commission (the “SEC”). You can access Mylan’s filings with the SEC through the SEC website at www.sec.gov, and Mylan strongly encourages you to do so. Mylan undertakes no obligation to update any statements herein for revisions or changes after the filing date of this Proxy Statement.

 

 

Reconciliation of Non-GAAP Financial Measures

 

 

This Proxy Statement and Shareholder Letter include the presentation and discussion of certain financial information that differs from what is reported under U.S. GAAP. These non-GAAP financial measures, including, but not limited to, adjusted diluted earnings per share (“adjusted EPS”), adjusted free cash flow, and return on invested capital, are presented in order to supplement investors’ and other readers’ understanding and assessment of Mylan’s financial performance. Management uses these measures internally for forecasting, budgeting, measuring its operating performance, and incentive-based awards. In addition, primarily due to acquisitions, Mylan believes that an evaluation of its ongoing operations (and comparisons of its current operations with historical and future operations) would be difficult if the disclosure of its financial results were limited to financial measures prepared only in accordance with U.S. GAAP. We believe that non-GAAP financial measures are useful supplemental information for our investors and when considered together with our U.S. GAAP financial measures and the reconciliation to the most directly comparable U.S. GAAP financial measure, provide a more complete understanding of the factors and trends affecting our operations. The financial performance of the Company is measured by senior management, in part, using the adjusted metrics included herein, along with other performance metrics. Management’s annual incentive compensation is derived, in part, based on the adjusted EPS metric and the adjusted free cash flow metric. Appendix A to this Proxy Statement contains reconciliations of such non-GAAP financial measures to the most directly comparable U.S. GAAP financial measures. Investors and other readers are encouraged to review the related U.S. GAAP financial measures and the reconciliations of the non-GAAP measures to their most directly comparable U.S. GAAP measures set forth in Appendix A, and investors and other readers should consider 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 U.S. GAAP.

 

 


Table of Contents

 

 

Table of Contents

 

 

 

 

     Page
      

Questions and Answers About The Annual General Meeting and Voting

  

1

 

The Annual General Meeting

 

  

6

 

Overview

   6

Time, Date and Place

   6

Purpose of the Annual General Meeting

   6

Recommendation of the Mylan Board

   7

Record Date; Shareholders Entitled to Vote

   7

Quorum, Abstentions and Non-Votes

   7

Required Vote

   7

Voting in Person

   8

Voting of Proxies

   8

How Proxies Are Counted

   9

Shares Held in Street Name

   9

Revocability of Proxies

   10

Tabulation of Votes

   10

Solicitation of Proxies

   10

Assistance

 

  

10

 

Voting Item 1 – Appointment of Directors

 

  

11

 

Meetings of the Mylan Board

   19

Mylan Board Committees

   19

Audit Committee and Audit Committee Financial Expert

   20

Compensation Committee

   20

Compliance Committee

   20

Executive Committee

   21

Finance Committee

   21

Governance and Nominating Committee

   21

Science and Technology Committee

   21

Consideration of Director Nominees

   21

Director Independence

   22

Board Education

   23

Mylan Board Leadership Structure

   23

Board of Directors Risk Oversight

   25

Non-Employee Director Compensation for 2016

   25

Security Ownership of Directors, Nominees, and Executive Officers

   27

Security Ownership of Certain Beneficial Owners

   28

Section 16(a) Beneficial Ownership Reporting Compliance

   28

Executive Officers

   29

 

 


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     Page
      

Voting Item 2 – Adoption of Dutch Annual Accounts for Fiscal Year 2016

   31

Voting Item  3 – Ratification of the Selection of Deloitte & Touche LLP as the Company’s Independent Registered Public Accounting Firm for Fiscal Year 2017

   32
   

Principal Accounting Fees and Services

   32

Audit Committee Pre-Approval Policy

   32

Report of the Audit Committee of the Mylan Board

   33

Voting Item 4 –  Instruction to Deloitte Accountants B.V. for the Audit of the Company’s Dutch Statutory Annual Accounts for Fiscal Year 2017

   34

Executive Compensation for 2016

   35

Compensation Discussion and Analysis

   35

Compensation Committee Report

   61

Summary Compensation Table

   62

Grants of Plan-Based Awards for 2016

   64

Outstanding Equity Awards at the End of 2016

   65

Option Exercises and Stock Vested for 2016

   66

Pension Benefits for 2016

   67

Nonqualified Deferred Compensation

   67

Restoration Plan

   67

Retirement Benefit Agreements

   68

Service Agreements

   68

Potential Payments Upon Termination or Change in Control

   69

Voting Item  5 – Approval, on an Advisory Basis, of the Compensation of the Named Executive Officers of the Company

   73

Voting Item  6 – Advisory Vote on the Frequency of the Say-on-Pay Vote

   74

Voting Item  7 – Authorization of the Mylan Board to Acquire Ordinary Shares and Preferred Shares in the Capital of the Company

   75
   

Compensation Committee Interlocks and Insider Participation

   76

Certain Relationships and Related Transactions

   76

Communications with Directors

   78

Proposals for the 2018 Annual General Meeting of Shareholders

   78

Other Matters

   79

Householding

   79

2016 Annual Report on Form 10-K

   79

Appendix A – Reconciliation of Non-GAAP Measures (Unaudited)

   A-1

 

 


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Questions and Answers About the Annual General Meeting and Voting

 

 

The following questions and answers are intended to address briefly some questions that you, as a Mylan shareholder, may have regarding the matters to be voted on at the 2017 annual general meeting of shareholders (“AGM”). These questions and answers highlight only some of the information contained in this proxy statement. Mylan urges you to read carefully the entire proxy statement because the information in this section does not provide all the important information with respect to these matters.

Unless the context expressly provides otherwise, this proxy statement describes the rights of Mylan ordinary shareholders to attend and, if relevant, vote at the AGM, including the procedures for convening the AGM and for Mylan ordinary shareholders exercising voting and other rights at such meeting. Generally similar rights apply in respect of Mylan preferred shareholders.

 

 

Q: Why am I receiving this proxy statement?

 

A: You are receiving this proxy statement because you were a Mylan shareholder or beneficial owner of Mylan shares on the Record Date (as defined below) for the AGM. This proxy statement serves as the proxy statement through which the Mylan Board will solicit proxies in connection with the Proposals.

This proxy statement contains important information about the Proposals, and you should read it carefully and in its entirety. The enclosed voting materials allow you, at your option, to vote your shares without attending the AGM.

You may mark, sign, and date your proxy card and return it in the enclosed postage-paid envelope, or vote over the Internet or by telephone, in accordance with the instructions contained in this proxy statement so that your Mylan ordinary shares may be represented and voted at the AGM. For more information, see the question below entitled “How do I vote?”.

 

 

Q: When and where will the AGM be held?

 

A: The AGM will be held at [ ] on June 22, 2017 at [ ] Central European Time (CET).

 

 

Q: How can I attend the AGM?

 

A: If you wish to attend the AGM in person, please so inform Mylan in writing (such notice to be sent to Mylan’s office address as set forth in the Notice of Annual General Meeting of Shareholders to the attention of Mylan’s Corporate Secretary) prior to [ ] Central European Time (CET) on [ ], 2017 (the “Cut-Off Time”).

Beneficial owners of Mylan ordinary shares that are not traded through the Tel Aviv Stock Exchange (“TASE”) and held through a broker, bank, trust company or other nominee may not vote the underlying ordinary shares at the AGM unless they first obtain (where appropriate, through the relevant broker, bank, trust company or other nominee) a signed proxy card from the relevant shareholder who is registered in the Register as the holder on the Record Date of the underlying ordinary shares. In addition, beneficial owners of Mylan ordinary shares must provide proof of ownership, such as a recent account statement or letter from a brokerage firm, bank nominee, or other institution proving ownership on the Record Date.

Beneficial owners of Mylan ordinary shares that are traded through the TASE may not vote the underlying ordinary shares at the AGM unless they first obtain an ownership certificate from the Tel Aviv Stock Exchange Clearing House Ltd. (the “TASE Clearing House”) member through which the underlying ordinary shares are registered (which you can obtain from your TASE broker) indicating the beneficial ownership of those ordinary shares on the Record Date.

Proper identification, such as a driver’s license or passport, must be presented at the meeting.

 

 

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Q: Who is entitled to vote at the AGM and how many votes do they have?

 

A: Dutch law provides that the record date for the AGM must be 28 days prior to the date of the AGM; thus, the record date is May 25, 2017 (the “Record Date”). Mylan shareholders who on the Record Date are registered in Mylan’s shareholder register (the “Register”) may attend the AGM and, if relevant, vote at such meeting in person or authorize a third party to attend and, if relevant, vote at the meeting on their behalf through the use of a proxy card.

If you are a beneficial owner of Mylan ordinary shares and hold your shares through a bank, broker, trust company, or other nominee (“street name”), the relevant institution will send you instructions describing the procedure for instructing the relevant institution as to how to vote the Mylan ordinary shares you beneficially own.

If you wish to vote the Mylan ordinary shares you beneficially own directly either in person at the AGM or by proxy, you must first obtain a signed “legal proxy” from the bank, broker, trust company or other nominee through which you beneficially own your Mylan ordinary shares, or if you are a beneficial owner of Mylan ordinary shares traded through the TASE, you must obtain a certificate of ownership from the TASE Clearing House member through which your Mylan ordinary shares are registered (which you can obtain from your TASE broker).

As of the close of business on [ ], 2017 (the last practicable date prior to the Record Date and the mailing of the proxy statement), there were [ ] Mylan ordinary shares and no Mylan preferred shares outstanding and entitled to vote. Each Mylan share is entitled to one vote on each matter properly brought before the AGM. Shareholders do not have cumulative voting rights.

Unless the context otherwise requires, references to (a) “Mylan ordinary shareholders” refer to both (i) shareholders who on the Record Date are registered in the Register as holders of Mylan ordinary shares and (ii) others with meeting rights under Dutch law with respect to Mylan ordinary shares, who on the Record Date are registered as such in the Register, (b) “Mylan preferred shareholders” refer to both (i) shareholders who on the Record Date are registered in the Register as holders of Mylan preferred shares and (ii) others with meeting rights under Dutch law with respect to Mylan preferred shares who, on the Record Date, are registered as such in the Register, and (c) “Mylan shareholders” refer to Mylan ordinary shareholders and Mylan preferred shareholders. The invitation to attend and vote at the AGM is being extended to such persons. Beneficial owners of Mylan ordinary shares are invited to attend the AGM and, if they obtain a “legal proxy”, or if you are a beneficial owner of Mylan ordinary shares traded through the TASE, a certificate of ownership, as described above, to vote at the AGM.

 

 

Q: What vote is required to adopt each of the Proposals?

 

A: Consistent with established Dutch law and the Company’s articles of association, executive directors and non-executive directors are appointed by the general meeting from a binding nomination proposed by the Mylan Board. The proposed candidate specified in a binding nomination shall be appointed provided that the requisite quorum is present or represented at the general meeting, unless the nomination is overruled by the general meeting voting against the appointment of the candidate by a resolution adopted with a majority of at least two-thirds of the votes cast, representing more than half of the issued share capital. In such event, the Mylan Board may draw up a new binding nomination to be submitted at a subsequent general meeting.

Other than for the appointment of directors, each Proposal requires the affirmative vote of an absolute majority of the valid votes cast at the AGM. A quorum of at least one-third of the issued share capital is separately required for the adoption of each Proposal. If a quorum of at least one-third of the issued share capital is not present or represented with respect to any Proposal, such Proposal cannot be validly adopted at the AGM.

 

 

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Q: How does the Mylan Board recommend that I vote?

 

A: The Mylan Board unanimously recommends that the Mylan shareholders vote FOR the appointment of each director; FOR the adoption of the Dutch annual accounts for fiscal year 2016; FOR ratification of the selection of Deloitte as the Company’s independent registered public accounting firm for fiscal year 2017; FOR instruction to Deloitte Accountants B.V. for the audit of the Company’s Dutch statutory annual accounts for fiscal year 2017; FOR approval, on an advisory basis, of the compensation of the named executive officers of the Company; FOR , on an advisory basis, one year as the frequency for the Say-on-Pay Vote; and FOR authorization of the Mylan Board to acquire ordinary shares and preferred shares in the capital of the Company.

 

 

Q: How do I vote?

 

A: Mylan shareholders may cast their votes at the meeting, over the Internet, by submitting a proxy card, or by calling a toll-free number in accordance with the instructions contained in this proxy statement.

If the ownership of your Mylan ordinary shares is reflected directly on the Register as of the Record Date and you vote by proxy, the individuals named on the enclosed proxy card will vote your Mylan ordinary shares in the manner you indicate. If you do not specify voting instructions, then the proxy will be voted in accordance with the recommendation of the Mylan Board, as described in this proxy statement.

If you are a beneficial owner of Mylan ordinary shares and hold your shares in street name through a bank, broker, trust company, or other nominee, the relevant institution will send you instructions describing the procedure for instructing the relevant institution as to how to vote the Mylan ordinary shares you beneficially own.

 

 

Q: If my shares are held in street name by my broker, will my broker automatically vote my shares for me?

 

A: If you hold your shares in street name, your broker, bank, trust company or other nominee cannot vote your shares on non-routine matters without instructions from you. Each of the Proposals is considered a non-routine matter, other than adoption of the Dutch statutory annual accounts for fiscal year 2016, the ratification of the selection of Deloitte as Mylan’s independent registered public accounting firm for fiscal year 2017, and the instruction to Deloitte Accountants B.V. for the audit of the Company’s Dutch statutory annual accounts for fiscal year 2017 (each of which is considered a routine matter). You should instruct your broker, bank, trust company or other nominee as to how to vote your Mylan ordinary shares, following the directions from your broker, bank, trust company or other nominee provided to you. Please check the voting form used by your broker, bank, trust company or other nominee.

If you do not give instructions to your broker, bank, trust company or other nominee, the broker, bank, trust company or other nominee will nevertheless be entitled to vote your ordinary shares in its discretion on routine matters and may give or authorize the giving of a proxy to vote the ordinary shares in its discretion on such matters. In such an instance, your shares will be counted for purposes of determining the presence of a quorum with respect to such Proposal. If you do not provide your broker, bank, trust company or other nominee with instructions and your broker, bank, trust company or other nominee submits an unvoted proxy with respect to a Proposal (either because it is non-routine or such broker, bank, trust company or other nominee does not give its discretion with respect to a routine Proposal), your shares will not be counted for purposes of determining the presence of a quorum with respect to that Proposal.

Beneficial owners of Mylan ordinary shares held through a broker, bank, trust company or other nominee may not vote the underlying ordinary shares at the AGM, unless they first obtain (where appropriate, through the relevant broker, bank, trust company or other nominee) a signed proxy card from the relevant shareholder who is registered in the Register as the holder on the Record Date of the underlying ordinary shares, or if you are a beneficial owner of Mylan ordinary shares traded through the TASE, unless you obtain a certificate of ownership from the TASE Clearing House member through which your Mylan ordinary shares are registered (which you can obtain from your TASE broker).

 

 

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Q: What will happen if I fail to vote or I abstain from voting?

 

A: If you do not exercise your vote because you do not submit a properly executed proxy card to Mylan, and do not vote over the Internet or by calling the toll-free number we have provided, in accordance with the instructions contained in this proxy statement in a timely fashion or by failing to attend the AGM to vote in person or fail to instruct your broker, bank, trust company or other nominee how to vote on a non-routine matter (a “failure to vote”), it will have no effect on the Proposal. If you mark your proxy or voting instructions expressly to abstain or to cast a “blank vote” for any Proposal, it will also have no effect on such Proposal. If you do not give instructions to your broker, bank, trust company or other nominee, the broker, bank, trust company or other nominee will nevertheless be entitled to vote your ordinary shares in its discretion on routine matters and may give or authorize the giving of a proxy to vote the ordinary shares in its discretion on such matters. For the avoidance of doubt, if a Mylan shareholder returns a properly executed proxy card in a timely fashion without indicating how to vote on one or more of the Proposals (and without indicating expressly to abstain or to cast a “blank vote”), the Mylan ordinary shares represented by such proxy will count for the purposes of determining the presence of a quorum with respect to such Proposal(s), will be voted in favor of the/each such Proposal in accordance with the recommendation of the Mylan Board, and it will not be considered a failure to vote.

 

 

Q: What constitutes a quorum?

 

A: At least one-third of the issued Mylan shares must be separately represented at the AGM with respect to a Proposal to constitute a quorum with respect to that Proposal. Abstentions, “blank votes” and invalid votes will be counted for purposes of determining the presence of a quorum (although they are considered to be votes that were not cast). If you do not give instructions to your broker, bank, trust company or other nominee, the broker, bank, trust company or other nominee will nevertheless be entitled to vote your ordinary shares in its discretion on routine matters and may give or authorize the giving of a proxy to vote the ordinary shares in its discretion on such matters. In such an instance, your shares will be counted for purposes of determining the presence of a quorum with respect to such Proposal. If your broker, bank, trust company or other nominee does not vote your ordinary shares in its discretion on routine matters, your shares will not be counted for purposes of determining the presence of a quorum with respect to such Proposal. Failures to vote (which, as described above, includes instances where you fail to instruct your broker, bank, trust company or other nominee to vote on a non-routine matter) on a Proposal will not be counted for purposes of determining the presence of a quorum with respect to that Proposal.

 

 

Q: What will happen if I return my proxy card without indicating how to vote?

 

A: If you return your properly executed proxy card in a timely fashion without indicating how to vote on any one or more of the Proposals (and without indicating expressly to abstain or to cast a “blank vote”), the Mylan ordinary shares represented by such proxy will count for the purposes of determining the presence of a quorum with respect to such Proposal(s), will be voted in favor of each such Proposal in accordance with the recommendation of the Mylan Board, and it will not be considered a failure to vote with respect to such Proposal(s).

 

 

Q: Can I change my vote after I have returned a proxy card?

 

A: Yes. You can change your vote of your Mylan shares as indicated on your proxy card or revoke your proxy at any time prior to the Cut-Off Time. You can do this by (a) voting again by telephone or the Internet or (b) submitting another properly executed proxy card, dated as of a later date (but prior to the Cut-Off Time), in writing (to be sent to Mylan’s office address as set forth in the Notice of Annual General Meeting of Shareholders to the attention of Mylan’s Corporate Secretary). Alternatively, you may give notice of your attendance at the meeting (prior to the Cut-Off Time in the manner described above) and vote in person.

If your shares are held through and/or in street name by your broker, bank, trust company, other nominee, you should contact your broker, bank, trust company or other nominee to change your vote or revoke your voting instructions.

 

 

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Q: What happens if I transfer my Mylan ordinary shares before the AGM?

 

A: The Record Date for the AGM is earlier than the date of the AGM. If you transfer your Mylan ordinary shares after the Record Date, you will retain your right to attend and vote at the AGM.

 

 

Q: Where can I find the voting results of the AGM?

 

A: Mylan expects to announce the preliminary voting results at the AGM. In addition, within four business days following certification of the final voting results, Mylan intends to file the final voting results of the AGM with the SEC in a Current Report on Form 8-K.

 

 

Q: What do I need to do now?

 

A: Carefully read and consider the information contained in this proxy statement and vote your shares either in person or by telephone, the Internet or the use of a proxy card, as described in this proxy statement.

If you are a Mylan ordinary shareholder who on the Record Date is registered in the Register, in order for your ordinary shares to be represented at the AGM, you can:

 

    attend the AGM in person;

 

    vote through the Internet or by telephone in accordance with the instructions contained in this proxy statement; or

 

    indicate on the enclosed proxy card how you would like to vote and return the proxy card in the accompanying pre-addressed postage paid envelope as described in this proxy statement.

If you are a beneficial owner of Mylan ordinary shares and hold your shares in street name through a bank, broker, trust company or other nominee, the relevant institution will send you instructions describing the procedure for instructing the relevant institution as to how to vote the Mylan ordinary shares you beneficially own.

If you wish to vote the Mylan ordinary shares you beneficially own directly either in person at the AGM or by proxy, you must first obtain a signed “legal proxy” from the bank, broker, trust company or other nominee through which you beneficially own your Mylan ordinary shares (or if you are a beneficial owner of Mylan ordinary shares traded through the TASE, you instead must obtain a certificate of ownership).

 

 

Q: Who can help answer my questions?

 

A: If you have questions about the Proposals to be voted on at the AGM or if you desire additional copies of this proxy statement or additional proxy cards, you should contact:

Innisfree M&A Incorporated

501 Madison Avenue

New York, NY 10022

+1 (877) 750-9499 (toll free)

+1 (212) 750-5833 (banks and brokers)

 

 

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The Annual General Meeting

 

 

 

 

Overview

 

 

This proxy statement is part of a solicitation of proxies by the Mylan Board for use at the annual general meeting of shareholders of Mylan and is being furnished to Mylan shareholders and beneficial owners of Mylan ordinary shares on or about [ ], 2017. This proxy statement provides Mylan shareholders with information relating to their decisions to vote, grant a proxy to vote, attend and, if relevant, instruct their vote to be cast at the annual general meeting.

Unless the context expressly provides otherwise, this proxy statement describes the rights of Mylan ordinary shareholders to attend and, if relevant, vote at the Mylan annual general meeting of shareholders, including the procedures for convening the annual general meeting and for Mylan ordinary shareholders exercising voting and other rights at such meeting. Generally similar rights apply in respect of Mylan preferred shareholders.

 

 

Time, Date and Place

 

 

The annual general meeting of shareholders of Mylan will be held at [ ] on June 22, 2017 at [ ] Central European Time (CET).

 

Purpose of the Annual General Meeting

 

 

The annual general meeting is being held for shareholders to vote on and/or discuss the following items:

 

1. To appoint two executive directors and nine non-executive directors ( voting items )

 

2. Explanation of remuneration policy for the Mylan Board ( discussion item )

 

3. Mylan Board report for fiscal year 2016 ( discussion item )

 

4. To adopt the Dutch annual accounts for fiscal year 2016 ( voting item )

 

5. To ratify the selection of Deloitte as the Company’s independent registered public accounting firm for fiscal year 2017 ( voting item )

 

6. To instruct Deloitte Accountants B.V. for the audit of the Company’s Dutch statutory annual accounts for fiscal year 2017 ( voting item )

 

7. To approve, on an advisory basis, the compensation of the named executive officers of the Company ( voting item )

 

8. Advisory vote on the frequency of the Say-on-Pay Vote (voting item )

 

9. To authorize the Mylan Board to acquire ordinary shares and preferred shares in the capital of the Company ( voting item )
 

 

 

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Recommendation of the Mylan Board

 

 

The Mylan Board unanimously recommends that the Mylan shareholders vote FOR the appointment of each director; FOR the adoption of the Dutch annual accounts for fiscal year 2016; FOR ratification of the selection of Deloitte as the Company’s independent registered public accounting firm for fiscal year 2017; FOR instruction to Deloitte Accountants B.V. for the audit of the Company’s Dutch statutory annual accounts for fiscal year 2017; FOR approval, on an advisory basis, of the compensation of the named executive officers of the Company; FOR , on an advisory basis, one year as the frequency for the Say-on-Pay Vote; and FOR authorization of the Mylan Board to acquire ordinary shares and preferred shares in the capital of the Company.

 

 

Record Date; Shareholders Entitled to Vote

 

 

The record date for the annual general meeting is May 25, 2017. Mylan shareholders who on the Record Date are registered in Mylan’s Register may attend the annual general meeting of shareholders and, if relevant, vote at such meeting in person or authorize a third party to attend and, if relevant, vote at the meeting on their behalf through the use of a proxy card.

Mylan ordinary shareholders who are not registered in the Register may request, if eligible for registration, to be registered in the Register no later than the Record Date by means of a request sent to Mylan in writing (such notice to be sent to Mylan’s office address as set forth in the Notice of Annual General Meeting of Shareholders to the attention of Mylan’s Corporate Secretary) or by sending an e-mail to corporatesecretary@mylan.com.

If you are a beneficial owner of Mylan ordinary shares and hold your ordinary shares through a bank, broker, trust company, or other nominee (“street name”), the relevant institution will send you instructions describing the procedure for instructing the relevant institution as to how to vote the Mylan ordinary shares you beneficially own.

If you wish to vote the Mylan ordinary shares you beneficially own directly either in person at the annual general meeting of shareholders or by proxy, you must first obtain a signed “legal proxy” from the bank,

broker, trust company or other nominee through which you beneficially own your Mylan ordinary shares, or if you are a beneficial owner of Mylan ordinary shares traded through the TASE, you must first obtain a certificate of ownership from the TASE Clearing House member through which your Mylan ordinary shares are registered (which you can obtain from your TASE broker).

As of the close of business on [ ], 2017 (the last practicable date prior to the Record Date and the mailing of the proxy statement), there were [ ] Mylan ordinary shares and no Mylan preferred shares outstanding and entitled to vote. Each Mylan share is entitled to one vote on each matter properly brought before the annual general meeting. Shareholders do not have cumulative voting rights.

 

 

Quorum, Abstentions and Non-Votes

 

 

A quorum of at least one-third of the issued share capital is separately required for the adoption of each Proposal. Abstentions, “blank votes” and invalid votes will be counted for purposes of determining the presence of a quorum (although they are considered to be votes that were not cast). If you do not give instructions to your broker, bank, trust company or other nominee, the broker, bank, trust company or other nominee will nevertheless be entitled to vote your ordinary shares in its discretion on routine matters and may give or authorize the giving of a proxy to vote the ordinary shares in its discretion on such matters. In such an instance, your shares will be counted for purposes of determining the quorum at the annual general meeting with respect to such Proposal. If you do not provide your broker, bank, trust company or other nominee with instructions and your broker, bank, trust company or other nominee submits an unvoted proxy with respect to a Proposal (either because it is non-routine or such broker, bank, trust company or other nominee does not give its discretion with respect to a routine Proposal), your shares will not be counted for purposes of determining a quorum at the annual general meeting with respect to each such Proposal.

 

 

Required Vote

 

 

Consistent with established Dutch law and the Company’s articles of association, executive directors and non-executive directors are appointed by the general meeting from a binding nomination proposed by the Mylan Board. The proposed candidate specified in a binding nomination shall be appointed provided that the

 

 

 

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requisite quorum is present or represented at the general meeting, unless the nomination is overruled by the general meeting (which would result if a majority of at least two-thirds of the votes cast, representing more than half of the issued share capital, vote “against” the appointment of such director, with abstentions, “blank votes” and invalid votes not considered votes cast), in which case he or she will not be appointed. In such event, the Mylan Board may propose a new binding nomination to be submitted at a subsequent general meeting. If appointed, each director’s term begins at the general meeting at which he or she is appointed and, unless such director resigns or is suspended or dismissed at an earlier date, his or her term of office lapses immediately after the next annual general meeting held after his or her appointment.

Adoption of each of the other Proposals requires the affirmative vote of an absolute majority of the valid votes cast on that Proposal at the annual general meeting at which a quorum is present. If a quorum of at least one-third of the issued share capital is not present or represented with respect to any Proposal, such Proposal cannot be validly adopted at the annual general meeting.

Abstentions and failures to vote (as described above) are not considered to be votes cast for purposes of determining if a Proposal has been adopted.

Mylan shareholders may cast their votes in person at the annual general meeting or by proxy as explained below under “Voting of Proxies”.

 

 

Voting in Person

 

 

If you plan to attend the annual general meeting and wish to vote in person, you will be given a ballot at the annual general meeting. Please note, however, that if your shares are held in “street name” (other than through the TASE) and you wish to vote at the annual general meeting, you must bring to the annual general meeting a legal proxy executed in your favor from the relevant shareholder who is registered in the Register as the holder on the Record Date of the underlying shares (through your broker, bank, trust company or other nominee) authorizing you to vote at the annual general meeting. In addition, if you plan to attend the annual general meeting, please be prepared to provide proper identification, such as a driver’s license or passport. If you hold your shares in street name, you must provide proof of ownership, such as a recent

account statement or letter from your brokerage firm, bank nominee, or other institution proving ownership on the Record Date, along with proper identification and the legal proxy described above.

If you beneficially own ordinary shares that are traded through the TASE, you may vote your ordinary shares in person by casting your vote at the annual general meeting. If you choose to vote in person at the annual general meeting, you need to bring an ownership certificate from the TASE Clearing House through which your ordinary shares are registered (which you can obtain from your TASE broker) indicating that you were the beneficial owner of those ordinary shares on the Record Date.

Persons attending the annual general meeting will not be allowed to use cameras, recording devices, and other similar electronic devices at the meeting.

Mylan ordinary shareholders who wish to exercise their rights at the annual general meeting of shareholders in person must notify Mylan thereof no later than on the Cut-Off Time in writing (such notice to be sent to Mylan’s office address as set forth in the Notice of Annual General Meeting of Shareholders to the attention of Mylan’s Corporate Secretary).

 

 

Voting of Proxies

 

 

In addition to voting at the annual general meeting, Mylan ordinary shareholders may cast their votes, after the Record Date but no later than the Cut-Off Time, over the Internet, by submitting a proxy card, or by calling a toll-free number in accordance with the instructions contained in this proxy statement.

Mylan requests that you mark, sign, and date the accompanying proxy card and return it promptly in the enclosed postage-paid envelope. When the accompanying proxy is returned properly executed no later than at the Cut-Off Time, the Mylan ordinary shares represented by it will be voted at the annual general meeting in accordance with the instructions contained in the proxy. If the proxy is returned without an indication as to how the Mylan ordinary shares represented are to be voted with regard to a Proposal (and without expressly indicating to abstain or to cast a “blank vote”), the Mylan ordinary shares represented by the proxy will be voted in accordance with the recommendation of the Mylan Board, as described in this proxy statement.

 

 

 

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If you hold your shares in street name, see “Shares Held in Street Name” below.

You may submit your proxy for your ordinary shares after the Record Date but no later than the Cut-Off Time by telephone, over the Internet, or by marking, signing, dating, and returning the enclosed proxy card in accordance with the instructions contained in this proxy statement if you do not plan to attend the annual general meeting in person.

 

 

How Proxies Are Counted

 

 

All ordinary shares represented by properly executed proxies received no later than the Cut-Off Time will be voted at the meeting in the manner specified by the Mylan ordinary shareholder giving those proxies. If the proxy is returned without an indication as to how the Mylan ordinary shares represented are to be voted with regard to a Proposal (and without expressly indicating to abstain or to cast a “blank vote”), the Mylan ordinary shares represented by the proxy will be voted in accordance with the recommendation of the Mylan Board, as described in this proxy statement.

 

 

Shares Held in Street Name

 

 

If you are a beneficial owner of Mylan ordinary shares and hold your shares in street name, your broker, bank, trust company or other nominee cannot vote your shares on non-routine matters without instructions from you. Each of the Proposals, other than adoption of the Dutch statutory annual accounts for fiscal year 2016, the ratification of the selection of Deloitte as Mylan’s independent registered public accounting firm for fiscal year 2017, and the instruction to Deloitte Accountants B.V. for the audit of the Company’s Dutch statutory annual accounts for fiscal year 2017 (each of which is considered a routine matter), is considered a non-routine matter. You should instruct your broker, bank, trust company or

other nominee as to how to vote your Mylan ordinary shares, following the directions from your broker, bank, trust company or other nominee provided to you. Please check the voting form used by your broker, bank, trust company or other nominee. If you do not give instructions to your broker, bank, trust company or other nominee, the broker, bank, trust company or other nominee will nevertheless be entitled to vote your ordinary shares in its discretion on routine matters and may give or authorize the giving of a proxy to vote the ordinary shares in its discretion on such matters. In such an instance, your shares will be counted for purposes of determining the presence of a quorum with respect to such Proposal. If you do not provide your broker, bank, trust company or other nominee with instructions and your broker, bank, trust company or other nominee submits an unvoted proxy with respect to a Proposal (either because it is non-routine or such broker, bank, trust company or other nominee does not give its discretion with respect to a routine Proposal), your shares will not be counted for purposes of determining the presence of a quorum with respect to that Proposal.

Beneficial owners of Mylan ordinary shares held through a broker, bank, trust company or other nominee may not vote the underlying ordinary shares at the Mylan annual general meeting of shareholders, unless they first obtain (where appropriate, through the relevant broker, bank, trust company or other nominee) a signed proxy card from the relevant shareholder who is registered in the Register as the holder on the Record Date of the underlying ordinary shares, or if you are a beneficial owner of Mylan ordinary shares traded through the TASE, unless you obtain a certificate of ownership from the TASE Clearing House member through which your Mylan ordinary shares are registered (which you can obtain from your TASE broker).

 

 

 

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Revocability of Proxies

 

 

You can change your vote of your ordinary shares as indicated on your proxy card at any time prior to the Cut-Off Time or revoke your proxy for your ordinary shares at any time prior to the Cut-Off Time. You can do this by (a) voting again by telephone or the Internet or (b) submitting another properly executed proxy card, dated as of a later date (but prior to the Cut-Off Time), in writing (to be sent to Mylan’s office address as set forth in the Notice of Annual General Meeting of Shareholders to the attention of Mylan’s Corporate Secretary). Alternatively, you may give notice of your attendance at the meeting (prior to the Cut-Off Time in the manner described above) and vote in person.

If your shares are held through and/or in street name by your broker, bank, trust company or other nominee, you should contact your broker, bank, trust company or other nominee to change or revoke your voting instructions.

 

 

Tabulation of Votes

 

 

The inspector of election will, among other matters, determine the number of shares represented at the annual general meeting to confirm the presence of a quorum, determine the validity of all proxies and ballots, and certify the results of voting on the Proposals.

 

Solicitation of Proxies

 

 

Mylan will bear the cost of soliciting proxies from its shareholders, including the costs associated with the filing, printing, and publication of this proxy statement. In addition to the use of the mail, proxies may be solicited by officers and directors and regular employees of Mylan, some of whom may be considered participants in the solicitation, without additional remuneration, by personal interview, telephone, facsimile or otherwise. Mylan will also request brokerage firms, bank nominees, and other institutions to forward proxy materials to the beneficial owners of shares held of record on the Record Date and will provide customary reimbursement to such institutions for the cost of forwarding these materials. Mylan has retained Innisfree M&A Incorporated to assist in its solicitation of proxies and has agreed to pay them a fee of approximately $20,000, plus reasonable expenses, for these services.

 

 

Assistance

 

 

If you need assistance in completing your proxy card or have questions regarding the annual general meeting, please contact:

Innisfree M&A Incorporated

501 Madison Avenue

New York, NY 10022

(877) 750-9499 (toll free)

(212) 750-5833 (banks and brokers)

 

 

 

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Voting Item 1 – Appointment of Directors

 

 

 

 

The Mylan Board currently consists of 13 directors, each of whom is either an executive director or a non-executive director pursuant to applicable Dutch law. On April 30, 2017, the Mylan Board voted to reduce the size of the Mylan Board to 11 directors, effective after the annual general meeting. Mr. Leech, Dr. Maroon, and Mr. Piatt will retire from the Mylan Board effective June 22, 2017 and have not been nominated for re-election. On April 30, 2017, the Mylan Board also nominated Sjoerd S. Vollebregt to be elected by shareholders at the annual general meeting to serve as a non-executive director for a term ending immediately after the next annual general meeting held after his election. If each nominated director discussed below is appointed at the annual general meeting, the Mylan Board will consist of 11 directors. Executive directors are responsible for the daily management and operation of the Company and non-executive directors are responsible for overseeing and monitoring the performance of the executive directors.

Consistent with established Dutch law and the Company’s articles of association, executive directors and non-executive directors are appointed by the general meeting from a binding nomination proposed by the Mylan Board. The proposed candidate specified in a binding nomination shall be appointed provided that the requisite quorum is present or represented at the general meeting, unless the nomination is overruled by the general meeting (which would result if a majority of at least two-thirds of the votes cast, representing more than half of the issued share capital, vote “against” the appointment of such director, with abstentions, “blank votes” and invalid votes not considered votes cast), in which case he or she will not be appointed. In such event, the Mylan Board may propose a new binding nomination to be submitted at a subsequent general meeting. If appointed, each director’s term begins at the general meeting at which he or she is appointed and, unless such director resigns or is suspended or dismissed at an earlier date, his or her term of office lapses immediately after the next annual general meeting held after his or her appointment. In accordance with the recommendation of the Company’s Governance and Nominating Committee, the Mylan Board has unanimously adopted resolutions to make the following binding nominations:

 

1. The Mylan Board has nominated Heather Bresch and Rajiv Malik to serve as executive directors for a term ending immediately after the next annual general meeting held after their appointment.

 

2. The Mylan Board has nominated Wendy Cameron, Hon. Robert J. Cindrich, Robert J. Coury, JoEllen Lyons Dillon, Neil Dimick, Melina Higgins, Mark W. Parrish, Randall L. (Pete) Vanderveen, Ph.D, R.Ph, and Sjoerd S. Vollebregt to serve as non-executive directors for a term ending immediately after the next annual general meeting held after their appointment.

The Mylan Board and the Governance and Nominating Committee have carefully considered the structure, culture, operation, interactions, collaboration, and performance of the current Mylan Board; the talents, expertise, and contributions of individual directors; the massive growth and creation of shareholder and other stakeholder value under the current Mylan Board’s leadership; the continued outstanding performance of the Company; the anticipated future challenges and opportunities facing the Company; and the Mylan Board’s ongoing commitment to ensuring the long-term sustainability of the Company to the benefit of shareholders and other stakeholders. Based on these considerations, among others, the Mylan Board recommends a vote “FOR” the appointment of each director.

Each of the proposed appointments is considered a separate voting item under Dutch law. Information concerning each of the 11 nominated directors is set forth below. Each nominee is currently on the Mylan Board other than Mr. Vollebregt, who is being nominated for the first time this year, and each has consented to act as a director of Mylan if appointed at the annual general meeting. This Voting Item 1 comprises the “explanatory notes” to the agenda of the annual general meeting as referred to in Section 8.02(d) of Mylan’s articles of association.

 

 

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Name, Age, and Year

First Became a Director **

  

Principal Occupation and Business Experience;

Other Directorships and Qualifications

 

Heather Bresch ^

47

2011

 

LOGO

  

 

Chief Executive Officer

 

Ms. Bresch has served as Mylan’s Chief Executive Officer (“CEO”) since January 1, 2012. Throughout her 25-year career with Mylan, Ms. Bresch has held roles of increasing responsibility in more than 15 functional areas. Prior to becoming CEO, Ms. Bresch was Mylan’s President commencing in 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 Limited (n/k/a Mylan Laboratories Limited) and Merck KGaA’s generics and specialty pharmaceuticals businesses. Under Ms. Bresch’s leadership, Mylan has continued to expand its portfolio and geographic reach, acquiring Meda, the EPD Business, the female healthcare business of Famy Care Ltd., the non-sterile, topicals-focused business of Renaissance Acquisition Holdings, LLC, and India-based Agila Specialties, a global leader in injectable products and an innovative respiratory technology platform; partnering on portfolios of biologic and insulin products; entering new commercial markets such as China, Southeast Asia, Russia, the Middle East, Mexico, India, Brazil, and Africa; and expanding its leadership in the treatment of HIV/AIDS through the distribution of novel testing devices. During her career, Ms. Bresch has championed initiatives aimed at improving product quality and removing barriers to patient access to medicine. Ms. Bresch’s qualifications to serve on the Mylan Board include, among others, her extensive industry, policy, and leadership experience and abilities, as well as her strategic vision, judgment and unique and in-depth knowledge about the Company.

 

 

 

Wendy Cameron

57

2002

 

LOGO

  

Director and Co-Owner, Cam Land LLC

Ms. Cameron has served as Co-Owner and Director 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 was a member of the hospital’s Board of Trustees from 1997 through 2012 and a member of the Washington Hospital Foundation Board from 1993 through 2012. 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 has invaluable experience and knowledge regarding the business, platforms, strategies, challenges, opportunities, and management of the Company, among other matters. Ms. Cameron’s qualifications to serve on the Mylan Board include, among others, this experience, as well as her independence, business experience, leadership, and judgment.

 

 

 

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Director Nominees (continued)

 

Name, Age, and Year

First Became a Director**

  

Principal Occupation and Business Experience;

Other Directorships and Qualifications

 

Hon. Robert J. Cindrich

73

2011

 

LOGO

  

 

President, Cindrich Consulting; Counsel, Schnader Harrison Segal & Lewis

 

Since February 2011, Judge Cindrich has been serving as the President of Cindrich Consulting, LLC, a business and healthcare consulting company that advises clients on corporate governance, compliance, and business strategies, and from October 1, 2013 through January 31, 2014 he served as Interim General Counsel for United States Steel Corporation (NYSE: X), an integrated steel producer of flat-rolled and tubular products. Judge Cindrich joined Schnader Harrison Segal & Lewis (“Schnader”), a law firm, as legal counsel in April 2013 and took a temporary leave of absence on October 1, 2013 to join United States Steel Corporation as Interim General Counsel, returning to Schnader after his time at United States Steel Corporation. In May 2012, he joined the Board of Directors of Allscripts Healthcare Solutions, Inc. (NASDAQ: MDRX), which provides healthcare information technology solutions, where he served until April 2015. From 2011 through 2012, Judge Cindrich served as a senior advisor to the Office of the President of the University of Pittsburgh Medical Center (“UPMC”), an integrated global health enterprise. From 2004 through 2010, Judge Cindrich was a Senior Vice President and the Chief Legal Officer of UPMC. From 1994 through January 2004, Judge 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 U.S. Attorney for the Western District of Pennsylvania and as the Allegheny County Assistant Public Defender and Assistant District Attorney. Judge Cindrich’s qualifications to serve on the Mylan Board include, among others, his extensive legal and leadership experience and judgment, as well as his independence and in-depth knowledge of the healthcare industry.

 

 

 

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Director Nominees (continued)

 

Name, Age, and Year

First Became a Director**

  

Principal Occupation and Business Experience;

Other Directorships and Qualifications

 

Robert J. Coury

56

2002

 

LOGO

  

 

Chairman

 

Robert J. Coury is the Chairman of Mylan N.V. Under his visionary leadership, Mylan has transformed from the third largest generics pharmaceutical company in the U.S. into one of the largest pharmaceutical companies in the world in terms of revenue, earning spots in both the S&P 500 and, prior to the Company’s reincorporation outside of the U.S. in 2015, the Fortune 500. Mr. Coury was first elected to the Mylan Board in February 2002, having served since 1995 as a strategic advisor to the Company. He became the Mylan Board’s Vice Chairman shortly after his election and served as CEO from September 2002 until January 2012, and as Executive Chairman from 2012 until he became Chairman as a director who is not an employee of the Company or Mylan Inc. (a “Non-Employee Director”, with all such directors being the “Non-Employee Directors”) in June 2016.

 

Since 2007, Mr. Coury has led the Company through a series of transactions totaling approximately $25 billion, which transformed Mylan into a global powerhouse within the highly competitive pharmaceutical industry, with a global workforce of over 35,000 and products sold in more than 165 countries. In 2007, Mylan purchased India-based Matrix Laboratories Limited, a major producer of active pharmaceutical ingredients, and the generics and specialty pharmaceuticals business of Europe-based Merck KGaA. Subsequent acquisitions under Mr. Coury’s leadership further expanded the Company into new therapeutic categories and greatly enhanced its geographic and commercial footprint. In 2010, Mylan acquired Bioniche Pharma, a global injectables business in Ireland; in 2013, Mylan acquired India-based Agila Specialties, a global injectables company; and in 2015, Mylan acquired the EPD Business and Famy Care Ltd.’s women’s healthcare businesses. Most recently, Mylan acquired Meda, a leading international specialty pharmaceutical company that sells both prescription and over-the-counter products and the non-sterile, topicals-focused business of Renaissance Acquisition Holdings, LLC.

 

During this period of expansion, the Company built an unmatched, high quality foundation for the future supporting Mylan’s mission of providing the world’s 7 billion people with access to high quality medicine, and benefiting patients, customers, investors, and other stakeholders. Before becoming Executive Chairman in 2012, Mr. Coury also executed a successful executive leadership transition after cultivating and developing a powerful leadership team. Grooming executive talent from within and recruiting dynamic leaders from outside the Company were both key components of the Company’s past, current, and future growth strategies.

 

Prior to joining Mylan, Mr. Coury was the principal of Coury Consulting, a boutique business advisory firm he formed in 1989, and The Coury Financial Group, a successful financial and estate planning firm, which he founded in 1984.

 

Mr. Coury is also the founder and president of the Robert J. Coury Family Foundation, which is a charitable organization formed to help support his philanthropic efforts and his mission of giving back. He has served as a member of the University of Southern California President’s Leadership Council since 2014.

 

Mr. Coury’s qualifications to serve on the Mylan Board include, among others, his prior business experience, his in-depth knowledge of the industry, the Company, its businesses, and management, and his leadership experience as the Company’s CEO, as well as his judgment, strategic vision, and service and leadership as Vice Chairman and then Chairman of the Mylan Board for more than ten years – the most transformational and successful time in the Company’s history.

 

 

 

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Director Nominees (continued)

 

Name, Age, and Year

First Became a Director**

  

Principal Occupation and Business Experience;

Other Directorships and Qualifications

 

JoEllen Lyons Dillon

53

2014

 

LOGO

  

 

Executive Vice President, Chief Legal Officer,

and Corporate Secretary, The ExOne Company

 

Ms. Dillon has served as Chief Legal Officer and Corporate Secretary of The ExOne Company (NASDAQ: XONE), a global provider of three-dimensional printing machines, since March 2013, and as Executive Vice President since December 2014. Previously, she was a legal consultant on ExOne’s initial public offering. Prior to that experience, Ms. Dillon was a partner with Reed Smith LLP, a law firm, from 2002 until 2011. She had previously been at the law firm Buchanan Ingersoll & Rooney PC from 1988 until 2002, where she became a partner in 1997. Ms. Dillon is a member of the Board of Trustees of the Allegheny District chapter of the National Multiple Sclerosis Society and has previously served as Chair and Audit Committee Chair. Ms. Dillon’s qualifications to serve on the Mylan Board include, among others, this experience, as well as her independence, judgment, and substantial legal and leadership experience.

 

 

Neil Dimick, C.P.A.*

67

2005

 

LOGO

  

 

Retired Executive Vice President and Chief Financial Officer,

AmerisourceBergen Corporation

 

Currently retired, Mr. Dimick previously served as Executive Vice President and Chief Financial Officer of AmerisourceBergen Corporation (NYSE: ABC), 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 for eight years. Mr. Dimick also serves on the Boards of Directors of WebMD Health Corp. (NASDAQ: WBMD), Alliance HealthCare Services, Inc. (NASDAQ: AIQ), and Resources Connection, Inc. (NASDAQ: RECN). Mr. Dimick also served on the Boards of Directors of Thoratec Corporation from 2003 to October 2015, at which time it was purchased by St. Jude Medical, Inc. Mr. Dimick has invaluable experience and knowledge regarding the business, platforms, strategies, challenges, opportunities, and management of the Company, among other matters. Mr. Dimick’s qualifications to serve on the Mylan Board include, among others, this experience, as well as his independence, substantial industry experience, business and accounting background, and judgment.

 

 

 

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Director Nominees (continued)

 

Name, Age, and Year

First Became a Director**

  

Principal Occupation and Business Experience;

Other Directorships and Qualifications

 

Melina Higgins

49

2013

 

LOGO

  

 

Retired Partner and Managing Director, Goldman Sachs

 

Currently retired, Ms. Higgins held senior roles of increasing responsibility at The Goldman Sachs Group, Inc. (NYSE: GS) (“Goldman Sachs”), a global investment banking, securities, and investment management firm, including Partner and Managing Director, during her nearly 20-year career at the firm from 1989 to 1992 and 1994 to 2010. 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 and as co-chairperson of the Investment Advisory Committee for the GS Mezzanine Partners funds, which managed over $30 billion of assets and were global leaders in their industry. Ms. Higgins also serves on the Women’s Leadership Board of Harvard University’s John F. Kennedy School of Government. In September 2013, Ms. Higgins joined the Board of Directors of Genworth Financial Inc. (NYSE: GNW), an insurance company. In January 2016, Ms. Higgins became non-executive Chairman of Antares Midco Inc., a private company that provides financing solutions for middle-market, private equity-backed transactions. Ms. Higgins’ qualifications to serve on the Mylan Board include, among others, her independence, broad experience in finance, and judgment.

 

 

Rajiv Malik ^

56

2013

 

LOGO

  

 

President

 

Mr. Malik has served as Mylan’s President since January 1, 2012. Previously, Mr. Malik held various senior roles at Mylan, including Executive Vice President and Chief Operating Officer from July 2009 to December 2012, and 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 portfolio, 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 GmbH, Mr. Malik was Head of Global Regulatory Affairs and Head of Pharma Research for Ranbaxy from October 1999 to September 2003. Mr. Malik’s qualifications to serve on the Mylan Board include, among others, his extensive industry and leadership experience, his understanding of the Asia-Pacific region and other growth markets, his knowledge about the Company, and judgment.

 

 

 

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Director Nominees (continued)

 

Name, Age, and Year

First Became a Director**

  

Principal Occupation and Business Experience;

Other Directorships and Qualifications

 

Mark W. Parrish

61

2009

 

LOGO

  

 

Chief Executive Officer, TridentUSA Health Services

 

Mr. Parrish has served as Chief Executive Officer of TridentUSA Health Services, a provider of mobile X-ray and laboratory services to the long-term care industry, since 2008 and also served as Chairman from 2008 to 2013. Since January 2013, Mr. Parrish has also served on the Board of Directors of Omnicell, Inc. (NASDAQ: OMCL), a company that specializes in healthcare technology. Mr. Parrish also serves on the Boards of Directors of Silvergate Pharmaceuticals, a private company that develops and commercializes pediatric medications, and GSMS, a private company that specializes in meeting unique labeling and sizing needs for its customers and pharmaceutical packaging, serialization, and distribution. From 2001 to 2007, Mr. Parrish held management roles of increasing responsibility with Cardinal Health Inc. (NYSE: CAH) 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 qualifications to serve on the Mylan Board include, among others, his independence, extensive industry, business, and leadership experience, knowledge of the healthcare industry, and judgment.

 

 

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

66

2002

 

LOGO

  

 

Professor of Pharmaceutical Policy and Economics, Senior Adviser to the Leonard D. Schaeffer Center of Health Policy and Economics, Director of the Margaret and John Biles Center for Leadership, and Senior Adviser to the Dean for Advancement, School of Pharmacy, University of Southern California

 

Dr. Vanderveen is currently Professor of Pharmaceutical Policy and Economics, Senior Adviser to the Leonard D. Schaeffer Center of Health Policy and Economics, Director of the Margaret and John Biles Center for Leadership, and Senior Adviser to the Dean for Advancement at the School of Pharmacy, University of Southern California in Los Angeles, California. Dr. Vanderveen previously served as Dean, Professor and John Stauffer Decanal Chair of the USC School of Pharmacy from 2005 to 2015 where he was named “Outstanding Pharmacy Dean in the Nation” in 2013 by the American Pharmacist Association. From 1998 to 2005, he served as Dean and Professor of Pharmacy of the School of Pharmacy and the Graduate School of Pharmaceutical Sciences at Duquesne University, before which he was Assistant Dean at Oregon State University from 1988 to 1998. Dr. Vanderveen has an extensive pharmaceutical and academic background. In addition, Dr. Vanderveen has invaluable experience and knowledge regarding the business, platforms, strategies, challenges, opportunities, and management of the Company, among other matters. Dr. Vanderveen’s qualifications to serve on the Mylan Board include, among others, this experience, as well as his independence, pharmaceutical and leadership experience, and judgment.

 

 

 

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Director Nominees (continued)

 

Name, Age, and Year

First Became a Director **

  

Principal Occupation and Business Experience;

Other Directorships and Qualifications

 

Sjoerd S. Vollebregt

62

Nominated for election for the first time in 2017

 

LOGO

  

 

Chairman, Supervisory Board of Heijmans N.V.; Chairman, Advisory Board of Airbus Defence and Space Netherlands B.V.

 

Mr. Vollebregt has been Chairman of the Supervisory Board of Heijmans N.V., a Euronext Amsterdam listed company that operates in property development, residential building, non-residential building, roads, and civil engineering, since 2015, and Chairman of the Advisory Board of Airbus Defence and Space Netherlands B.V., a subsidiary of Airbus SE, a Euronext Paris listed company, that develops solar arrays, satellite instruments, and structures for launchers, since 2015. Mr. Vollebregt had served as Chairman of the Executive Board of Stork B.V. and its predecessor from 2002 to 2014, which was an Amsterdam Stock Exchange listed industrial group until 2008, consisting of a global provider of knowledge-based maintenance, modification, and asset integrity products and services, food and textile equipment manufacturer, and Chief Executive Officer of Fokker Technologies Group B.V., an aerospace company and a Stork B.V. subsidiary from 2010 to 2014. Previously, Mr. Vollebregt served as a member of the Supervisory Board of TNT Express N.V., an international courier delivery services company, from 2013 to 2016 and has held various other senior positions at Excel plc, Ocean plc, Intexo Holding, and Royal Van Ommeren. Mr. Vollebregt’s qualifications to serve on the Mylan Board include, among others, this experience as well as his independence, judgment, business and leadership experience, and understanding of and familiarity with managing and serving on the board of directors of other Dutch companies.

 

Ages as of [ ], 2017.

^ Refers to an executive director. All other directors listed above are non-executive directors.
* C.P.A. distinctions refer to “inactive” status.
** Includes service as director of Mylan Inc. and Mylan N.V. Each director listed above, other than Mr. Vollebregt, was a director of Mylan Inc. on February 27, 2015, the date on which Mylan N.V. completed the EPD Transaction, and became a director of Mylan N.V. on such date in connection with the EPD Transaction.

THE MYLAN BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE APPOINTMENT OF MS. BRESCH AND MR. MALIK AS EXECUTIVE DIRECTORS AND EACH OF THE OTHER NOMINEES DISCUSSED ABOVE AS NON-EXECUTIVE DIRECTORS.

 

 

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Meetings of the Mylan Board

 

 

The Mylan Board met six times in 2016. In addition to meetings of the Mylan Board, directors attended meetings of individual Mylan Board committees of which they were members. Each of the directors attended at least 75% of the aggregate of the Mylan Board meetings and meetings of Mylan Board committees of which they were a member during the periods for which they served in 2016. All 13 current members of the Mylan Board attended Mylan’s annual general meeting of shareholders on June 24, 2016 (the “2016 AGM”).

Non-management members of the Mylan Board met in executive session from time to time during 2016. As noted, Rodney L. Piatt, the Vice Chairman of the

Mylan Board, is the Lead Independent Director and has presided at such executive sessions.

 

 

Mylan Board Committees

 

 

The standing committees of the Mylan 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 pursuant to a written charter.

 

 

The table below provides the current membership and 2016 meeting information for the noted Mylan Board committees of Mylan.

 

Director

 

 

Audit

 

 

Compensation

 

 

Compliance

 

 

Executive

 

 

Finance

 

 

Governance
& Nominating

 

 

Science &
Technology

 

Heather Bresch

              X

Wendy Cameron

    C         X  

Hon. Robert J. Cindrich

      X       X   X

Robert J. Coury

        C      

JoEllen Lyons Dillon (1)

  X     X       X  

Neil Dimick (1)

  C   X     X     X  

Melina Higgins

  X         C    

Douglas J. Leech (2)

  X         X   C  

Rajiv Malik

              X

Joseph C. Maroon, M.D. (2)

      X       X   C

Mark W. Parrish

    X   C     X    

Rodney L. Piatt (2)

  X       X   X   X  

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

      X         X

Meetings during 2016

  4   6   4   2   4   4   3

 

(1) Ms. Dillon joined the Audit Committee and Governance and Nominating Committee on June 24, 2016. Mr. Dimick joined the Governance and Nominating Committee on June 24, 2016 and served on the Finance Committee until June 24, 2016.
(2) Mr. Leech, Dr. Maroon and Mr. Piatt are not nominated for election at the annual general meeting.

C = Chair

X = Member

Copies of the committee charters of Mylan are available on Mylan’s website at http://www.mylan.com/company/corporate-governance or in print to shareholders upon request, addressed to Mylan N.V.’s Corporate Secretary at Building 4, Trident Place, Mosquito Way, Hatfield, Hertfordshire, AL10 9UL, England.

 

 

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Audit Committee and Audit Committee Financial Expert

 

 

The Audit Committee’s responsibilities include, among others: the appointment (other than the independent auditor of annual accounts prepared in accordance with Dutch law), compensation, retention, oversight, and replacement of the Company’s independent registered public accounting firm; approving the scope, procedures, and fees for the proposed audit for the current year and reviewing the scope, conduct, and findings of any financial or internal control-related audit performed by the independent registered public accounting firm; reviewing the organization, responsibilities, plans, and resources of the internal audit function; reviewing with management both the Company’s financial statements and management’s assessment of the Company’s internal control over financial reporting; reviewing, including reviewing and discussing with management (including the Company’s internal audit function) and the independent registered public accounting firm, as appropriate, the Company’s processes and procedures with respect to risk assessment and risk management; and reviewing, approving, ratifying, or rejecting “transactions” between the Company and “related persons” (each as defined in Item 404 of Regulation S-K). 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 SEC and the applicable NASDAQ Global Select Stock Market (“NASDAQ”) listing standards. The Mylan Board has determined that Mr. Dimick, Ms. Higgins, Mr. Leech, and Mr. Piatt are each an “audit committee financial expert,” as that term is defined in the rules of the SEC. The Mylan Board has also approved Mr. Dimick’s concurrent service on the audit committees of more than two other public companies.

 

 

Compensation Committee

 

 

The Compensation Committee’s responsibilities include, among others: reviewing and recommending to the non-executive, independent (in accordance with the NASDAQ listing standards) members of the Mylan Board corporate goals and objectives relevant to the Executive Chairman’s (if applicable), CEO’s, and other executive directors’ compensation, evaluating such individual’s performance, and determining (with

respect to the CEO’s and other executive directors’ compensation) and providing recommendations to the non-executive, independent members of the Mylan Board with respect to such individual’s compensation based on these evaluations. In making such recommendations, the Compensation Committee may consider pay for performance, alignment with long-term shareholder interests, promotion of Company strategic goals, maintenance of the appropriate level of fixed and at-risk compensation, remaining competitive with companies within the Company’s peer group, internal pay equity, an executive’s leadership and mentoring skills and contributions, talent management, the executive’s contributions to establishment or execution of corporate strategy, retention, and recognition of individual performance and contributions, and/or any other factors determined by the Mylan Board or the Compensation Committee to be in the interests of the Company. The Compensation Committee also exercises oversight of, and provides recommendations to the Mylan Board as appropriate regarding, the compensation of the other executive officers of the Company and applicable compensation programs and incentive compensation plans, as well as the compensation of independent directors. The Compensation Committee may, in its sole discretion, delegate any of its responsibilities to one or more subcommittees of one or more directors who are members of the Compensation Committee as the Compensation Committee may deem appropriate. 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 the Chief Compliance Officer’s implementation of the Company’s Corporate Compliance Program and, as appropriate, makes recommendations to the Mylan Board with respect to the formulation or re-formulation of, and the implementation, maintenance, and monitoring of, the Company’s Corporate Compliance Program and Code of Business Conduct and Ethics as may be modified, supplemented, or replaced from time to time, designed to support and promote compliance with corporate policies and legal rules and regulations. All of the members of the Compliance Committee are independent directors as defined in the NASDAQ listing standards.

 

 

 

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Executive Committee

 

 

The Executive Committee exercises those powers of the Mylan Board not otherwise limited by a resolution of the Mylan Board or by law.

 

 

Finance Committee

 

 

The Finance Committee advises the Mylan Board with respect to, and by discharging the duties and responsibilities delegated to it by the Mylan Board in respect of, material financial matters and transactions of the Company including, but not limited to: reviewing and overseeing material mergers, acquisitions, and combinations with other companies; swaps and other derivatives transactions; the establishment of credit facilities; potential financings with commercial lenders; and the issuance and repurchase of the Company’s debt, equity, hybrid, or other securities. 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 advises the Mylan Board with respect to corporate governance matters as well as the nomination or re-nomination of director candidates and its responsibilities also include overseeing both the Mylan Board’s review and consideration of shareholder recommendations for director candidates and the Mylan Board’s annual self-evaluation. Additionally, the Governance and Nominating Committee oversees director orientation and Mylan Board continuing education programs and makes recommendations to the Mylan Board with respect to the annual evaluation of independence of each director and, as needed, the appointment of directors to committees of the Mylan Board and the appointment of a chair of each committee. All of the members of the Governance and Nominating 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 as requested by management and, at the Mylan Board’s request, reviews the Company’s research and development (“R&D”) strategy and

portfolio from time to time from a scientific and technological perspective.

 

 

Consideration of Director Nominees

 

 

For purposes of identifying individuals qualified to become members of the Mylan Board, and consistent with Mylan’s Corporate Governance Principles, the Governance and Nominating Committee considers the following general criteria, among others, for nomination by the Mylan Board of director candidates in accordance with Mylan’s articles of association. These criteria, among others, reflect the traits, abilities, and experience that the Mylan Board looks for in determining candidates for election to the Mylan Board:

 

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

 

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

 

    Directors shall have relevant expertise and experience and be able to offer advice and guidance to the CEO based on that expertise and experience.

 

    Directors shall have the ability to exercise sound business judgment.

 

    Unless otherwise approved by the Mylan Board, directors shall not be a member of the board of directors or an officer or employee of a competitor (or an affiliate of a competitor) of the Company.

In addition to the criteria set forth above and any others the Governance and Nominating Committee or Mylan Board may consider, a majority of the members of the Mylan Board must be “independent,” as that term may be defined from time to time by NASDAQ listing standards, including that an independent director must be free of any relationships which, in the opinion of the Mylan Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

Although the Governance and Nominating Committee has not set specific targets with respect to diversity, the Governance and Nominating Committee and the Mylan Board as a whole believe that it is important for

 

 

 

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Mylan Board members to represent diverse viewpoints and further that the personal backgrounds and qualifications of the directors, considered as a group, should provide a significant composite mix of experience, knowledge and abilities. The Mylan Board also seeks to combine the skills and experience of its long-standing board members with the fresh perspectives, insights, skills, and experiences of new members.

As needed, the Governance and Nominating Committee may identify new potential director nominees by, among other things, asking current directors and executive officers and external advisors to notify the Governance and Nominating Committee if they become aware of persons meeting the criteria described above who would be suitable candidates for service on the Mylan Board. The Governance and Nominating Committee also may, as needed, engage firms that specialize in identifying director candidates.

The Governance and Nominating Committee will consider for nomination by the Mylan Board potential director candidates properly recommended by shareholders, subject to the discretion of the Mylan Board and to Mylan’s articles of association. In considering candidates recommended by shareholders, the Governance and Nominating Committee will take into consideration, among other matters, the needs of the Mylan Board and Mylan and the qualifications of the candidate, including, among other things, those traits, abilities, and experiences described above. Any submission to the Governance and Nominating Committee of a recommended candidate for consideration must include, among other information, the name of the recommending shareholder and evidence of such person’s ownership of Mylan shares, and the name of the recommended candidate, his or her resume or a statement of his or her principal occupation or employment, and the recommended candidate’s signed consent to be named as a director if recommended by the Governance and Nominating Committee and nominated by the Mylan Board. Any shareholder recommendations for director must be sent to Mylan’s Corporate Secretary at Building 4, Trident Place, Mosquito Way, Hatfield, Hertfordshire, AL10 9UL, England, not later than 120 days prior to the anniversary date of Mylan’s most recent annual general meeting of shareholders.

As appropriate, the Governance and Nominating Committee will review publicly available information regarding a potential candidate, request information from the candidate, review the candidate’s experience and qualifications, including in light of any other candidates that the Governance and Nominating Committee might be considering, and conduct together with other members of the Mylan Board one or more interviews with the candidate. Governance and Nominating Committee members may also contact one or more references provided by the candidate or may contact other members of the business community or other persons that may have first-hand knowledge of the candidate’s talents and experience. The Governance and Nominating Committee’s evaluation process does not vary based on whether or not a candidate is recommended by a shareholder.

Mr. Vollebregt was recommended for consideration by the Governance and Nominating Committee by a current member of the Mylan Board.

 

 

Director Independence

 

 

The Mylan Board has determined that Ms. Cameron, Judge Cindrich, Ms. Dillon, Mr. Dimick, Ms. Higgins, Mr. Leech, Dr. Maroon, Mr. Parrish, Mr. Piatt, Dr. Vanderveen, and Mr. Vollebregt are independent directors under the applicable NASDAQ listing standards. In making these determinations, the Mylan Board considered, with respect to Dr. Maroon’s independence, that his daughter has worked for Mylan during one or more of the past several years. With respect to Mr. Piatt’s independence, the Mylan Board considered that in 2016 and earlier years, Mylan paid minimal membership costs for several employees and sponsored events at a facility indirectly owned, in part, by Mr. Piatt. The Mylan Board also considered that Mr. Piatt is a prominent member of the Southpointe community, in which Mylan’s headquarters is located, and that he has, and has had in the past, ownership interests in certain properties in the Southpointe community; Mr. Piatt has also been involved in the development of Southpointe and in various routine matters related to the upkeep and maintenance of the neighborhood and associated utilities, as has Mylan. With regard to both Dr. Maroon and Mr. Piatt, the Mylan Board determined that any such arrangements, transactions, or relationships do not interfere with the exercise of independent judgment by these directors in carrying out their responsibilities as a director of

 

 

 

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Mylan. Ms. Bresch and Mr. Malik are not independent directors due to their current service as Mylan’s CEO and President, respectively. Mr. Coury is not an independent director due to his employment by Mylan Inc. during the past three years, most recently as Executive Chairman until June 24, 2016. The Chairman of the Mylan Board is not independent within the meaning of best practice provision 2.1.8 of the Dutch Corporate Governance Code. All other non-executive directors of the Mylan Board are considered to be independent within the meaning of that best practice provision.

 

 

Board Education

 

 

From time-to-time, the Mylan Board or individual Mylan Board members participate in director educational programs.

 

 

Mylan Board Leadership Structure

 

 

The Mylan Board elects one of its own members as the Chairman of the Board. Mr. Coury has served as the Chairman of the Board of Mylan Inc. and Mylan N.V. since being elected in May 2009. On June 3, 2016, the independent members of the Mylan Board unanimously approved the transition of Mr. Coury from Executive Chairman to the role of Chairman of the Mylan Board as a Non-Employee Director effective as of the close of the 2016 AGM (June 24, 2016). Based on significant interaction and experience with Mr. Coury, the independent directors on the Mylan Board continue to believe that Mr. Coury’s highly collaborative relationship with the independent directors, including the Lead Independent Director, his extensive knowledge of the industry, Mylan’s management, businesses, and global platform, and the opportunities and challenges anticipated in the future, as well as his proven leadership abilities, vision, and insight, and the continued outstanding performance of the Company, make him the ideal person to lead the Mylan Board. Mr. Coury previously served as CEO of the Company from September 2002 to January 2012.

In his capacity as Chairman as a Non-Employee Director, Mr. Coury continues to be actively focused on his role of providing the overall strategic leadership for the Company, consistent with Dutch law and the Company’s organizational documents. Mr. Coury also continues to be directly involved on behalf of the Mylan

Board in any material transactions involving the Company, as well as in other matters considered significant by the Mylan Board, including providing guidance to the senior management team as well as interactions with shareholders. During Mr. Coury’s leadership over approximately the last 15 years as both Executive Chairman and, prior to that role, as CEO, he has served as a key architect in helping Mylan become a global leader in the generic and specialty pharmaceutical industry with a leading and differentiated global operating platform and commercial infrastructure. Mr. Coury, who has agreed with Mylan to remain in the role of non-executive Chairman for at least the next five years, will more intently focus, with the Mylan Board and in collaboration with the senior executive management team, on the strategy for Mylan for the next decade and beyond.

In his previous capacity as Executive Chairman, Mr. Coury’s primary responsibilities included certain executive responsibilities, providing overall leadership and strategic direction of the Company; providing guidance to the CEO and senior management; coordinating the activities of the Mylan Board; overseeing talent management; communicating with shareholders and other stakeholders; strategic business development; and mergers and acquisitions.

Effective January 1, 2012, the Mylan Board implemented an enhanced management structure, appointing Ms. Bresch as CEO and Mr. Malik as President, among other changes described in previous public filings.

In connection with this enhanced management structure implemented in 2012, the Mylan Board also appointed Mr. Piatt as Lead Independent Director based on, among other factors, Mr. Piatt’s independence, outstanding contributions as a director of the Company, excellent business judgment, and recognized leadership abilities. The Mylan Board believes that this appointment only further enhanced the Mylan Board’s already strong independent oversight of the Company. As Lead Independent Director, Mr. Piatt presides at executive sessions of the independent directors, and he has the authority to call meetings of the independent directors. He also serves on the Executive Committee of the Mylan Board. In addition, the Chairman, in consultation with the Lead Independent Director, as applicable, determines the information sent to the Mylan Board, the meeting agendas, and meeting schedules to assure that there is sufficient time for discussion of

 

 

 

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agenda items. The Lead Independent Director in turn is charged with separately approving information sent to the Mylan Board, its meeting agendas, and its meeting schedules. He also serves as the contact person for stakeholders wishing to communicate with the Mylan Board and as a liaison between the Chairman and independent directors.

As of 2012, in her role as CEO, Ms. Bresch’s primary responsibilities include the day-to-day running and oversight of the Company’s global operations, business, and functions; executing on and overseeing implementation of strategies developed or approved by the Mylan Board; continued oversight of process and operational enhancements; and continued implementation of a blueprint for an organizational design to help ensure the sustainability of our success into the future.

The Mylan Board strongly believes, and the Company’s short- and long-term performance demonstrates, that the current Mylan Board and management structures are ideal for Mylan, and that they have produced outstanding results for shareholders and have benefited the interests of other stakeholders, as illustrated on pages [ ] to [ ] of this Proxy Statement. We believe that the Company and its stakeholders have benefited, and continue to benefit, from the respective leadership, judgment, vision, experience – and performance – of the Mylan Board and management structure, and that the CEO, Ms. Bresch, and the President, Mr. Malik, share a vision for the Company that is consistent with the Mylan Board’s philosophy.

This determination is based on, among other factors, senior management’s demonstrated leadership abilities; the performance of the Company; the Mylan 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.

Our governance structure also provides effective independent oversight by the Mylan Board in the following additional ways, among others:

 

    ten of the 13 current members of the Mylan Board are independent and, if all nominated directors are elected at the annual general meeting, eight of the 11 members of the Mylan Board will be independent;

 

    the Mylan Board has established robust Corporate Governance Principles;

 

    the Audit, Compensation, Compliance, Finance, and Governance and Nominating Committees are all composed entirely of independent directors (as defined in the applicable NASDAQ listing standards);

 

    the independent directors on the Mylan Board and its committees receive extensive information and input from management and external advisors, engage in detailed discussion and analysis regarding matters brought before them (including in executive session), and consistently and actively engage in the development and approval of significant corporate strategies;

 

    the Mylan Board and its committees have unrestricted access to management;

 

    the Mylan Board and its committees (other than the Science and Technology Committee) can retain, at their discretion and at Company expense, any advisors they deem necessary with respect to any matter brought before the Mylan Board or any of its committees (the Science and Technology Committee retains advisors in consultation with the Chairman and the Lead Independent Director);

 

    the Mylan Board and its committees are intimately familiar with the business and management of the Company and collectively met 33 times in 2016; and

 

    in 2016, the Mylan Board held five executive sessions of non-management members while its committees collectively held 20 executive sessions.
 

 

 

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Board of Directors Risk Oversight

 

 

The Audit Committee is primarily responsible for overseeing the Company’s risk management processes on behalf of the full Mylan 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 potential risk or control issues. The Audit Committee reports regularly to the full Mylan Board, which also considers the Company’s risk profile. The full Mylan 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 Mylan Board’s risk management expectations. While the Mylan 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 continues to remain a highly effective approach for addressing the risks facing the Company and that the Mylan Board’s leadership structure supports this approach.

In addition, the Compensation Committee is responsible for overseeing the Company’s compensation risks as discussed further beginning on page [ ] of this Proxy Statement under “Consideration of Risk in Company Compensation Policies.”

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

 

 

 

Non-Employee Director Compensation for 2016

 

 

The following table sets forth information concerning the compensation earned by the Non-Employee Directors, other than Mr. Coury, for 2016. Directors who are employees of Mylan Inc. do not receive any consideration for their service on the Mylan Board. A discussion of the elements of Non-Employee Director compensation follows the table.

 

Name (1)

   Fees Earned or Paid
in Cash ($)
   RSUs ($) (2)    Option Awards
($) (2)
   All Other
Compensation ($)
   Total ($)

Wendy Cameron

   132,000    165,045    50,017       347,062

Hon. Robert J. Cindrich

   120,000    165,045    50,017       335,062

JoEllen Lyons Dillon

   119,500    165,045    50,017       334,562

Neil Dimick

   177,000    165,045    50,017       392,062

Melina Higgins

   132,000    165,045    50,017       347,062

Douglas J. Leech

   125,000    165,045    50,017       340,062

Joseph C. Maroon, M.D

   127,000    165,045    50,017       342,062

Mark W. Parrish

   145,000    165,045    50,017       360,062

Rodney L. Piatt

   212,000    165,045    50,017       427,062

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

   113,000    165,045    50,017       328,062

 

 

(1) In the case of Mr. Coury, the amounts he received in connection with his service as a Non-Employee Director following his retirement as an executive officer and transition to Chairman are described in the Summary Compensation Table for 2016 below and the section entitled “Chairman Transition,” beginning on page [ ] of this Proxy Statement.
(2) Represents the grant date fair value of the specific award granted to the Non-Employee Director. Option awards and restricted stock unit (“RSU”) awards granted in 2016 vested on February 17, 2017. For information regarding assumptions used in determining the amounts reflected in the table above, please refer to Note 11 to the Company’s Consolidated Financial Statements contained in the Form 10-K for the year ended December 31, 2016. The aggregate number of ordinary shares subject to stock options held by the Non-Employee Directors listed in the table as of December 31, 2016 were as follows: Ms. Cameron, 8,365; Judge Cindrich, 8,365; Ms. Dillon, 8,365; Mr. Dimick, 8,365; Ms. Higgins, 14,988; Mr. Leech, 8,365; Dr. Maroon, 8,365; Mr. Parrish, 8,365; Mr. Piatt, 84,916; and Dr. Vanderveen, 8,365. The number of unvested RSUs held by each of the Non-Employee Directors listed in the table, as of December 31, 2016, was 3,567. The number of ordinary shares subject to stock options and the number of unvested RSUs and restricted ordinary shares held by Mr. Coury as of December 31, 2016 are provided in the Outstanding Equity Awards at the End of 2016 Table on page [ ] of this Proxy Statement.

 

 

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Non-Employee Directors, other than Mr. Coury, receive $100,000 per year in cash compensation for their service on the Mylan Board. Non-Employee Directors are also reimbursed for actual expenses relating to meeting attendance.

In addition, in 2016:

 

    The Chair of the Audit Committee received an additional fee of $30,000 per year;

 

    The Chair of the Compensation Committee received an additional fee of $25,000 per year;

 

    The Chair of the Compliance Committee received an additional fee of $30,000 per year;

 

    The Chair of the Finance Committee received an additional fee of $20,000 per year;

 

    The Chair of the Governance and Nominating Committee received an additional fee of $10,000 per year;

 

    The Chair of the Science and Technology Committee received an additional fee of $10,000 per year;

 

    Each member of the Executive Committee who is a Non-Employee Director, other than Mr. Coury, received an additional fee of $30,000 per year;

 

    Each member of the Audit Committee and Compensation Committee received an additional fee of $12,000 per year;

 

    Each member of the Compliance Committee received an additional fee of $10,000 per year;

 

    Each member of the Governance and Nominating Committee received an additional fee of $7,000 per year;

 

    Each member of the Finance Committee and the Science and Technology Committee received an additional fee of $3,000 per year; and

 

    Mr. Piatt, as the Lead Independent Director, received an additional fee of $60,000 per year.

Mr. Coury, as Chairman as a Non-Employee Director, does not receive the Non-Employee Director fees described above, and instead receives the Chairman’s retainer described in the section below entitled “Chairman Transition,” beginning on page [ ] of this Proxy Statement.

Non-Employee Directors are eligible to receive stock options or other grants under the Company’s Amended and Restated 2003 Long-Term Incentive Plan (“Amended 2003 Plan”). In February 2016, each Non-Employee Director, other than Mr. Coury, was granted an option to purchase 2,788 ordinary shares, at an exercise price of $46.27 per share, the closing price per share of the Company’s ordinary shares on the date of grant, which option vested on February 17, 2017, and 3,567 RSUs, which also vested on February 17, 2017. In lieu of the standard Non-Employee Director equity awards, Mr. Coury received the one-time Chairman grant, described below in the section entitled “Chairman Transition,” beginning on page [ ] of this Proxy Statement. Non-Employee Directors, including Mr. Coury, will also receive tax equalization payments for incremental tax liabilities, if any, incurred as a result of attendance at board meetings in the United Kingdom.

Ordinary Share Ownership Requirements

The Mylan Board adopted ordinary share ownership requirements for Non-Employee Directors, requiring Non-Employee Directors to hold ordinary shares valued at three times their annual retainer as long as they remain on the Mylan Board. Each Non-Employee Director has five years from his or her initial election to the Mylan Board to achieve this requirement. The policy was adopted to demonstrate the alignment of Directors’ interests with shareholders for the duration of their service. As of December 31, 2016, all Non-Employee Directors satisfied this ownership requirement. If Mr. Vollebregt is elected to the Mylan Board at the annual general meeting, he will be required to satisfy the ownership requirements by June 2022.

 

 

 

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Security Ownership of Directors, Nominees, and Executive Officers

 

 

The following table sets forth information regarding the beneficial ownership of ordinary shares of Mylan N.V. as of [ ], 2017 by (i) Mylan N.V.’s directors, nominees, and named executive officers (“NEOs”), and (ii) all directors, nominees, and executive officers of Mylan N.V. as a group (based on [ ] ordinary shares of Mylan N.V. 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 [ ], 2017. To Mylan N.V.’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

    842,927 (1)(6)       165,705     *

Wendy Cameron

    70,579       8,365     *

Hon. Robert J. Cindrich

    16,951       8,365     *

Robert J. Coury

    1,466,279 (2)(6)       231,074     *

JoEllen Lyons Dillon

    7,511       8,365     *

Neil Dimick

    42,489       8,365     *

Melina Higgins

    79,439 (3)       14,988     *

Douglas J. Leech**

    46,282       8,365     *

Rajiv Malik

    824,855 (6)       78,870     *

Joseph C. Maroon, M.D.**

    25,603       8,365     *

Anthony Mauro

    156,227 (4)(6)       44,217     *

Kenneth S. Parks

    1,368       5,517     *

Mark W. Parrish

    35,267       8,365     *

Rodney L. Piatt**

    39,960       84,916     *

John D. Sheehan, C.P.A. (5)

    126,220       38,038     *

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

    39,689       8,365     *

Sjoerd S. Vollebregt (7)

    0       0     *

All directors, nominees, and executive officers as a group (17 persons, including Daniel M. Gallagher (8) but not including Mr. Sheehan (5) )

    3,695,426 (6)(9)       692,207     *

 

 

* Less than 1%.
** Mr. Leech, Dr. Maroon, and Mr. Piatt are not nominated for election at the annual general meeting.
(1) Includes 1,157 shares held in Ms. Bresch’s 401(k) account and 200,000 shares held in a grantor retained annuity trust of which Ms. Bresch is the sole trustee.
(2) Includes 1,000,000 shares held in a grantor retained annuity trust of which Mr. Coury is the sole trustee.
(3) Includes 74,000 shares held by Ms. Higgins’ spouse.
(4) Includes 5,574 shares held in Mr. Mauro’s 401(k) account.
(5) Mr. Sheehan departed from Mylan effective April 1, 2016.
(6) Includes restricted ordinary shares issued on June 10, 2015 upon conversion of stock appreciation rights (“SARs”) pursuant to the terms of Mylan’s One-Time Special Performance-Based Incentive Program (as defined below) implemented in 2014. The restricted ordinary shares remain subject to forfeiture and additional vesting conditions, including achievement of adjusted EPS of $6.00 and continued service, and the other terms and conditions of the program.
(7) Mr. Vollebregt is nominated for election to the Mylan Board for the first time in 2017.
(8) More information on Mr. Gallagher can be found in the “Executive Officers” section of this Proxy Statement.
(9) Includes 6,731 shares held in the executive officers’ 401(k) accounts.

 

 

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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 ordinary shares of Mylan N.V. as of [ ], 2017 (based on [ ] ordinary shares of Mylan N.V. outstanding as of such date):

 

Name and Address of Beneficial Owner

   Amount and Nature of Beneficial
Ownership
  Percent of Class

Wellington Management Company LLP and affiliates,

280 Congress Street, Boston, MA 02210

   45,207,406 (1)   [ ]%

BlackRock, Inc.,
55 East 52nd Street, New York, NY 10055

   39,714,103 (2)   [ ]%

Vanguard Specialized Funds – Vanguard Heath Care Fund –
23-2439149, 100 Vanguard Blvd., Malvern, PA 19355

   30,084,537 (3)   [ ]%

The Vanguard Group, 100 Vanguard Blvd., Malvern, PA 19355

   28,258,025 (4)   [ ]%

 

 

(1) Based on Schedule 13G/A filed by Wellington Management Group LLP, Wellington Group Holdings LLP, Wellington Investment Advisors Holdings LLP and Wellington Management Company LLP with the SEC on February 9, 2017, Wellington Management Group LLP has sole voting power over 0 shares, shared voting power over 9,212,021 shares, sole dispositive power over 0 shares, and shared dispositive power over 45,207,406 shares; Wellington Group Holdings LLP has sole voting power over 0 shares, shared voting power over 9,212,021 shares, sole dispositive power over 0 shares, and shared dispositive power over 45,207,406 shares; Wellington Investment Advisors Holdings LLP has sole voting power over 0 shares, shared voting power over 9,212,021 shares, sole dispositive power over 0 shares, and shared dispositive power over 45,207,406 shares; and Wellington Management Company LLP has sole voting power over 0 shares, shared voting power over 7,160,105 shares, sole dispositive power over 0 shares, and shared dispositive power over 42,107,636 shares. Based on the Schedule 13G/A, the securities as to which the Schedule 13G/A was filed are owned of record by clients of one or more investment advisers identified therein directly or indirectly owned by Wellington Management Group LLP. Those clients have the right to receive, or the power to direct the receipt of, dividends from, or the proceeds from the sale of, such securities. No such client is known to have such right or power with respect to more than five percent of this class of securities, except for Vanguard Health Care Fund.
(2) Based on Schedule 13G/A filed by BlackRock, Inc. with the SEC on January 25, 2017, BlackRock, Inc. has sole voting power over 35,999,853 shares, shared voting power over 0 shares, sole dispositive power over 39,714,103 shares, and shared dispositive power over 0 shares.
(3) Based on Schedule 13G filed by Vanguard Specialized Funds – Vanguard Health Care Fund – 23-2439149 on February 13, 2017, Vanguard Specialized Funds – Vanguard Health Care Fund – 23-2439149 has sole voting power over 30,084,537 shares, shared voting power over 0 shares, sole dispositive power over 0 shares, and shared dispositive power over 0 shares.
(4) Based on Schedule 13G filed by The Vanguard Group with the SEC on February 10, 2017, The Vanguard Group has sole voting power over 715,299 shares, shared voting power over 76,324 shares, sole dispositive power over 27,487,177 shares, and shared dispositive power over 770,848 shares.

 

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

 

Section 16(a) of the Securities Exchange Act of 1934, as amended (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 ordinary shares and our 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 2016.

 

 

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Executive Officers

 

 

The names, ages, and positions of Mylan’s executive officers as of [ ], 2017, are as follows:

 

Heather Bresch

   47    Chief Executive Officer (principal executive officer)

Daniel M. Gallagher

   44    Chief Legal Officer

Rajiv Malik

   56    President

Anthony Mauro

   44    Chief Commercial Officer

Kenneth S. Parks

   53    Chief Financial Officer (principal financial officer)

 

Each executive officer listed above other than Mr. Gallagher and Mr. Parks was an executive officer of Mylan Inc. on February 27, 2015, the date on which Mylan N.V. completed the EPD Transaction, and became an executive officer of Mylan N.V. on such date in connection with the EPD Transaction.

Ms. Bresch and Mr. Malik are both also members of the Mylan Board. A discussion of their respective business experience and other relevant biographical information is provided under “Voting Item 1 – Appointment of Directors” above.

Mr. Gallagher has served as Chief Legal Officer since April 2017. Mr. Gallagher previously served as president of Patomak Global Partners, a consulting firm providing strategic advice, compliance consulting, and litigation and regulatory enforcement services, from January 2016 to March 2017. As president, Mr. Gallagher was responsible for originating and managing client matters, and assisting the Chief Executive Officer in overseeing operations of the firm. From November 2011 to October 2015, Mr. Gallagher served as a commissioner of the SEC. During his tenure at the SEC, Mr. Gallagher focused on initiatives aimed at strengthening the U.S. capital markets and encouraging capital formation, among others. Before being appointed commissioner, Mr. Gallagher served on the staff of the SEC in several capacities, including as counsel to both SEC Commissioner Paul Atkins and Chairman Christopher Cox, working on matters involving the Division of Enforcement and the Division of Trading and Markets. Mr. Gallagher served as deputy director and co-acting director of the Division of

Trading and Markets from 2008 to 2010. In addition to his tenure in public service, Mr. Gallagher spent a number of years in the private sector. Following law school, he joined the Washington, D.C. law firm Wilmer Cutler & Pickering. He later returned to Wilmer (now WilmerHale) as a partner following his staff service at the SEC. Mr. Gallagher also served as senior vice president and general counsel of Fiserv Securities, Inc., where he was responsible for managing all of the firm’s legal and regulatory matters. Mr. Gallagher serves as non-executive director of both the Irish Stock Exchange and Symbiont.io, and is on the advisory board of the Drexel LeBow Center for Corporate Governance.

Mr. Mauro has served as Chief Commercial Officer since January 2016. Prior to that date, Mr. Mauro served as President, North America of Mylan since January 1, 2012. He served as President of Mylan Pharmaceuticals Inc. from 2009 through February 2013. In his 21 years at Mylan, Mr. Mauro has held roles of increasing responsibility, including Chief Operating Officer for Mylan Pharmaceuticals ULC in Canada and Vice President of Strategic Development, North America, and Vice President of Sales, North America for Mylan.

Mr. Parks has served as Chief Financial Officer since June 2016. Mr. Parks previously served as chief financial officer for WESCO International (“WESCO”), a leading provider of electrical, industrial, and communication products, from June 2012 to May 2016, where he led all aspects of the finance function

 

 

 

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at WESCO. From June 2012 to December 2013, Mr. Parks also served as a vice president, and starting in January 2014, he also served as senior vice president. Prior to joining WESCO, Mr. Parks spent the majority of his career at United Technologies Corporation (“UTC”) in a variety of U.S. and international finance roles. He most recently served as vice president, Finance, for the $7 billion UTC Fire & Security division from 2008 to February 2012.

Pursuant to Mylan’s Rules for the Board of Directors of Mylan N.V. (the “Board Rules”), the Mylan Board appoints the CEO and may appoint, or delegate authority to the Chairman or the CEO to appoint, a President, a Chief Financial Officer, a Chief Legal Officer, a Secretary, and any other officers of Mylan as the Mylan Board, the Chairman, or the CEO may

desire. Each officer appointed by the Mylan Board, or appointed by the Chairman or the CEO, holds office until his or her successor shall have been appointed, or until his or her death, resignation, or removal. Officers of Mylan who are appointed by the Mylan Board can be removed by the Mylan Board, and the Mylan Board may delegate to the Chairman or the CEO the right to remove any officer the Chairman or the CEO has appointed (but not any officer directly appointed by the Mylan Board). A copy of the Board Rules is available on Mylan’s website at http://www.mylan.com/company/corporate-governance or in print to shareholders upon request, addressed to Mylan N.V.’s Corporate Secretary at Building 4, Trident Place, Mosquito Way, Hatfield, Hertfordshire, AL10 9UL, England.

 

 

 

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Voting Item 2 – Adoption of Dutch Annual Accounts for Fiscal Year 2016

 

 

At the annual general meeting, shareholders will be asked to adopt the Company’s Dutch statutory annual accounts for the fiscal year ended December 31, 2016, which are prepared in accordance with International Financial Reporting Standards as adopted by the European Union (“IFRS”).

As a public limited liability company incorporated under the laws of the Netherlands, Mylan is required by Dutch law to prepare the Dutch statutory annual accounts and submit them to shareholders for adoption. The Company’s Dutch statutory annual accounts are different from the consolidated financial statements contained in our annual report on Form 10-K for the year ended December 31, 2016 that were prepared in accordance with U.S. GAAP and filed with the SEC.

A copy of the Dutch statutory annual accounts is available free of charge on our website at http://www.mylan.com/en/company/corporate-governance and at our office address at Building 4, Trident Place, Mosquito Way, Hatfield, Hertfordshire, AL10 9UL England.

A representative of Deloitte Accountants B.V. is expected to be present at the annual general 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.

THE MYLAN BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ADOPTION OF OUR DUTCH STATUTORY ANNUAL ACCOUNTS FOR FISCAL YEAR 2016.

 

 

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Voting Item 3 – Ratification of the Selection of Deloitte & Touche LLP as the Company’s Independent Registered Public Accounting Firm for Fiscal Year 2017

 

 

The Audit Committee has approved Deloitte as the Company’s independent registered public accounting firm to audit the Company’s U.S. GAAP consolidated financial statements for the fiscal year ending December 31, 2017, and has directed that management submit the selection of Deloitte as the independent registered public accounting firm for ratification by the shareholders at the annual general meeting. A representative of Deloitte is expected to be present at the annual general 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 as the Company’s independent registered public accounting firm is not required by Mylan’s articles of association 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 MYLAN BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” RATIFICATION OF THE SELECTION OF DELOITTE AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 2017.

 

 

Principal Accounting Fees and Services

 

 

Deloitte served as Mylan’s independent registered public accounting firm during 2016 and 2015, 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 and affiliated firms for such services during 2016 and 2015 are set forth below.

 

     In Millions  
     2016     2015  

Audit Fees (1)

   $ 9.2     $ 8.5  

Audit Related Fees (2)

     0.6       0.5  

Tax Fees (3)

     0.1       0.1  

All Other Fees (4)

           0.1  
  

 

 

   

 

 

 

Total Fees

   $ 9.9     $ 9.2  

 

 

(1) Represents fees for professional services provided for the audit of the Company’s annual consolidated financial statements and the Dutch Annual Accounts, 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 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 primarily related to tax return preparation, tax planning, and tax compliance support services.
(4) Represents fees related primarily to advisory services.

 

 

Audit Committee Pre-Approval Policy

 

 

The Audit Committee has 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 during 2016 and 2015 were pre-approved by the Audit Committee in accordance with its policy.

 

 

 

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Report of the Audit Committee of the Mylan Board

 

 

The following Report of the Audit Committee of the Mylan Board does not constitute soliciting material and shall not be deemed filed or incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent the Company specifically incorporates such information by reference.

April 30, 2017

The Audit Committee is currently comprised of five directors, each of whom is independent as required by and as defined in the audit committee independence standards of the SEC and the applicable NASDAQ listing standards. The Audit Committee operates under a written charter adopted by the Board, a copy of which is available on the Company’s website at mylan.com/company/corporate-policy.

Management is responsible for the preparation and integrity of the Company’s financial statements. Management is also responsible for implementing and maintaining appropriate accounting and financial reporting policies, procedures, and internal controls designed to ensure compliance with applicable accounting standards and laws and regulations. The independent registered public accounting firm (the “independent auditor”) is responsible for auditing and reviewing the Company’s financial statements and auditing the Company’s internal control over financial reporting, in accordance with standards of the Public Company Accounting Oversight Board (“PCAOB”), and to issue their reports thereon. One of the Audit Committee’s responsibilities is to oversee these processes.

In this context, the Audit Committee met a total of four times in 2016, and has reviewed and discussed with management, including Mylan’s internal auditor, and with the independent auditor Mylan’s audited consolidated financial statements and its internal control over financial reporting. These discussions covered the quality, as well as the acceptability, of Mylan’s financial reporting practices and the completeness and clarity of the related financial disclosures as well as the effectiveness of Mylan’s internal control over financial reporting and its disclosure controls and procedures. Management represented to the Audit Committee that Mylan’s consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States, and the Audit Committee has reviewed and discussed the consolidated financial statements with management and the independent auditor. The Audit Committee discussed with the independent auditor the matters required to be discussed by Auditing Standard No. 16 (as codified, AS 1301).

Mylan’s independent auditor also provided to the Audit Committee the written disclosures and letter required by the applicable requirements of the PCAOB’s Rule 3526 regarding the independent auditor’s communications with the Audit Committee concerning the independent auditor’s independence, and the Audit Committee discussed these matters with the independent auditor. The Audit Committee has also considered whether the independent auditor’s provision of non-audit services to Mylan is compatible with the firm’s independence. Deloitte & Touche LLP, Mylan’s independent auditor, stated in the written disclosures that in their judgment they are, in fact, independent. The Audit Committee concurred in that judgment of independence.

Based upon the review and discussions referred to above, the Audit Committee recommended to the Board that the audited consolidated financial statements be included in Mylan’s Annual Report on Form 10-K for 2016, which was filed with the Securities and Exchange Commission.

BY THE AUDIT COMMITTEE:

Neil Dimick, C.P.A., Chairman

JoEllen Lyons Dillon

Melina Higgins

Douglas J. Leech, C.P.A.

Rodney L. Piatt, C.P.A.

 

 

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Voting Item 4 – Instruction to Deloitte Accountants B.V. for the Audit of the Company’s Dutch Statutory Annual Accounts for Fiscal Year 2017

 

 

Pursuant to Dutch law, the general meeting is authorized to appoint an auditor to audit the Company’s Dutch statutory annual accounts, which are presented pursuant to IFRS. Based on the recommendation of the Audit Committee of the Mylan Board, the Mylan Board proposes to the general meeting that Deloitte Accountants B.V. be instructed to serve as the auditor who will audit our Dutch statutory annual accounts as required by Dutch law for the year ending December 31, 2017.

THE MYLAN BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE INSTRUCTION TO DELOITTE ACCOUNTANTS B.V. FOR THE AUDIT OF THE COMPANY’S DUTCH STATUTORY ANNUAL ACCOUNTS FOR FISCAL YEAR 2017.

 

 

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Executive Compensation for 2016

 

 

 

 

 

Compensation Discussion and Analysis

 

 

 

 

 

Named Executive Officers

 

 

This Compensation Discussion and Analysis (“CD&A”) describes the compensation of the following NEOs for 2016.

 

Name

   Position

Heather Bresch

   Chief Executive Officer

Kenneth S. Parks

   Chief Financial Officer

Rajiv Malik

   President

Anthony Mauro

   Chief Commercial Officer

John D. Sheehan, CPA (1)

   Former Executive Vice President and Chief Financial Officer

Robert J. Coury (2)

   Former Executive Chairman, currently Chairman of the Mylan Board as a Non-Employee Director

 

 

(1) Mr. Sheehan departed Mylan effective April 1, 2016.
(2) In June 2016, the Mylan Board, in another step toward further ensuring strong and stable long-term leadership of the Company, as discussed in further detail below, unanimously approved Mr. Coury’s retirement and transition from Executive Chairman to the role of Chairman of the Mylan Board as a Non-Employee Director. This change was effective as of the close of the 2016 AGM.

 

 

Executive Summary

 

 

Leading Global Pharmaceutical Company Providing Access to High Quality Medicine

 

Company Mission

  

At Mylan, we are committed to setting new standards in healthcare. Working together around the world to provide 7 billion people access to high quality medicine, we:

 

    Innovate to satisfy unmet needs;

 

    Make reliability and service excellence a habit;

 

    Do what’s right, not what’s easy; and

 

    Impact the future through passionate global leadership.

 

Business Overview

  

Global Reach:

 

    One of the largest pharmaceutical companies in the world today in terms of revenue

 

    Develops, licenses, manufactures, markets, and distributes generic, brand name, and over-the-counter (“OTC”) products, as well as active pharmaceutical ingredients (“API”)

 

    One of the industry’s broadest product portfolios, including more than 7,500 marketed products globally; supplies antiretroviral therapies to approximately 50% of people being treated for HIV/AIDS in the developing world

 

 

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    Balanced and diversified global commercial footprint with products sold in more than 165 countries and territories

 

    Operates a global, high quality, vertically-integrated manufacturing platform with 50 manufacturing sites worldwide

 

    Strong and innovative R&D network that has consistently delivered a robust product pipeline, including complex products such as injectables, respiratory products, insulin analogs, and biosimilars

 

    A talented global workforce of more than 35,000 employees as of December 31, 2016

 

  

U.S. Business Overview:

 

    Mylan holds a top two ranking within the U.S. generics prescription market in terms of both sales and prescriptions dispensed

 

    More than 635 brand, generic, and OTC products marketed in the U.S.

 

    Our medicines filled one of every 13 prescriptions in the U.S. — more than Pfizer, GlaxoSmithKline, Johnson & Johnson, AstraZeneca, Merck, Sanofi, and Eli Lilly combined  — representing more than 22 billion doses at an average price of just 25 cents per dose

 

    Nearly 80% of Mylan’s products sold in the U.S. are manufactured in the U.S.

 

    A talented workforce of approximately 7,000 located in the U.S.

 

Looking Back: Over 15 Years of Outstanding Long-Term Value Creation and Superior Results

Long-Term Leadership Team Delivered Long-Term Results . Over the course of the last 15 years, Mylan has transformed from being a strong presence in the U.S. domestic generic pharmaceutical industry into a global pharmaceutical market leader with strong positions in generic, brand, and OTC medicines, as well as API. Our leadership team drove this transformation through a consistent, carefully devised, and executed growth strategy. As one of the most stable and longest tenured leadership teams in our industry, our Chairman, CEO, President, and Chief Commercial Officer have combined for over 70 years of dedicated service to Mylan. This stability has been very important, given the breadth and complexity of Mylan’s global platform, the complex and differing regulatory environments in which Mylan operates around the world, and the on-going consolidation and

disruption in our highly volatile, intensely competitive industry, among other reasons. Each of these leaders has been focused on a unique aspect of our business. This leadership structure has created sustained value for shareholders, and has allowed Mylan to focus on executing on our long-term strategy even during periods of potential disruption caused by industry and other headwinds and forces outside our control in various jurisdictions and geographies. Among other matters, Mr. Coury has been responsible for the overall strategic direction of Mylan; Ms. Bresch has been responsible for executing our strategy and overall company performance; and Mr. Malik has been responsible for the oversight of day-to-day operations, R&D, and other disciplines within the Company. Mr. Mauro, who was promoted to the role of Chief Commercial Officer in early 2016, is responsible for overseeing all of Mylan’s commercial businesses around the world. As discussed below, 2016 was another transformational year for the Company.

 

 

 

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Over 70 Years of Combined Service and Experience Among a

Leadership Team that has Delivered Sustained Value

 

    Our Chairman, Mr. Coury, joined the Mylan Board and became CEO and Vice Chairman in 2002 and CEO and Chairman in 2009, transitioning to the role of Executive Chairman in 2012, a position he held through June 24, 2016, when he became Chairman as a Non-Employee Director.

 

    Our CEO, Ms. Bresch, has served Mylan for 25 years in roles of increasing responsibility in more than 15 functional areas.

 

    Our President, Mr. Malik, has served Mylan for approximately ten years since joining Mylan in 2007 through the acquisition of Matrix Laboratories, one of the world’s largest suppliers of API (and prior to that had another 20 years of experience in the pharmaceutical industry).

 

    Our Chief Commercial Officer, Mr. Mauro, has been with Mylan for over 20 years, in roles of increasing responsibility in our commercial businesses.

 

   

 

Successful Long-Term Results . The Mylan Board has overseen the development of a differentiated, clear, and consistent long-term strategy, and partnered with and empowered our unique and talented management team to execute on that vision. Mylan has been successful at creating sustained long-term shareholder value while acting in the best interests of shareholders, employees, customers, patients, our communities, and our other stakeholders in pursuit of the Company’s mission to provide access to a broad range of high quality medicine to the global population. We have created this long-term value to shareholders by consistently operating based on the principle that a well-run company delivers value to all its stakeholders.

In addition to creating billions of dollars in shareholder value for our investors, our results have benefited our entire range of stakeholders. For example:

 

    Over the last 15 years, the market capitalization of Mylan has increased from ~$3 billion (as of March 31, 2001) to ~$20 billion (as of December 31, 2016), an increase of ~$17 billion

 

    Over the five-, ten-, and fifteen- year periods ending on December 31, 2016, Mylan has delivered exceptional absolute stock price appreciation of 78%, 93%, and 140%, respectively

 

    Since going global in 2008, Mylan has increased its U.S. workforce by ~2,500, and now totals
   

~7,000 as part of a more than 35,000-member talented global workforce as of December 31, 2016

 

    Mylan has invested approximately $3 billion on R&D in the last five years alone, and today has more than 1,800 new product submissions pending regulatory approval around the world, with more than 6,000 planned submissions globally

 

    Leveraging our differentiated, global operating platform, Mylan has decreased annual average net prices over the last five years across its entire U.S. business, including EpiPen ® Auto-Injector

 

    Mylan has saved the U.S. healthcare system an estimated $180 billion over the last ten years by developing high quality generic alternatives to more costly branded pharmaceuticals

Successful 2016 Financial and Operational Results with Industry-Wide Challenges . Despite industry-wide headwinds in 2016, including volatility and valuation contraction in the generic and specialty pharmaceutical industry due in part to industry-wide drug pricing concerns, Mylan delivered successful financial and operational results for 2016.

Shown below are certain financial and operational metrics used in our 2016 annual incentive program and results against those metrics.

 

 

 

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Performance Against 2016 Annual Incentive Plan Metrics

 

 

 

 

LOGO

 

* The adjusted EPS amount is derived from Mylan’s audited financial statements in the same manner as Mylan publicly reports adjusted EPS (which for 2016 is reconciled to the most directly comparable U.S. GAAP measure in Appendix A), but for annual incentive plan purposes is measured on a constant currency basis. Adjusted free cash flow is derived from Mylan’s audited financial statements in the same manner as Mylan publicly reports adjusted free cash flow (which for 2016 is reconciled to the most directly comparable U.S. GAAP measure in Appendix A).

 

 

 

Continued Growth Through Successful Strategic Acquisitions in 2016 . Over the last decade, Mylan has carefully planned, executed, and integrated acquisitions that, together with robust organic growth, have been key to our long-term growth, and 2016 was no exception. In 2016, we completed and began integrating our acquisitions of Meda and the non-sterile topicals-focused specialty and generics business of Renaissance Acquisition Holdings, LLC. These transactions further built our scale and breadth from a product and geographic perspective and further positioned the Company for ongoing value creation.

 

Looking Ahead: Mylan is Positioned for Future Growth and Value Creation

Global Company with Diversified Strategy to Drive Growth and Value Creation . Our strategy over the past decade has produced a highly differentiated global company capable of making high quality medicines available to those who need them, and we believe will continue to drive growth going forward. As just one example, over the last four years, including as a result of the EPD Transaction and the Meda Transaction, among other things, we have diversified the geographic sources of our net third party sales.

 

 

 

 

LOGO

Percentages reflect total Net Third Party Sales

 

 

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As our customers continue to consolidate and global demand for medicines increases, Mylan is uniquely positioned to meet these needs through our scale, global supply chain, and commitment to driving access.    

 

We believe there simply is no other company that combines our unique operating platform, tremendous work ethic, willingness to challenge the status quo, and desire to champion the cause of better health for the world’s 7 billion people in order to serve the interests of all stakeholders.

 

 

     We continue to leverage our differentiated, global operating platform. This vertically-integrated platform includes 50 manufacturing sites around the world, with extensive capabilities and the capacity to produce approximately 80 billion oral solid doses, 4,800 kiloliters of APIs, 500 million injectable units, and 1.5 billion complex-product units annually to high quality standards and with the efficiency to manage costs.

     

 

     We use our strong commercial presence, with critical mass across the generics, brand, and OTC channels, to keep expanding and delivering value for our customers. We have one of the industry’s broadest and most diverse portfolios, with more than 7,500 marketed products. Our global sales force of more than 5,000 calls on approximately 60,000 customers worldwide. Through “ONE Mylan” (a term that describes our expansive, diversified, and integrated commercial and operational platform), we have opportunities to be the partner of choice to continue to drive revenue growth.

     We are making significant ongoing investments in our future organic growth. We invested approximately $3 billion in R&D in the last five years, including approximately $827 million in the last year alone. As a result, we have more than 1,800 additional new product submissions pending regulatory approval, and more than 6,000 more submissions planned. These include complex products such as injectables and respiratory products as well as insulin analogs and biosimilars, where we have one of the industry’s largest and broadest portfolios.

 

    We will continue to pursue business-development transactions that fit strategically and culturally into Mylan and will add value while ensuring ongoing financial flexibility with a strong balance sheet and maintaining our commitment to our investment grade credit rating.

 

    We have a strong track record of delivering exceptional shareholder returns , and we will work to maintain this exceptional record.

 

    We are putting our commitment to global social responsibility to action by championing Better Health for a Better World.

 

 

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Robust R&D Investment and Product Pipeline

 

 

 

~$3B of cumulative investment, 2012  –  2016

 

 

LOGO

 

* QuintilesIMS, a leading provider of technology and analytics to the healthcare industry.

Global Integrated R&D Network

 

 

 

 

LOGO

 

 

 

Our Pay Philosophy and 2016 Components of Compensation

Pay Philosophy . Mylan’s executive compensation programs are consciously structured to create a maximum return on executive leadership. The Compensation Committee has implemented a unique, transparent, and robust long-term pay for performance approach with respect to Mylan’s top leaders. The Mylan Board has designed the programs to drive continued execution against our strategy to create a leading, robust, sustainable company, while aligning compensation with company performance and shareholder value creation and other stakeholder interests. The Company’s compensation strategy has been deliberately developed by the Mylan Board to ensure that the compensation programs were tailored

to the specific aspects of the Company, its leadership team and structure, and the particular stage in its evolution, in addition to taking conventional market practices into consideration.

Compensation Components . We place a clear emphasis on variable, performance-based compensation: approximately 67% of our CEO’s 2016 annual target compensation was performance-based. The financial metrics selected for our annual incentive compensation plan and the return on invested capital (“ROIC”) component of our performance restricted stock units (“PRSUs”) were selected specifically because they are directly influenced by our management team’s actions and decisions, and measure their ability to deliver the most value from Mylan’s assets.

 

 

 

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  Pay Element

   Form    2016 Metrics    2016 Performance / Shareholder
Alignment Link

 

Salary

  

 

Cash

  

 

N/A

  

 

Base compensation set competitively to attract and retain executives

 

 

Annual Incentive

Compensation

  

 

Cash

  

 

Adjusted EPS

  

 

Earnings are expected to have a direct relationship to the price of Mylan’s ordinary shares

 

       

 

Global regulatory

submissions

  

 

Approval and commercialization of new products yield new revenue sources that are essential for Mylan to remain competitive, and as such are fundamental to our short- and long-term growth strategy

 

       

 

Adjusted free cash

flow

  

 

Captures the potential impact of all types of business transactions on the generation of adjusted operating cash flow

 

 

Long-Term

Incentive

Compensation

  

 

Stock Options

  

 

Stock price

  

 

Provides value only if stock price rises from the grant date

  

 

Restricted

Stock Units

(“RSUs”)

 

  

 

Stock price

  

 

Realized value depends on continued employment and absolute stock performance over time

 

  

 

PRSUs

  

 

ROIC

  

 

Focuses executives on earning an appropriate return on investments

 

     

 

Relative total

shareholder return (“TSR”)

 

  

 

Incentivizes executives to deliver superior shareholder returns as compared to competitors

 

 

 

2016 Pay Mix

 

 

 

 

LOGO    LOGO

 

 

 

Key 2016 Decisions and Pay Outcomes

Mylan’s executive compensation program for 2016 reflects a simplified compensation program for our continuing executives, with a streamlined pay mix consisting primarily of base salary, annual cash-based

incentive awards, and long-term incentive awards. We expect to rely on this simplified pay mix in coming years and the 2016 compensation for Ms. Bresch and Messrs. Parks, Malik, and Mauro reflect this approach.

 

 

 

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Base Salary . There were no NEO base salary increases except for Mr. Mauro, who received a 12% increase to reflect his performance and increased responsibilities as Chief Commercial Officer.

Annual Incentive Compensation . For 2016, the Compensation Committee set adjusted EPS and adjusted free cash flow targets at 13% and 8% increases, respectively, over prior year performance (equal to an additional $0.59 of adjusted EPS and $146 million in adjusted free cash flow). Annual incentives for 2016 were earned at 116.75% of target based on threshold performance with respect to the adjusted EPS metric, above-maximum performance on the global submissions metric, and above-target performance on the adjusted free cash flow metric.

Long-Term Incentive Compensation . The Compensation Committee continued to allocate long-term incentive awards more heavily weighted toward performance-based awards than time-based awards. For 2016, each NEO received approximately 52% of their total award as PRSUs, other than Mr. Parks, whose PRSUs were allocated at 60% of his total award. Each NEO, other than Mr. Parks, received the balance of their total award as approximately 17% options and approximately 31% RSUs. Mr. Parks received 20% options and 20% RSUs.

Mr.  Coury’s Transition to Non-Executive Chairman Role . In June 2016, the Mylan Board approved the transition of Mr. Coury from his role as Executive Chairman to the role of Chairman of the Mylan Board as a Non-Employee Director. Mr. Coury’s transition is the most recent development in a multi-year succession plan that the Mylan Board began implementing in 2012. As part of the transition, Mr. Coury will remain active as Chairman, consistent with the role of chairman under Dutch law and Mylan’s organizational documents.

During the 15-year period in which Mr. Coury led the Company as both Executive Chairman and, prior to that role, as CEO and Chairman, he has served as the key architect in helping Mylan become a global leader in the generic and specialty pharmaceutical industry. In light of his contributions and to ensure continuity and a seamless transition during this critical period for the industry, among other considerations, the Mylan Board decided to retain the leadership of Mr. Coury in a role that would continue to serve Mylan and its

stakeholders following his transition from his role as Executive Chairman. The Mylan Board was mindful of the need to maintain stability at this critical juncture, particularly in light of recent disruptions to other industry players.

In connection with his transition, Mr. Coury has agreed to serve as Chairman for at least five years and will intently focus, with the Mylan Board and in collaboration with the management team, on the strategy for Mylan for the next decade and beyond.

In structuring Mr. Coury’s compensation as Chairman as a Non-Employee Director, the Mylan Board focused on ensuring his continued alignment with shareholders and retention for at least five years, keeping in mind that he will no longer participate in the Company’s executive compensation programs, including the annual bonus, long-term incentive, and retirement benefit programs. After extensive deliberation, the Mylan Board determined that Mr. Coury would receive:

 

    A Chairman’s retainer equal to $450,000 per fiscal quarter.

 

    On June 24, 2016, a single grant of 1,000,000 RSUs, 75% of which will not vest until the third anniversary following the 2016 AGM and the remaining 25% of which will not vest until the fifth anniversary following the 2016 AGM, generally subject to Mr. Coury’s continued service as Chairman as a Non-Employee Director.

For further details, see the discussion below entitled “Chairman’s Transition and Other NEO Developments” on page [ ] of this Proxy Statement. Upon Mr. Coury’s transition from an executive officer role, certain past compensation that had accrued or was granted over his successful 15-year tenure as CEO and Executive Chairman became payable under the terms of the compensation programs and applicable tax law, as described more fully on page [ ] of this Proxy Statement. The vast majority of those payments have been previously disclosed in proxy statements and other public filings prior to 2016.

Actual Pay Demonstrates Alignment with Performance . The following graph demonstrates that the total compensation realizable by Mylan’s CEO over a three-year period is aligned with Mylan’s TSR relative to the Company’s 2016 peer group.

 

 

 

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Alignment of CEO Realizable Pay* with TSR Performance

 

 

 

LOGO

 

* Realizable pay includes cumulative salary and annual incentives paid for the most recent three years, plus current value (as of December 31, 2016) of options (intrinsic value) and time-based restricted stock/units granted during the most recent three years, plus the value (as of December 31, 2016) of performance-based long-term incentive awards earned 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 2016 peer companies listed on page [ ] of this Proxy Statement, excluding Teva Pharmaceutical Industries Ltd., for whom sufficient information was not publicly available. Note that Perrigo Company plc three-year realizable pay excludes the most recent 6-month stub year, and Mylan’s realizable pay excludes awards granted in connection with the One-Time Special Performance-Based Incentive Program (as defined below), since these performance awards are still subject to performance-based criteria.

 

 

 

Robust Shareholder Outreach and Enhancement to Compensation Practices

Robust Shareholder Outreach Over Last Three Years . While unique in certain respects, our executive compensation programs have been successful in driving long-term shareholder value, and shareholders have been generally supportive of these programs over the years. However, Mylan has never been content to remain static and, as a result, over the last several years, Mylan has undertaken a robust shareholder engagement program to discuss matters of importance to Mylan and our shareholders in a variety of areas, which has included matters related to our compensation programs. As a result of this effort, over the last three years, the Mylan Board and members of the senior management team have met with shareholders representing over 80% of Mylan’s outstanding ordinary shares, including, in 2016 and early 2017, again meeting with our largest institutional shareholders. Among other topics discussed during these shareholder engagements was the unique structure of our management team, including Mr. Coury’s role as Executive Chairman as well as the

respective roles of the CEO and President, and the compensation paid to each.

Responsive Changes Made to Compensation Practices . Based on this extensive shareholder engagement, as well as the Mylan Board’s own independent analysis and initiatives, we have implemented numerous robust compensation-related policies, including, among others, those most recent changes noted in the chart below.

We believe the transition of Mr. Coury to Chairman as a Non-Employee Director is both consistent with the Mylan Board’s succession planning strategies and addresses some shareholders’ feedback about overall executive compensation. The transition of Mr. Coury to Chairman as a Non-Employee Director, at a lower annualized compensation level, is occurring at a time when our other executives have taken on increased responsibilities and now play a larger role in contributing to the Company’s success. The transition simplified the executive structure and will lower overall executive compensation totals.

 

 

 

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In his new role as Chairman as a Non-Employee Director, Mr. Coury no longer receives a salary or incentive compensation like an executive. He is paid a quarterly retainer and was granted front-loaded and

shareholder aligned RSUs that vest over five years. The Mylan Board believes the Company is fortunate to have ensured Mr. Coury’s retention as Chairman for at least another five years.

 

 

Changes Made to Compensation Program Based
on Board Analysis and/or Shareholder Feedback
 

Impact of Change

 

     In connection with Mr. Coury’s transition from Executive Chairman to Chairman as a Non-Employee Director, his total annualized compensation package is lower than previous levels

 

¡      This year’s Summary Compensation Table and accompanying tables within this Proxy Statement show compensation previously granted to Mr. Coury that became payable as a result of this transition or that will be earned in the future

   

 

     Mr. Coury will continue to provide the overall strategic leadership of the Company

 

     80% of the compensation Mr. Coury will receive as Chairman as a Non-Employee Director is in the form of shareholder aligned RSUs that vest over five years and therefore promote his continued strategic leadership

      Removed automatic accelerated vesting of stock option, RSU, and PRSU awards for eligible executives upon an individual satisfying retirement-eligibility criteria (55 years of age with ten+ years of service)

   

     Further promotes the goal of ensuring stable leadership and executive retention

 

     Ms. Bresch and Mr. Malik have voluntarily waived their right to this provision for previously granted RSUs and PRSUs

     Intention to rely on a simplified mix of base salary, annual cash-based incentive awards, and long-term incentive awards over the next few years

   

     Historically-important but complex compensation components are being phased out

 

     New NEOs do not have Retirement Benefit Agreements (“RBAs”)

      Reduced expatriate benefits payable to our President, Mr. Malik

   

     Pursuant to Mr. Malik’s expatriate assignment to the U.S. from India, Mr. Malik was responsible for taxes equal to those he would have been obligated to pay if he maintained his principal work location and residence in India, while Mylan was responsible for all additional taxes

 

     Beginning in 2016, Mr. Malik no longer receives a tax equalization benefit for long-term incentive awards

      Introduced a U.S. GAAP revenue metric for 2017 annual incentive compensation

   

     Incentivizes management to focus on top-line growth, essential to Mylan’s ongoing value creation and consistent with our long-term growth strategy

 

     Affirms Mylan’s commitment to maintaining a tight link between compensation and objective performance results

      Increased transparency on our pay philosophy and efforts to more closely align pay with performance

   

     Additional clarity for shareholders on the items that we believe best incentivize and help retain critical senior leaders

 

     Additional line-of-sight on how we compensate management on a long-term basis for outstanding relative performance

 

 

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Business and Performance

 

 

A Unique Company Focused on Value Creation and Serving All Stakeholders

The Mylan Board believes that its most important objective is positioning the Company to deliver exceptional long-term shareholder value and serving other stakeholders by developing a differentiated, clear, and consistent long-term strategy, and partnering with and empowering our unique and talented management team to execute on that vision. Consistent with this approach, over approximately the last 15 years, Mylan has developed from a strong player in the U.S. domestic generic pharmaceutical industry into a global market leader with a diversified commercial and operating platform and an industry-leading portfolio of high quality products.

The results of this commitment to being different are clear and have had clear benefits to our shareholders, patients, employees, and other stakeholders. Over the last 15-year period, the market capitalization of Mylan has increased from approximately $3 billion (as of March 31, 2001) to approximately $20 billion (as of December 31, 2016), an increase of approximately $17  billion . Over the five-, ten-, and fifteen-year periods ending on December 31, 2016, Mylan has delivered exceptional absolute stock price appreciation of 78%, 93%, and 140%, respectively .

During the last ten years, as a result of our commitment to our long-term strategy, we have successfully and dramatically transformed and grown our commercial and operating scope and scale, as can be demonstrated clearly in the growth of our talented employees, research staff, manufacturing capabilities, products, and geographic reach as shown in the chart below.

 

 

   

March 31, 2006

  

December 31, 2016

Workforce

  ~3,000    >35,000

R&D Staff

  ~300    ~3,000

Manufacturing

  5 Sites    50 Sites

Portfolio

  ~150 Products    >7,500 Marketed Products

Geography

  Domestic (U.S.) Only    >165 Countries and Territories

 

 

 

Mylan has always been at the forefront of the quest to provide access to more affordable, high quality medicines to the world’s 7 billion people. Our medicines filled one out of every 13 prescriptions in the U.S. — more than Pfizer, GlaxoSmithKline, Johnson & Johnson, AstraZeneca, Merck, Sanofi, and Eli Lilly combined  —representing more than 22 billion doses at an average price of just 25 cents per dose. With the U.S. healthcare system undergoing a rapid and dramatic evolution that is shifting a greater cost burden to patients, for instance through the growth in high deductible plans, our EpiPen ® Auto-Injector became an example of how today’s pharmaceutical pricing system is no longer working for patients. With regard to our EpiPen ® Auto-Injector product, we took immediate and unprecedented actions to address pricing concerns by significantly enhancing patient access programs and introducing an authorized generic version of the product priced at less than 50% of the wholesale acquisition price of the branded version . As we have stated publicly, Mylan welcomes the opportunity to be a leader in this dialogue and in working with others to address

structural issues in the drug pricing system. We hope that our experience with our EpiPen ® Auto-Injector product can serve as a catalyst for change and illuminate the conversation about the need for better transparency and reform throughout the healthcare sector.

Unique Leadership Team with Proven Track Record

We believe that we have accomplished the remarkable growth cited above as a direct result of our differences from the rest of our industry — our unique leadership structure and culture and our willingness to passionately challenge accepted viewpoints on the industry and identifying and acting upon its distinct opportunities and challenges.

The Mylan Board has invested significant time and effort into developing and fostering a leadership structure that is appropriate for Mylan and believes that the strong and stable leadership of the Company has been critical in the long-term growth and development of Mylan into a global leader in its industry.

 

 

 

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The leadership structure, consisting of Mr. Coury as Executive Chairman (until June 2016), Ms. Bresch as CEO, and Mr. Malik as President was implemented in 2012 and successfully served Mylan through much of the period of growth and platform expansion noted above. Mr. Mauro was promoted to the role of Chief Commercial Officer in early 2016 and is responsible for overseeing all of Mylan’s commercial businesses around the world. This team has more than 70 years of combined service and experience and has delivered sustained value to shareholders.

The Mylan Board has seen first-hand, and our results have shown, the benefits of having such a strong and cohesive leadership group. For example, the Mylan Board believes that as a result of this structure, together with the outstanding work and efforts of our work force, Mylan has been able to focus on successfully executing on our long-term strategy while also acquiring and integrating compelling and sometimes underappreciated businesses and assets into the Mylan platform, devoting substantial resources and efforts to pharmaceutical access and disease awareness initiatives, and developing a successful commercial and operating presence in India.

Leadership Updates

The Mylan Board remains committed to fostering and broadening our leadership team as part of a multi-year succession plan that the Board implemented in 2012. During 2016 and early 2017, Mylan had several important developments in this regard.

 

    In early 2016, Mr. Mauro was promoted to the role of Chief Commercial Officer. Mr. Mauro has been with Mylan for over 20 years, serving the Company in several capacities of increasing responsibility. Prior to his promotion to Chief Commercial Officer, Mr. Mauro served as President, North America, successfully leading Mylan’s largest commercial business.

 

    During the second quarter of 2016, Mr. Parks was hired for the role of Chief Financial Officer to replace Mr. Sheehan, who departed as our Chief Financial Officer as of April 1, 2016. As a member of Mylan’s executive leadership team, Mr. Parks is responsible for all of Mylan’s global finance functions, including accounting and internal control, financial planning and analysis, investor relations, treasury, and tax.

 

    In June 2016, the Mylan Board approved the transition of Mr. Coury from his role as Executive
   

Chairman to the role of Chairman of the Mylan Board as a Non-Employee Director. During the period of Mr. Coury’s leadership over approximately the last 15 years as both Executive Chairman and, prior to that role, as CEO and Chairman, he has served as the key architect in helping Mylan become a global leader in the generic and specialty pharmaceutical industry. Mr. Coury has been, and will continue to be, actively focused on his role of providing the overall strategic leadership for Mylan.

 

    In early 2017, Mylan named former SEC commissioner Daniel M. Gallagher as Chief Legal Officer. Mr. Gallagher brings to Mylan extensive experience in regulatory matters, financial markets, and corporate legal affairs and governance. Mylan believes that Mr. Gallagher will add significant value to its senior leadership team and add further depth to Mylan’s already strong legal organization.

Continued Investment in Future Growth

The dramatic growth of our company has been achieved through the tireless dedication of the Mylan Board and senior management to advancing both strategic organic growth drivers and investing strategically in compelling transactions and other growth opportunities. The Mylan Board and senior management remain committed to identifying key strategic opportunities for growth within our industry and directing resources towards those opportunities that we believe will drive future growth.

 

    Commitment to Research and Development and Organic Growth . In order to continue our long track record of growth, Mylan remains committed to providing access to high quality medicines to the world’s population through significant investment in R&D initiatives and, as a result, we continue to successfully develop and bring new products to market, especially those that are difficult to develop or manufacture. This expertise has made Mylan a sought after partner for other innovative companies in our industry. In the last year alone, we invested approximately $827 million in R&D, continuing our long commitment to heavily investing in R&D.

 

   

Anticipated Future Acquisition Activity . With Mylan’s acquisition activity in 2016, which followed extensive acquisition activity in 2015 as well as several other large scale acquisitions over

 

 

 

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the past decade, we believe that we have successfully assembled an outstanding and differentiated group of assets to drive the creation of future shareholder value. While we will always consider any and all assets that become available in the industry, we currently expect future acquisitions to be in the nature of acquisitions complementary to our existing business, as opposed to larger transformative transactions, while we work to optimize the existing assets within our exceptional “ONE Mylan” platform.

 

Components of 2016 Executive Compensation

 

 

Our executive compensation program is designed to incentivize our NEOs to deliver exceptional long-term shareholder value and to fully align the interests of our executives with those of our investors. We pay our NEOs through three primary components of compensation: base salary, an annual incentive, and a long-term incentive. In addition, our NEOs receive certain benefits and perquisites. Our program is heavily weighted toward performance-based compensation, and the annual and long-term incentive outcomes are primarily dependent on the achievement of outstanding performance results.

 

 

 

2016 Pay Mix

 

 

 

 

LOGO    LOGO

 

 

 

Base Salary

The Compensation Committee considers a variety of factors in deciding base salary, including, among others: individual performance, responsibilities, and expected future performance; Company performance; management structure; marketplace practices; internal pay equity considerations; and the executive’s experience, tenure, and leadership. The Compensation Committee also considers, among other factors, what the marketplace would require in terms of the replacement costs to hire a qualified

individual to replace an executive, as well as the fact that a new executive would lack the critical knowledge base regarding Mylan as compared to the executive he or she would be replacing.

For 2016, no NEOs received base salary increases except for Mr. Mauro. The Compensation Committee increased Mr. Mauro’s base salary by 12% to reflect his strong performance and increased role and responsibilities as Chief Commercial Officer, among other factors.

 

 

NEO

  

Position

  

2015

  

2016*

    

Change in
Base Salary

Heather Bresch

   Chief Executive Officer    $1,300,000      $1,300,000      0%

Kenneth S. Parks

   Chief Financial Officer    N/A      600,000     

Rajiv Malik

   President    1,000,000      1,000,000      0%

Anthony Mauro

   Chief Commercial Officer    625,000      700,000      12%

 

 

* Prior to his departure from Mylan on April 1, 2016, Mr. Sheehan received an annual base salary of $650,000. Prior to his transition to Chairman as a Non-Employee Director, Mr. Coury received an annual base salary of $1,350,000.

 

 

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The base salary earned by each of the NEOs for 2016 is included in the column entitled “Salary” in the Summary Compensation Table on page [ ] of this Proxy Statement.

Annual Incentive Compensation

Mylan’s annual incentive compensation consists of performance-based annual cash awards that are based on the achievement of objective operational and financial measures identified by the Mylan Board as critical to the successful execution of Mylan’s business strategy and tied to the continued creation of shareholder value.

 

    Annual Incentive Structure . For 2016, the Compensation Committee set challenging performance goals based on three key
   

performance indicators of the current and future strength of our business. In addition, the metrics were selected specifically because they are related to the actions and leadership of our management team, and measure their ability to extract the most value from our assets. The Compensation Committee chose to use adjusted metrics for the two financial goals because the financial performance of the Company is measured by senior management, in part, using these adjusted metrics, and the Compensation Committee believes that the adjusted metrics present the most appropriate alternative measure of Mylan’s financial performance, in addition to offering the best method to evaluate the ongoing operations of the Company.

 

 

 

Adjusted EPS

 

 

Earnings are expected to have a direct relationship to the price of Mylan’s ordinary shares

 

 

Global Regulatory Submissions

 

 

Approval and commercialization of new products yield new revenue sources that are essential for Mylan to remain competitive, and as such are fundamental to our short- and long-term growth strategy

 

 

Adjusted Free Cash Flow

 

 

Captures the potential impact of all types of business transactions on the generation of adjusted operating cash flow, and strengthens our balance sheet

 

 

    Setting Challenging Targets Based on Past Performance Results and Future Expectations . For 2016, the Compensation Committee set adjusted EPS and adjusted free cash flow targets at 13% and 8% increases, respectively over prior year performance. The Compensation Committee set the global regulatory submissions target based on forecasts for submissions for the year. The following tables show the 2016 threshold, target, and maximum goals and the relative weightings of each metric:

 

Goal

  

Weighting

      

Threshold

      

Target

      

Maximum

   

Adjusted EPS

       50 %          $ 4.85          $ 5.00          $ 5.15    

Global regulatory submissions

       25 %            120            135            150    

Adjusted free cash flow ($ in millions)

       25 %          $ 1,800          $ 2,000          $ 2,200    

 

 

No annual incentives are paid if threshold performance is not achieved. Furthermore, the Compensation Committee has committed to not using its discretion to upwardly adjust annual incentive award amounts generated by the performance metrics.

 

 

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    Potential Opportunities Subject to Performance . Set forth below are the 2016 threshold, target, and maximum award opportunities for the NEOs who are currently executive officers:

 

NEO*

  Position  

Threshold

(% of Salary)

      

Target

(% of Salary)

      

Maximum

(% of Salary)

   

Heather Bresch

 

Chief Executive Officer

  75.0%      150%      300%  

Kenneth S. Parks

 

Chief Financial Officer

  50.0%      100%      200%  

Rajiv Malik

 

President

  62.5%      125%      250%  

Anthony Mauro

 

Chief Commercial Officer

  57.5%      115%      230%  

 

 

* As a result of his announced departure from Mylan, Mr. Sheehan was not granted an annual incentive award for 2016. As a result of his transition to Chairman as a Non-Employee Director, Mr. Coury received only a pro-rated annual incentive award for 2016, the value of which is included in the column entitled “Non-Equity Incentive Plan Compensation” in the Summary Compensation Table on page [ ] of this Proxy Statement.

 

    Annual Incentive Payouts . The annual incentives earned for 2016 were determined based on the annual performance criteria, and the relative weightings and Company results set forth in the table below. The Company achieved threshold performance with respect to the adjusted EPS metric, exceeded maximum performance on the global submissions metric, and exceeded target performance on the adjusted free cash flow metric in 2016. As a result, the NEOs received payouts of annual incentive awards for 2016 at 116.75% of target.

 

Goal*

 

Weighting

     

2016

Target

     

2016

Actual

     

Weighted
Score

   

Adjusted EPS

      50 %         $ 5.00         $ 4.85            Threshold         25.00%    

Global regulatory submissions

      25 %           135           155            Above maximum         50.00%    

Adjusted free cash flow ($ in millions)

      25 %         $ 2,000         $ 2,134            Above target         41.75%    

2016 Company Performance Score

                                   116.75%    

 

 

* The adjusted EPS amount is derived from Mylan’s audited financial statements in the same manner as Mylan publicly reports adjusted EPS (which for 2016 is reconciled to the most directly comparable U.S. GAAP measure in Appendix A), but for annual incentive plan purposes is measured on a constant currency basis. Adjusted free cash flow is derived from Mylan’s audited financial statements in the same manner as Mylan publicly reports adjusted free cash flow (which for 2016 is reconciled to the most directly comparable U.S. GAAP measure in Appendix A).

The annual incentive compensation earned by each of the NEOs for 2016 is set forth in the column entitled “Non-Equity Incentive Plan Compensation” in the Summary Compensation Table on page [ ] of this Proxy Statement.

Long-Term Incentive Compensation

The Compensation Committee believes that the value of long-term incentives should be directly related to the performance of Mylan’s ordinary shares, as well as other measures associated with the growth and success of Mylan.

 

    Long-Term Incentive Structure . For 2016, long-term incentive awards were granted to our NEOs in the form of stock options, time-based RSUs, and PRSUs.

 

 

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The mix of awards, detailed below, provides recipients with a combination of incentive opportunities, aligns our executives with shareholders, and each vehicle has its own risk-reward profile and provides a unique benefit. The Compensation Committee believes that maintaining a higher percentage of the total long-term incentive award that is specifically performance-based further supports alignment between the Company’s performance, shareholder interests, and executive compensation.

 

Vehicle

  Approx. Weight
for all NEOs*
Except Mr.
Parks
      Weight for
Mr. Parks
      Incentive Opportunity

Stock Options

  17%     20%    

Stock options provide value only if Mylan’s ordinary share price rises from the grant date

 

RSUs

  31%     20%    

RSU value increases/decreases with ordinary share price performance, and provides a strong retention value

 

PRSUs

  52%     60%    

PRSUs provide value based on Mylan’s ROIC and relative TSR performance, strongly linking payouts with long-term value creation

 

 

 

* Mr. Sheehan did not receive a long-term incentive award in 2016 due to his announced departure from Mylan.

 

    Stock options . Stock options are granted with an exercise price equal to the closing price of Mylan’s ordinary shares on the date of grant. They vest in three equal installments, generally provided that the NEO remains continually employed by Mylan.

 

    RSUs . RSUs generally vest in three annual installments, generally provided that the NEO remains continually employed by Mylan. The NEOs, other than Mr. Parks, received a slightly higher percentage of their long-term incentive awards in the form of RSUs compared to prior years in light of the fact that certain of their PRSUs were not eligible to vest above target as a result of the EPD Transaction in 2015 (despite performance that resulted in vesting above target). The additional RSUs are subject to more rigorous cliff-vesting after a three-year period to further strengthen the Compensation Committee’s retention objective.

 

    PRSUs . PRSUs cliff-vest at the end of the performance period based on the achievement of predetermined performance criteria and provided that the NEO remains continually employed by Mylan. PRSUs vest based on Mylan’s TSR performance relative to the companies in its peer group (as set forth in the section entitled “Peer Group for 2016” on page [ ] of this Proxy Statement), and ROIC. The Compensation Committee believes that these two metrics provide an appropriate balance of incentives. Relative TSR rewards the NEOs for performance measured relative to our peer group while ROIC links payouts to returns generated by investments, both organic and through acquisitions. The following table shows the 2016 threshold, target, and maximum goals and relative weightings.

 

Metric

   Weighting        Threshold        Target        Maximum    

ROIC*

 

   50%

 

    

10%

 

    

12%

 

    

14%

 

 

Relative TSR**

   50%

 

    

25 th  Percentile of Peer Group

 

    

50 th  Percentile of Peer Group

 

    

75 th  Percentile of Peer Group

 

 

Opportunity

 

   N/A

 

    

50%

 

    

100%

 

    

150%

 

 

 

 

* ROIC is calculated from Mylan’s audited financial statements in the same manner as set forth in the reconciliations provided in Appendix A. Starting in 2016, the definition of ROIC was updated to include intangible assets and goodwill in the denominator to more appropriately reflect the strategic acquisitions Mylan has made.
** Relative TSR is calculated by comparing the difference between Mylan’s 30-day trailing average closing ordinary share price at the beginning of the performance period and the end of the performance period plus any dividends paid during the performance period against the same metric for each company in our peer group.

 

 

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Timing and Value of 2016 Long-Term Incentive Award Grants

The Compensation Committee has historically approved annual long-term incentive award grants in the first quarter of the fiscal year, which grants were made following the release of year-end audited financial results, with exceptions for new hires (as was the case for Mr. Parks in 2016), promotions, and other special awards, grants, or circumstances.

 

In 2016, each NEO, other than Mr. Sheehan due to his announced departure, received, in their capacity as an executive officer, a grant of long-term incentive awards with a targeted value at grant equal to a percentage of their base salary. Values are determined based on a variety of factors, including peer group, individual performance, and tenure. The grant date value of awards granted in February 2016 were:

 

 

NEO*

  Position    PRSUs   Options   RSUs   Total
Award

Heather Bresch

  Chief Executive Officer    $4,680,025   $1,560,009   $2,756,396   $8,996,430

Kenneth S. Parks

  Chief Financial Officer    $900,022   $300,000   $300,007   $1,500,029

Rajiv Malik

  President    $2,700,040   $900,014   $1,619,080   $5,219,134

Anthony Mauro

  Chief Commercial Officer    $1,470,044   $490,013   $743,837   $2,703,894

 

 

* Mr. Sheehan did not receive a long-term incentive award grant in 2016 due to his announced departure from Mylan. Mr. Coury received a 2016 long-term incentive award grant in his capacity as Executive Chairman prior to his transition to Chairman of the Mylan Board as a Non-Employee Director, which is reflected in the Grants of Plan-Based Awards for 2016 Table on page [ ] of this Proxy Statement.

 

Perquisites

Perquisites include the following:

 

    Each NEO receives the use of a Company car or a car allowance and payment of certain ancillary expenses. The NEOs are responsible for paying any taxes incurred relating to this perquisite.

 

    Our senior executives take an extraordinarily active approach to overseeing and managing our global operations, which necessitates a significant amount of U.S. domestic and international travel time due to our diverse set of business centers, manufacturing and other facilities, and many client and vendor locations around the world. Mylan provides management with access to corporate aircraft to assist in the management of Mylan’s global platform by providing a more efficient and secure traveling environment, including where sensitive business issues may be discussed or reviewed, as well as maximum flexibility to our executives in the conduct of Company business. For reasons of business efficiency and continued security-related concerns (including personal security, especially given the global nature of Mylan’s business, as well as privacy of business information and communications), we have required Mr. Coury and Ms. Bresch to use Mylan aircraft for business and personal purposes. Mr. Coury fully reimbursed Mylan for any incremental cost associated with his personal use of the aircraft in 2016. During 2016, other
   

executives from time to time also were authorized to have personal use of the corporate aircraft for similar reasons. The Compensation Committee monitors business and personal aircraft usage on a periodic basis. To the extent any travel on the corporate aircraft results in imputed taxable income to an NEO, Mylan does not provide gross-up payments to cover the NEO’s personal income tax obligation due to such imputed income. For a summary of how this perquisite is calculated, see footnote (9) to the Summary Compensation Table on page [ ] of this Proxy Statement.

 

    Executives will also receive tax equalization payments for incremental tax liabilities, if any, incurred as a result of attendance at meetings of the Mylan Board in the United Kingdom.

Retirement Benefits

Mylan previously entered into RBAs with four of the NEOs — Ms. Bresch and Messrs. Malik, Sheehan, and Coury — in recognition of their service to Mylan, to encourage their retention and to provide a supplemental form of retirement and death benefit. In the case of Messrs. Sheehan and Coury, following Mr. Sheehan’s departure from Mylan and Mr. Coury’s transition to Chairman of the Mylan Board as a Non-Employee Director, respectively, under the terms of the RBAs and applicable tax laws, the accumulated and vested benefits under their RBAs were required to be paid to them, as reflected in the Pension Benefits

 

 

 

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for 2016 Table on page [ ] of this Proxy Statement. As a result, Messrs. Sheehan and Coury had no remaining accumulated RBA benefit as of December 31, 2016. For a detailed description of the RBAs with Ms. Bresch and Mr. Malik, see the section below entitled “Retirement Benefit Agreements,” beginning on page [ ] of this Proxy Statement.

Mylan 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; however, effective April 1, 2013, Mylan modified the Restoration Plan so that U.S. employees with an RBA would no longer receive matching contributions under the Restoration Plan.

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

The Summary Compensation Table includes changes in pension values calculated based on certain actuarial assumptions regarding discount rates. In computing these amounts, we used the same assumptions that were used to determine the expense amounts recognized in our 2016 financial statements. In 2016, the impact of a decrease in the applicable discount rates led to an increase in the present value of accumulated benefits of approximately $340,000 for Ms. Bresch, approximately $112,000 for Mr. Malik, and approximately $36,000 for Mr. Sheehan.

 

 

Chairman’s Transition and Other NEO Developments

 

 

Chairman Transition

Following his transition to Chairman of the Mylan Board as a Non-Employee Director on June 24, 2016, Mr. Coury ceased to be an executive and therefore no longer receives the compensation and benefits ordinarily awarded to the Company’s executives. Going forward he will not participate in the Company’s annual bonus, long-term incentive, and retirement programs. More than 80% of Mr. Coury’s

compensation as Chairman is in the form of front-loaded, shareholder aligned RSUs vesting over the next five years. These and other changes also address shareholder comments about compensation, and the Mylan Board believes the long vesting RSUs are consistent with the Board’s desire to retain Mr. Coury’s leadership of the strategic direction of the Company over the critical coming years.

In connection with Mr. Coury’s transition to Chairman as a Non-Employee Director, described in the section above entitled “Leadership Updates,” beginning on page [ ] of this Proxy Statement, the Mylan Board was focused on structuring his compensation in the new role to ensure his long-term retention for at least a five-year period and to ensure that his compensation was significantly weighted toward equity-based compensation to further strengthen his alignment with shareholders. After extensive deliberations, which included consultation with the Mylan Board’s independent compensation consultant and U.S. and Dutch advisors, the Mylan Board determined that as consideration for Mr. Coury’s long-term future commitment and continued leadership of Mylan N.V. as Chairman as a Non-Employee Director, Mr. Coury would receive:

 

    a Chairman’s retainer equal to $450,000 per fiscal quarter; and

 

    a single grant of 1,000,000 RSUs, 75% of which will vest on the third anniversary following the 2016 AGM and the remaining 25% of which will vest on the fifth anniversary following the 2016 AGM, in each case, subject to Mr. Coury’s continued service as Chairman as a Non-Employee Director on such dates, or earlier upon Mr. Coury’s cessation of service as Chairman under certain circumstances.

In addition, the Mylan Board determined that Mr. Coury’s continued service as Chairman as a Non-Employee Director through the end of the year qualified for purposes of the vesting requirements of his $20 million cash incentive award previously granted in February 2014, as described in more detail in the section below entitled “Committee Evaluation of 2014 Performance Award” beginning on page [ ] of this Proxy Statement.

Mylan and Mr. Coury also agreed to extend the duration of Mr. Coury’s non-compete and other

 

 

 

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restrictive covenants to cover the duration of his service as Chairman as a Non-Employee Director and for an additional two years thereafter.

As a result of his transition from his role as Executive Chairman to Chairman of the Mylan Board as a Non-Employee Director, Mr. Coury ceased to be an employee of Mylan at a time that he qualified as retirement eligible under the terms of Mylan’s compensation and benefit plans and agreements applicable to him. Therefore, under the terms of such plans and agreements and applicable tax law, certain previously (before 2016) granted compensation became payable to Mr. Coury, including certain vested separation payments, previously granted long-term incentive awards, and accrued vested compensation under both Mr. Coury’s RBA and the Restoration Plan.

As a result of SEC rules, several items of compensation received by Mr. Coury in 2016 are required to be shown in the Summary Compensation Table for 2016 even though the vast majority of this compensation has been approved in prior years and previously disclosed to shareholders in prior proxy statements, supplements to proxy statements, and other public filings. Shareholders have had the opportunity to vote on these arrangements through prior say-on-pay votes. Shareholders have consistently approved our say-on-pay vote since 2013.

LOGO

As a result, a substantial portion of the compensation being disclosed in this year’s Summary Compensation Table or elsewhere in this Proxy Statement does not relate to 2016 service or compensation awarded in 2016. In particular, the Retirement Benefit Agreement, Deferred Separation Payment and Benefits, Restoration Plan, and 2014 Performance Incentive Award compensation figures reflect previously-approved, and with the exception of the 2014 Performance Incentive Award, fully vested compensation accumulated during Mr. Coury’s long service with Mylan. Much of the remaining compensation shown this year will vest over future years, contingent on Mr. Coury’s continued service and contributions as Chairman of the Mylan Board. Because of these unique circumstances, we have included the tables below that show certain of the amounts paid or granted to Mr. Coury in 2016 in connection with his transition, along with the period over which such amounts previously vested or will vest in the future, and his Chairman’s compensation for 2016–2021.

 

 

Chairman Payments and Benefits in Connection with Transition

 

Prior Earned Compensation Settled in 2016

Category

 

Amount

 

Vesting Period

Retirement Benefit Agreement

  Approx.
$50.4 million
  2004 – 2014

Deferred Separation Payments and Benefits

  Approx.
$22.3 million
  Vested in 2012

Long-Term Incentive Awards

  Approx.
$10.7 million
  Upon Mr. Coury’s satisfaction of retirement eligibility requirements
(55 years of age with at least 10 years of service)

Restoration Plan

  Approx.
$5.2 million
  Amounts vested upon contribution or, for profit sharing contributions, following an initial 3-year vesting period

Performance Incentive Award Granted in 2014

  $20 million*   2014 – 2016

 

 

* Due to SEC reporting requirements for cash awards, this prior grant will be included in this year’s compensation disclosure, even though it was granted in 2014.

 

 

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Chairman Compensation 2016 – 2021*

Category

  

Amount

Cash Retainer

   $450,000 / fiscal quarter

Chairman RSUs

   1 million RSUs ($8.7M / year)

 

 

* In 2016, Mr. Coury received his full long-term incentive grant and a pro-rated bonus for his service during the year as Executive Chairman. As Chairman as a Non-Employee Director, he will no longer receive a salary, annual bonus, or long-term incentive and is not eligible to participate in retirement programs.

 

As noted, a substantial amount of the compensation highlighted above reflects compensation that vested prior to 2016 and which was paid as a result of cessation of employment, and emphasizes Mr. Coury’s long service and significant contributions to Mylan over his tenure.

We also highlight that many of the legacy arrangements applicable to Mr. Coury are no longer available to incoming executives. In particular:

 

    While certain of our longer-tenured NEOs are eligible for legacy RBA benefits, Mylan’s two newest NEOs are not eligible for such benefits, and effective April 1, 2013, U.S. employees with an RBA no longer receive matching contributions under the Restoration Plan.

 

    We recently amended our equity arrangements so that long-term incentive awards granted under the Amended 2003 Plan will no longer be eligible for accelerated vesting based on satisfaction of
   

retirement-eligibility criteria, and further note that Ms. Bresch and Mr. Malik have waived their right to this treatment for previously granted RSUs and PRSUs.

Mr. Coury’s transition to Chairman of the Mylan Board as a Non-Employee Director, and the resulting reduction in his compensation, follows a multi-year trend where his total direct compensation and all other compensation decreased year over year. Excluding the compensation that was earned over prior, multiple year periods that became payable to Mr. Coury as a result of him ceasing to be an employee, Mr. Coury’s total direct compensation and all other compensation (as disclosed in the Summary Compensation Table, excluding transition related compensation) has decreased over the last three years. The compensation disclosed in this year’s Summary Compensation Table and other tables within this Proxy Statement include required disclosure of payments made in prior years and therefore may not fully reflect the extent to which the overall compensation of Mr. Coury and the leadership team have decreased.

 

 

                                                                                            

Mr. Coury’s Total Direct Compensation and All Other Compensation

 

Category

 

 

2015

 

 

2016

 

Chairman Direct

Compensation

Salary / Chairman’s Stipend

  $1.4M   $1.6M   $1.8M

 2014 Performance Incentive Award (Annualized) 

  $6.7M   $6.7M  

Annual Incentive Plan Compensation

  $3.4M   $0.9M  

Annual Long-Term Equity Incentives

  $6.1M   $8.7M  

All Other Compensation*

  $5.2M   $0.4M  

Chairman RSUs (Annualized)

      $8.7M**

Total

  $22.8M   $18.3M   $10.5M

 

 

* For 2016, excludes transition related compensation included in the column entitled “All Other Compensation” in the Summary Compensation Table on page [ ] of this Proxy Statement.
** RSU grant is annualized over its five-year vesting period.

 

Committee Evaluation of 2014 Performance Award

As described in the Proxy Statement for Mylan Inc.’s 2014 Annual Meeting of Shareholders, in February 2014, Mr. Coury was granted a $20 million performance

incentive opportunity in connection with the extension of his then-current employment agreement. The award provided that it would be earned only if Mr. Coury satisfactorily performed his key leadership responsibilities and the requirements of his employment

 

 

 

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agreement through December 31, 2016 and remained employed by Mylan through such date.

The Mylan Board evaluated Mr. Coury’s performance through the transition, noting Mr. Coury’s significant leadership achievements since the award was granted, including, among others, his continued strong overall leadership of Mylan, mentorship of executives, shareholder engagement, and unique and successful strategic vision that has led to the continued growth of Mylan’s global operating platform and strong financial results over the past several years, including significant short- and long-term value creation for shareholders and other stakeholders, and his execution and completion of the EPD Transaction and Meda Transaction, among others, each of which is expected to have a significant role in the creation of shareholder value over the long term. In light of these achievements, the Mylan Board determined that Mr. Coury’s performance had exceeded expectations when the award was granted to Mr. Coury in 2014, and that the performance-based requirements had therefore been satisfied.

In connection with Mr. Coury’s transition to Chairman of the Mylan Board as a Non-Employee Director described above, the Mylan Board determined that Mr. Coury’s continued service as Chairman through the end of the year would qualify for purposes of the service-based vesting requirement.

As a result, both the performance-based and service-based requirements of the award were satisfied and the full amount of the performance incentive opportunity was paid to Mr. Coury in 2016. The value of the performance incentive opportunity is included in the table above entitled “Chairman Payments and Benefits in Connection with Transition” and the Summary Compensation Table on page [ ] of this Proxy Statement.

Update on 2014 One-Time Special Performance-Based Five-Year Realizable Value Incentive Program

As described in the Proxy Statement for Mylan Inc.’s 2014 Annual Meeting of Shareholders, in February 2014 Mylan adopted the One-Time Special Performance-Based Five-Year Realizable Value Incentive Program (the “One-Time Special Performance-Based Incentive Program”) to retain more than 100 key employees and to incentivize them

toward the achievement of Mylan’s ambitious long-term objective of achieving adjusted EPS of at least $6.00 by the end of 2018, which the Mylan Board believed and continues to believe will lead to the corresponding creation of significant shareholder value. This innovative, wholly performance-based program is a continuation of Mylan’s robust pay-for-performance philosophy.

Mylan has made great progress toward the achievement of its long-term objective of achieving adjusted EPS of at least $6.00 by the end of 2018, which the Mylan Board believes is linked to the design and incentives provided by this program. The awards subject to the One-Time Special Performance-Based Incentive Program will be earned by the NEOs in full only if Mylan reaches its adjusted EPS target and the NEOs remain with Mylan through the end of 2018 (subject to certain limited exceptions). Participants will be eligible for 50% vesting if we achieve 90% of our adjusted EPS target ($5.40 per ordinary share), with linear interpolation between $5.40 and $6.00 per ordinary share. In addition, the awards were granted subject to an additional performance metric, such that participants would realize the full value of the awards only if Mylan’s ordinary share price met or exceeded $73.33 for ten consecutive trading days during the performance period, which was achieved in 2015.

Appointment of Chief Financial Officer

On May 3, 2016, Mylan announced that Kenneth S. Parks would join Mylan as Chief Financial Officer effective as of June 6, 2016, at which point he assumed responsibility for all of Mylan’s global finance functions, including accounting and control, financial planning and analysis, investor relations, treasury, and tax. Mr. Parks also leads the Company’s Global Integrated Services Organization, in addition to his finance role. Mr. Parks joined Mylan from WESCO, a leading provider of electrical, industrial, and communication products, where he served as chief financial officer and led all aspects of the finance function. Prior to WESCO, Mr. Parks spent the majority of his career at UTC in a variety of U.S. and international finance roles.

In connection with his appointment as Chief Financial Officer, on April 27, 2016, Mr. Parks and Mylan Inc. entered into an Executive Employment Agreement and a Transition and Succession Agreement, in both cases, effective as of June 6, 2016.

 

 

 

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Mr. Parks’ Executive Employment Agreement has an initial term of three years and automatically renews for successive one-year periods unless earlier terminated by Mr. Parks or Mylan. The Executive Employment Agreement provides for the following during his term of employment:

 

    a base salary of $600,000;

 

    eligibility for a discretionary annual bonus with a target amount equal to 100% of his base salary;

 

    an annual grant of long-term incentive awards under the Amended 2003 Plan with a value equal to 250% of his base salary;

 

    a signing bonus of $375,000, which is subject to full or partial repayment in the event Mr. Parks leaves Mylan prior to the third anniversary of his appointment; and

 

    the right to receive certain payments and benefits in connection with certain terminations of employment, which are described more fully in the section below entitled “Termination Under Service Agreements,” beginning on page [ ] of this Proxy Statement. Mr. Parks’ Transition and Succession Agreement governs the terms of his employment in the event of a change in control, the terms of which are described in the sections below entitled “Transition and Succession Agreements” and “Termination Under Transition and Succession Agreements (Change in Control),” beginning on pages [ ] and [ ], respectively, of this Proxy Statement.

Promotion of President, North America, and Extension of Executive Employment Agreement

In recognition of Mr. Mauro’s performance in his role as President, North America and increasing role with Mylan, in early 2016, Mr. Mauro was promoted to Chief Commercial Officer, effective January 4, 2016, and his Executive Employment Agreement with Mylan Inc. was amended and restated effective January 1, 2016. The Amended and Restated Executive Employment Agreement automatically renews on each anniversary of the effective date unless earlier terminated by Mr. Mauro or Mylan Inc. The Amended and Restated Executive Employment Agreement contains substantially the same terms as Mr. Mauro’s

previous contract, except that Mr. Mauro’s base salary was increased to $700,000 in connection with his promotion to Chief Commercial Officer.

Departure of Former Chief Financial Officer

John D. Sheehan, former Executive Vice President and Chief Financial Officer of Mylan, departed effective April 1, 2016. In connection with Mr. Sheehan’s departure from the Company, to secure certain consulting services, and in order to facilitate the transition of Mr. Sheehan’s responsibilities, Mr. Sheehan and Mylan Inc. entered into a Retirement and Consulting Agreement. The agreement provided that Mr. Sheehan would provide consulting services to Mylan for one year following his separation date. Pursuant to the agreement, Mr. Sheehan received an amount equal to his annual base salary, payable in four equal installments on or around the end of the first four fiscal quarters following his separation date, and COBRA health and welfare benefits during the consulting period, with an aggregate value of approximately $670,000. In connection with his departure, Mr. Sheehan was treated as retirement eligible for purposes of his outstanding stock options, which resulted in the vesting of all unvested stock options held by Mr. Sheehan as of April 1, 2016. Mr. Sheehan remains subject to all restrictive covenants with Mylan pursuant to their terms.

 

 

Compensation Committee Considerations in Evaluating Compensation

 

 

Compensation Committee Process

Our culture and our success continue to depend on our ability to attract and retain talented people in critical roles. The independent Directors believe that the remarkable growth and performance of Mylan during Mr. Coury’s tenure is directly related to the unique leadership of Mr. Coury, Ms. Bresch, Mr. Malik, and Mr. Mauro, the talents of Mylan’s other senior executives, and Mylan’s outstanding workforce around the world.

The decisions of the Compensation Committee and the independent Directors relating to executive compensation each year reflect a variety of subjective considerations, in addition to quantitative metrics. Our determinations reflect our individual and collective experience and business judgment, and are based on

 

 

 

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our extensive interactions with, and observations of, management, and our assessment of some or all of the following factors, among others:

 

    Company performance (relative to peers and budget);

 

    Value realized by shareholders;

 

    Individual performance and contributions to the success of Mylan;

 

    Responsibilities of, and future expectations for, the individual;

 

    Short-, medium-, and long-term personnel needs of Mylan;

 

    The need to reward and retain our uniquely talented NEOs and other key employees;

 

    Other qualitative contributions of each executive, including, among others, the actual and 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;

 

    Peer group pay levels and published survey data; and

 

    Advice from independent external experts and advisors.

We consider these and other qualitative and quantitative factors from time-to-time in assessing our compensation philosophy and approach, in addition to using these factors to make individual compensation decisions. The Compensation Committee and the independent Directors believe that, while peer groups may be helpful reference points, they do not substitute

for the individual and collective judgment and experience of independent Directors who are intimately familiar with, among other matters that the Mylan Board oversees and opines on, Mylan, its business, its strategies, its challenges, its opportunities, and the unique respective talents, contributions, leadership, responsibilities, and future expectations of the executives who drive performance and long-term sustainability.

Peer Group for 2016

While the competitive market for our executives is one factor the Compensation Committee considers when making compensation decisions, the Compensation Committee does not target compensation of NEOs 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.

After review and consideration of these factors and consultation with experts in executive compensation, we developed the peer group listed below for 2016. The Compensation Committee refers to the peer group as a reference point when evaluating executive pay and performance. Due to Mylan’s unique position in the market and long-tenured management team, pay is not formulaically tied to a particular percentile of the peer group. Instead, this group is considered as part of the overall mix of subjective, qualitative, and quantitative information considered by the Compensation Committee.

This group consists of companies with revenues ranging from approximately 0.3x-3.0x Mylan’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:

 

 

  AbbVie Inc.   Boston Scientific Corp.   Perrigo Company plc  
  Agilent Technologies Inc.   Bristol-Myers Squibb Company   St. Jude Medical Inc.  
  Allergan plc.   Celgene Corp.   Stryker Corp.  
  Amgen Inc.   Eli Lilly and Company   Teva Pharmaceutical Industries Ltd.  
  Baxter International Inc.   Endo International plc   Thermo Fisher Scientific Inc.  
  Becton Dickinson & Co.   Gilead Sciences, Inc.   Zimmer Biomet Holdings, Inc.  
  Biogen Inc.   Medtronic plc    

 

 

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Role of Compensation Committee, Independent Consultants, and Management

In 2016, the Compensation Committee retained Meridian Compensation Partners, LLC (“Meridian”) to provide advice and information regarding the design and implementation of Mylan’s executive compensation programs. Meridian also provided information to the Compensation Committee regarding regulatory and other technical developments that may be relevant to Mylan’s executive compensation programs. In addition, Meridian provided the Compensation Committee with competitive market information, analyses, and trends on executive base salary, annual incentives, long-term incentives, benefits, and perquisites.

The Compensation Committee and management also receive advice from outside counsel including, but not limited to, Cravath, Swaine & Moore LLP and NautaDutilh N.V.

The Compensation Committee also receives input from management; however, decisions on these matters are made solely by the Compensation Committee and/or the independent Directors.

The Compensation Committee performs an annual review of the independence of its outside advisors, consistent with NASDAQ requirements and the Compensation Committee charter.

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. We believe that the mix and design of the elements of executive compensation do not encourage management to assume excessive risks. In addition, the Chairmen of the Audit and Compliance Committees serve on the Compensation Committee, giving Mylan the benefit of the breadth of their perspectives regarding the impact of compensation-related decisions on the Company. Finally, as described in this CD&A, 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.

 

 

 

 

Other Considerations and Executive Compensation Policies

 

 

Ordinary Share Ownership Requirements for NEOs

The ownership requirements are expressed as a multiple of base salary as follows:

 

Position

    

Ownership Requirement

(multiple of base salary)

CEO

     6x

President

     4x

Other NEOs*

     3x

 

 

* Excludes Mr. Coury, who is subject to the ordinary share ownership policy for Non-Employee Directors, as described in the section above entitled “Non-Employee Director Compensation for 2016” beginning on page [ ] of this Proxy Statement, and Mr. Sheehan, who departed from the Company effective April 1, 2016.

 

In addition to the NEOs, Mylan’s ordinary share ownership policy covers approximately 155 of the most senior employees at Mylan to promote an ownership culture and stronger alignment with the interests of shareholders among the broader leadership team. Each covered employee generally

has five years from the adoption of the policy to achieve the minimum ownership requirement. Ordinary shares actually owned by the covered employee (including ordinary shares held by the covered employee in Mylan’s 401(k) and Profit Sharing Plan), as well as restricted ordinary shares and

 

 

 

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unvested RSUs and PRSUs count toward compliance with these requirements. As of December 31, 2016, all of the NEOs were in compliance with these requirements.

Clawback Policy

The Mylan Board has approved a clawback policy relating to incentive compensation programs. The provisions of the policy allow Mylan to recoup certain bonus and equity-based incentive compensation gains resulting from specified misconduct that causes Mylan to materially restate its financial statements. The Mylan Board considers updates to this policy from time to time. In addition, to the extent that the SEC adopts rules for clawback policies that require changes to our policy, we will revise our policy accordingly.

Anti-Hedging and Pledging Policy

The Mylan Board has approved a securities trading policy that prohibits directors and certain employees from engaging in any transaction designed to limit or eliminate economic risks associated with the

ownership of our equity or debt securities by trading in certain types of hedging instruments relating to any of our securities. Hedging instruments include prepaid variable forward contracts, equity swaps, collars, exchange funds, insurance contracts, short sales, options, puts, calls, or other instruments designed to hedge or offset movements in the price of our ordinary shares or debt. The policy also prohibits directors and certain employees from entering into transactions that involve the holding of Mylan securities in margin accounts (other than the “cashless exercise” of stock options) or the pledging of Mylan equity or debt securities as collateral for loans, with certain exceptions approved by the Compensation Committee if the executive demonstrates that he or she has the continuing financial capacity to repay any underlying loan or potential margin call without resorting to Mylan equity or debt securities. To the extent that the SEC adopts rules for anti-hedging and pledging policies that require changes to our policy, we will revise our policy accordingly.

 

 

Summary of Compensation Governance Practices

The Compensation Committee regularly reviews our compensation governance practices to ensure we are incentivizing continued excellence in execution against our long-stated strategy while also managing risk. Below is a summary of the features of our compensation program, as described throughout this CD&A:

 

 

What We Do

  

 

What We Don’t Do

 

    Maintain a significant portion of compensation aligned with shareholder interests and tied to ordinary share price or financial and operational business performance

 

    Balance annual and long-term incentives

 

    Employ balanced and different metrics for annual and long-term incentives

 

    Long-term incentives heavily weighted to performance-based metrics

 

    Double-trigger vesting for annual long-term incentive awards upon a change in control

 

    Consider peer groups and market data in determining compensation

 

    Retain an independent compensation consultant that reports directly to the Compensation Committee

 

    Maintain robust ordinary share ownership guidelines, which our senior management significantly exceeds

 

    Maintain a robust clawback policy

 

    Conduct an annual compensation-related risk review to ensure that compensation is aligned with shareholder interests

  

 

    Effective January 1, 2017, discontinued automatic accelerated vesting of stock options, RSUs, and PRSUs upon satisfying retirement eligibility (55 years of age with 10+ years of service)

 

    No exercise of positive discretion in determining annual incentive payouts

 

    No re-pricing of stock options

 

    No hedging or pledging of Company ordinary shares

 

    No new 280G tax gross-ups

 

    No Company matching contributions to the Restoration Plan for NEOs with RBAs

 

 

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Employment Agreements

We believe it is important to have employment agreements with our executive officers and other key employees. These agreements memorialize certain key terms of employment, including termination rights and obligations, non-competition and other restrictive covenants, and compensation and perquisites, and we believe thereby enhance the stability and continuity of our employment relationships. Each of the NEOs who is currently an executive officer is party to an Executive Employment Agreement with Mylan Inc. Following Mr. Sheehan’s departure from Mylan and Mr. Coury’s transition to Chairman of the Mylan Board as a Non-Employee Director, Messrs. Sheehan and Coury are no longer party to Executive Employment Agreements. For a detailed description, see the section below entitled “Service Agreements,” beginning on page [ ] of this Proxy Statement. See also page [ ] of this Proxy Statement for a discussion of Mylan Inc.’s entry into an Executive Employment Agreement with Mr. Parks in 2016 and page [ ] for a description of the 2016 extension of the Executive Employment Agreement with Mr. Mauro.

Transition and Succession Agreements

Mylan Inc. is party to separate Transition and Succession Agreements with each NEO who is currently an executive officer with an aim to assuring that Mylan will have the NEO’s full attention and dedication to Mylan during the pendency of a possible change in control transaction that might optimize shareholder value, and to provide the officer with compensation and benefits in connection with a change in control. Following Mr. Sheehan’s departure from Mylan and Mr. Coury’s transition to Chairman of the Mylan Board as a Non-Employee Director, Messrs. Sheehan and Coury are no longer party to Transition and Succession Agreements. The Transition and Succession Agreements are independent of each NEO’s employment agreement. Subsequent to the execution of certain legacy agreements, Mylan adopted a policy that no new Transition and Succession Agreements will provide for an excise tax gross-up for golden parachute payments. Consistent with this commitment, the Transition and Succession Agreement with Mr. Parks does not contain an excise tax gross-up. For legal and other considerations, the Transition and Succession Agreements currently in effect and executed prior to the new policy are not

subject to that policy. Mylan does not have the right to unilaterally abrogate pre-existing binding contracts with its executives, and does not believe it would be in shareholders’ best interests to expend funds to “buy out” the executives from these rights. Since implementation of the new policy, no new or amended Transition and Succession Agreements with excise tax gross-up provisions have been executed and several have expired as executives have ceased to be actively employed with Mylan (as was the case with the retirement of Harry A. Korman and departure of John D. Sheehan over the last several years). The agreement with Mr. Parks provides that Mr. Parks will, in the event he is subject to an excise tax on any golden parachute payments, be subject to a “best net” approach, under which he will receive the full amount of such payments or the greatest amount of such payments that will not subject him to the excise tax, whichever would result in the greatest after-tax amount.

For a detailed description of these Transition and Succession Agreements, see the section below entitled “Termination Under Transition and Succession Agreements (Change in Control),” beginning on page [ ] of this Proxy Statement.

Deductibility Cap on Executive Compensation

Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), restricts the deductibility for federal income tax purposes of the compensation paid to the CEO and each of the other NEOs who was an executive officer at the end of the applicable fiscal year (other than our Chief Financial Officer) for such fiscal year to the extent that such compensation for such executive exceeds one million dollars and does not qualify as “qualified performance-based compensation” as defined under Section 162(m) of the Code. The Compensation Committee considers available opportunities to deduct compensation paid to NEOs for U.S. federal income tax purposes. The Compensation Committee, however, reserves the right to provide compensation to our executives that is not deductible, including but not limited to when necessary to comply with contractual commitments, or to maintain the flexibility needed to attract talent, promote retention, or recognize and reward desired performance.

 

 

 

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Compensation Committee Report

 

 

We have reviewed and discussed the CD&A with management. Based on such review and discussions, we recommended to the Mylan Board that the CD&A be included in this Proxy Statement.

Respectfully submitted,

Wendy Cameron

Neil Dimick, C.P.A

Mark W. Parrish

 

 

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Summary Compensation Table

 

 

The following summary compensation table sets forth the cash and non-cash compensation paid or granted to or earned by the NEOs for 2016, 2015, and 2014.

 

Name and

Principal Position

  Fiscal
Year
    Salary
($) (3)
    Bonus
($) (4)
    Stock
Awards
($) (5)
    Option
Awards
($) (6)
   

Non-Equity
Incentive Plan
Compensation

($) (7)

   

Changes

in Pension
Value and
Non-qualified

Deferred

Compensation

Earnings
($) (8)

    All Other
Compensation
($) (9)
    Total
($)
 

Heather Bresch

Chief Executive Officer

    2016       1,300,000             7,436,421       1,560,009       2,276,625       506,765       696,873       13,776,693  
    2015       1,330,769             5,200,046       1,300,007       3,900,000       768,216       6,432,030       18,931,068  
    2014       1,180,769             4,800,007       14,401,997       3,259,800       1,546,776       633,477       25,822,826  

Kenneth S. Parks

Chief Financial Officer

    2016       346,154       375,000       2,766,841       300,000       700,500             18,498       4,506,993  
                                                                       

Rajiv Malik

President

    2016       1,000,000             4,319,120       900,014       1,459,375       616,520       390,518       8,685,547  
    2015       1,019,231             3,200,041       800,017       2,500,000       970,676       11,411,770       19,901,735  
    2014       890,385             2,520,003       11,946,006       1,874,385       649,051       7,284,822       25,164,652  

Anthony Mauro

Chief Commercial Officer

    2016       700,000             2,213,881       490,013       939,838             234,603       4,578,335  
    2015       634,615         1,250,036       312,517       1,437,500             1,216,500       4,851,168  
    2014       545,192             879,983       2,577,505       996,050             240,881       5,239,611  

John D. Sheehan

Former Executive Vice President and Chief Financial Officer (1)

    2016       715,381                               278,765       167,841       1,161,987  
    2015       675,000             1,560,074       390,008       1,300,000       355,679       1,235,718       5,516,479  
    2014       650,000             1,300,011       2,682,497       1,177,150       341,795       177,821       6,329,274  

Robert J. Coury

Chairman (2)

    2016       1,627,001       20,000,000       50,805,142       1,485,001       947,398             22,736,073       97,600,615  
    2015       1,401,923             4,860,067       1,215,004       3,375,000       1,606,533       5,242,131       17,700,658  
    2014       1,350,000             4,320,005       10,510,001       3,056,063       2,404,435       883,086       22,523,590  

 

 

(1) Mr. Sheehan departed from Mylan effective April 1, 2016.
(2) On June 24, 2016, the Mylan Board approved the transition of Mr. Coury from Executive Chairman of the Mylan Board to the role of Chairman as a Non-Employee Director, as described in the sections above entitled “Mr. Coury’s Transition to Non-Executive Chairman Role” and “Chairman Transition,” beginning on pages [ ] and [ ], respectively, of this Proxy Statement.
(3) Represents the value of the base salary actually paid to the NEO in 2016, 2015, or 2014, except that Mr. Sheehan’s amount for 2016 also includes Mr. Sheehan’s consulting payment for three fiscal quarters (total of $487,500) and payment in lieu of accrued vacation ($65,381) and Mr. Coury’s amount for 2016 also includes Mr. Coury’s retainer as Chairman as a Non-Employee Director for two fiscal quarters (total of $900,000) and payment in lieu of accrued vacation ($77,963). The annual base salary approved by the Compensation Committee for each of the NEOs is payable in accordance with the Company’s normal payroll practices for its senior executives, so that an NEO’s total base salary amount is paid to him or her in 26 equal bi-weekly installments. 2015 included an additional payment date (a total of 27 payments were made in 2015), therefore the amounts shown for 2015 are greater than the applicable NEO’s annual base salary.
(4) For Mr. Parks, represents the value of his sign-on bonus, which is subject to full or partial repayment in the event Mr. Parks leaves Mylan prior to the third anniversary of his joining Mylan. For Mr. Coury, represents the value of his performance incentive opportunity, which was granted in 2014 and fully earned in 2016.
(5) Represents the grant date fair value of the stock awards granted to the NEO in 2016, 2015, or 2014, as applicable. The grant date fair value of PRSUs, for 2016, is based on the target value and is as follows: Ms. Bresch ($4,680,025), Mr. Parks ($900,022), Mr. Malik ($2,700,040), Mr. Mauro ($1,470,044), and Mr. Coury ($4,455,014). If the maximum achievement of performance goals had been assumed, the grant date fair value of the PRSUs, for 2016, would have been as follows: Ms. Bresch ($7,020,038), Mr. Parks ($1,350,057), Mr. Malik ($4,050,059), Mr. Mauro ($2,205,089), and Mr. Coury ($6,682,545). For Mr. Parks, the amount shown for 2016 also includes the grant date fair value of PRSUs granted to him under the One-Time Special Performance-Based Incentive Program, which was $1,566,811, which assumes achievement of performance targets at maximum level. For Mr. Coury, the amount shown for 2016 includes the grant date fair value of his one-time five-year Chairman’s grant ($43,560,000), 75% of which will generally vest on the third anniversary following the 2016 AGM and the remaining 25% will generally vest on the fifth anniversary following the 2016 AGM, in each case, generally subject to Mr. Coury’s continued service as Chairman as a Non-Employee Director on such dates. For information regarding assumptions used in determining the expense of such awards, please refer to Note 11 to the Company’s Consolidated Financial Statements contained in the Form 10-K for the year ended December 31, 2016.
(6) Represents the grant date fair value of the option awards granted to the NEO in 2016, 2015, or 2014, as applicable. For information regarding assumptions used in determining the expense of such awards, please refer to Note 11 to the Company’s Consolidated Financial Statements contained in the Form 10-K for the year ended December 31, 2016. For 2014, also includes the grant date fair value of SARs granted under the One-Time Special Performance-Based Incentive Program, which were as follows: $13,202,000 for Ms. Bresch; $11,316,000 for Mr. Malik; $2,357,500 for Messrs. Mauro and Sheehan; and $9,430,000 for Mr. Coury.
(7) Represents amounts paid under the Company’s non-equity incentive compensation plan. For a discussion of this plan, see the CD&A set forth above. Mr. Sheehan did not receive an award under the Company’s non-equity incentive compensation plan for 2016 as a result of his announced departure. In the case of Mr. Coury, due to his transition to Chairman as a Non-Employee Director, his amount was pro-rated to reflect the portion of 2016 during which he was an employee of Mylan.
(8) Represents the aggregate change in present value of the applicable NEO’s accumulated benefit under his or her respective RBA. In computing these amounts, we used the same assumptions that were used to determine the expense amounts recognized in our 2016 financial statements. In 2016, the impact of a decrease in the applicable discount rates led to an increase in the present value of accumulated benefits of approximately $340,000 for Ms. Bresch, approximately $112,000 for Mr. Malik, and approximately $36,000 for Mr. Sheehan. For further information concerning the RBAs, see the Pension Benefits for 2016 Table set forth below and the section below entitled “Retirement Benefit Agreements,” beginning on page [ ] of this Proxy Statement.

 

 

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(9) Amounts shown in this column are detailed in the following chart:

 

    Fiscal
Year
    Use of
Company-
Provided
Automobile
($) (a)
    Personal
Use of
Company
Aircraft
($) (b)
    Lodging
Reimbursement
($) (c)
    Expatriate
Benefits
($) (d)
   

401(k) and
Profit Sharing

Plan Matching
and Profit
Sharing
Contribution
($) (e)

    Restoration
Plan
Contribution
($) (f)
   

Transaction-
Related

Excise Tax
Reimbursement
($) (g)

    Transition
Related
Benefits
($) (h)
    Other
($) (i)
 

Heather Bresch

    2016       20,507       184,020                   29,419       302,790                   160,137  
    2015       19,200       310,312                   28,792       218,454       5,828,995             26,277  
    2014       19,200       319,050                   27,280       224,054                   43,893  

Kenneth S. Parks

    2016       10,944                         6,908                         646  

Rajiv Malik

    2016       30,725       80,295             247,421       10,600                         21,477  
    2015       23,392       29,557       50,000       6,333,891                   4,859,071             115,859  
    2014       29,992       32,234       50,000       7,076,038                               96,558  

Anthony Mauro

    2016       19,200       608                   28,335       170,589                   15,871  
    2015       19,200                         28,800       131,918       1,020,722             15,860  
    2014       19,200                   77,267       28,250       106,222                   9,942  

John D. Sheehan

    2016       4,800                         29,150       111,101                   22,790  
    2015       19,200       4,506                   28,800       100,100       1,069,057             14,055  
    2014       19,200                         28,250       114,100                   16,271  

Robert J. Coury

    2016       34,577                         29,150       293,509             22,292,238       86,599  
    2015       38,931       605,255                   28,800       265,300       4,272,289             31,556  
    2014       40,114       498,636                   28,250       301,088                   14,998  

 

 

(a) In the case of Ms. Bresch and Messrs. Parks, Mauro, and Sheehan, these numbers represent a vehicle allowance and ancillary expenses associated with such vehicle. In the case of Messrs. Malik and Coury, this number represents the cost of a vehicle (based on lease value), insurance, and ancillary expenses associated with such vehicle.
(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 aircrafts 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 NEO. In certain instances where there are both business and personal passengers, the incremental costs per hour are pro-rated. Mr. Coury fully reimbursed Mylan for any such incremental cost associated with his use of the aircraft in 2016.
(c) Beginning in 2016, Mr. Malik was no longer eligible to receive a housing allowance or home leave benefit, both of which he received in prior years.
(d) Expatriate benefits for Mr. Malik represent income taxes paid by Mylan 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 to pay had he maintained his principal work location and residence in India rather than having transferred, at Mylan’s request, to the United States, while Mylan generally has responsibility for all additional taxes, including Mr. Malik’s tax obligations on the imputed income associated with Mylan’s payment of taxes on his behalf. Beginning in 2016, Mr. Malik no longer receives a tax equalization benefit in respect of his long-term incentive awards. Amounts shown for 2016, 2015, and 2014 for Mr. Malik are net of Mylan’s estimated tax refunds for each year. Estimated refunds were approximately $0.2 million for 2016, $1.1 million for 2015, and $1.5 million for 2014. Expatriate benefits for Mr. Mauro represent income taxes paid by the Company in connection with certain long-term incentive awards held by Mr. Mauro relating to a period when he provided services in Canada.
(e) In 2016, amounts disclosed included, for Ms. Bresch and Messrs. Parks, Malik, Mauro, Sheehan, and Coury, a matched contribution of $10,869, $6,908, $10,600, $9,785, $10,600, and $10,600, respectively, and, for Ms. Bresch and Messrs. Mauro, Sheehan, and Coury, a profit sharing contribution from the Company of $18,550. In 2015, amounts disclosed for Ms. Bresch included a matched contribution of $10,592, and a profit sharing contribution from the Company of $18,200. In 2015, such amounts for each of Messrs. Mauro, Sheehan, and Coury were $10,600 and $18,200, respectively. In 2014, amounts disclosed for Ms. Bresch included the total of a $17,850 matched contribution and a $9,430 Company profit sharing contribution, and for each of Messrs. Mauro, Sheehan, and Coury such amounts were $17,850 and $10,400, respectively. Mr. Malik became eligible to participate in Mylan’s U.S. retirement plans in 2016.
(f) Represents profit sharing contribution under the Restoration Plan. Ms. Bresch and Messrs. Sheehan and Coury are no longer eligible to receive matching contributions under the Restoration Plan. Although he became eligible to participate in Mylan’s U.S. retirement plans in 2016, Mr. Malik is not eligible to receive matching contributions under the Restoration Plan. See page [ ] of this Proxy Statement for further information regarding Restoration Plan contributions.
(g) Represents the one-time tax reimbursement payment with respect to the excise tax under Section 4985 of the Code that was imposed in connection with the EPD Transaction on the value of certain long-term incentive awards held by the directors and NEOs. Such payment ensured that, on a net after-tax basis, the NEO would be in the same position as if such excise tax had not been imposed. See the Proxy Statement for Mylan’s 2016 Annual Meeting of Shareholders for further discussion of the excise tax imposed in connection with the EPD Transaction and this one-time payment.
(h) For Mr. Coury, these amounts are included in the table above entitled “Chairman Payments and Benefits in Connection with Transition” on page [ ] of this Proxy Statement, and represent the value of his deferred separation payments (an amount equal to three times his “annual cash compensation” (defined as the sum of Mr. Coury’s base salary as in effect on December 31, 2011, plus the higher of (i) the average annual bonus awarded to Mr. Coury with respect to 2009, 2010, and 2011 or (ii) Mr. Coury’s 2011 target bonus, $17,443,750) and continued health and other benefits and certain aircraft usage for three years following termination of employment ($265,196 and $4,583,292, respectively), each of which were previously vested and disclosed and became payable in connection with his transition to Chairman as a Non-Employee Director.
(i) Represents events and memberships for all NEOs other than Mr. Parks; life insurance retention plan premium for Ms. Bresch and Mr. Mauro; long-term disability premiums; out-of-pocket medical for Mr. Coury; a health insurance premium for Mr. Malik; employee contributions to the Provident Fund, a statutory plan in India, for Mr. Malik; matching of certain charitable contributions for Ms. Bresch and Messrs. Malik, Mauro, and Coury; certain personal security services for Ms. Bresch and Mr. Coury, which for 2016, totaled $104,965 and $41,687, respectively; tax preparation services related to U.K. tax returns for all NEOs other than Mr. Parks; executive physicals for Ms. Bresch and Mr. Sheehan in 2014; and the value ($19,307) of continued health benefits that Mr. Sheehan received in 2016 in connection with his departure from the Company.

 

 

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Grants of Plan-Based Awards for 2016

 

 

The following table summarizes grants of plan-based awards made to each NEO during 2016.

 

Name (1)

         

 

Estimated Future Payments
Under Non-Equity Incentive
Plan Awards (2)

         

 

Estimated Future Payments
Under Equity Incentive Plan
Awards (3)

   

All Other
Stock
Awards:
Number of
Shares of
Stock or
Units

(#) (4)

   

All Other
Option
Awards:
Number of
Securities
Underlying
Options

(#) (5)

   

Exercise or
Base Price
of Option
Awards

($/Sh)

   

Grant

Date Fair
Value

of Stock
and
Option
Awards

($) (6)

 
 

Grant

Date

  Approval
Date
 

Threshold

($)

   

Target

($)

   

Maximum

($)

         

Threshold

(#)

   

Target

(#)

   

Maximum

(#)

         

Heather Bresch

        975,000       1,950,000       3,900,000                                              
  2/17/2016   2/4/2016                         50,573       101,146       151,719                         4,680,025  
  2/17/2016   2/4/2016                                           59,572                   2,756,396  
  2/17/2016   2/4/2016                                                       86,957       46.27       1,560,009  

Kenneth S. Parks

        300,000       600,000       1,200,000                                              
  6/6/2016   4/26/2016                         9,674       19,347       29,021                         900,022  
  10/25/2016   10/25/2016                         20,254       40,507                               1,566,811  
  6/6/2016   4/26/2016                                           6,449                   300,007  
  6/6/2016   4/26/2016                                                       16,549       46.52       300,000  

Rajiv Malik

        625,000       1,250,000       2,500,000                                              
  2/17/2016   2/4/2016                         29,177       58,354       87,531                         2,700,040  
  2/17/2016   2/4/2016                                           34,992                   1,619,080  
  2/17/2016   2/4/2016                                                       50,168       46.27       900,014  

Anthony Mauro

        402,500       805,000       1,610,000                                              
  2/17/2016   2/4/2016                         15,886       31,771       47,657                         1,470,044  
  2/17/2016   2/4/2016                                           16,076                   743,837  
  2/17/2016   2/4/2016                                                       27,314       46.27       490,013  

Robert J. Coury

        843,750       1,687,500       3,375,000                                              
  2/17/2016   2/4/2016                         48,142       96,283       144,425                         4,455,014  
  2/17/2016   2/4/2016                                           60,301                   2,790,127  
  6/24/2016   6/3/2016                                           1,000,000                   43,560,000  
  2/17/2016   2/4/2016                                                 82,776       46.27       1,485,001  

 

 

(1) As a result of his announced departure from the Company, Mr. Sheehan did not receive any grants of plan-based awards in 2016.
(2) The performance goals under the annual incentive compensation program applicable to the NEOs during 2016 are described above in the CD&A.
(3) Represents the grant of PRSUs awarded under the Amended 2003 Plan. For Mr. Parks, the PRSUs granted on October 25, 2016 were granted under the One-Time Special Performance-Based Incentive Program. The vesting terms applicable to these awards are described above in the CD&A and below in the footnotes to the Outstanding Equity Awards at the End of 2016 Table.
(4) Represents the grant of RSUs awarded under the Amended 2003 Plan. For Mr. Coury, the RSUs granted on June 24, 2016 consist of his one-time Chairman award, which is described in the section above entitled “Chairman Transition” beginning on page [ ] of this Proxy Statement. The vesting terms applicable to these awards are described below in the footnotes to the Outstanding Equity Awards at the End of 2016 Table.
(5) Represents the grant of ten-year stock options awarded under the Amended 2003 Plan. Stock options were granted with an exercise price equal to the closing price of the Company’s ordinary shares on the date of grant. The vesting terms applicable to these awards are described below in the footnotes to the Outstanding Equity Awards at the End of 2016 Table.
(6) Represents the grant date fair value of the specific award granted to the NEO. For information regarding assumptions used in determining such value, please refer to Note 11 to the Company’s Consolidated Financial Statements contained in the Form 10-K for the year ended December 31, 2016.

 

 

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Outstanding Equity Awards at the End of 2016

 

 

The following table sets forth information concerning all of the outstanding long-term incentive awards held by each NEO as of December 31, 2016.

 

    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 (#)

    Equity Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other Rights
That Have Not
Vested ($) (3)
 

Heather Bresch

    14,196             21.13       3/3/2020                          
    4,413             22.66       3/2/2021                          
    4,266             23.44       2/22/2022                          
    3,236             30.90       3/6/2023                          
    43,668       21,834       55.84       3/5/2024                          
    22,553       45,106       50.66       11/17/2025                          
          86,957       46.27       2/17/2026                          
                                        378,071 (4)       14,423,409  
                            17,108       652,670       76,984 (5)       2,936,940  
                            59,572       2,272,672       101,146 (5)       3,858,720  

Kenneth S. Parks

          16,549       46.52       6/6/2026                          
                                        40,507 (4)       1,545,342  
                            6,449       246,029       19,347 (5)       738,088  

Rajiv Malik

    22,926       11,463       55.84       3/5/2024                          
    13,879       27,758       50.66       11/17/2025                          
          50,168       46.27       2/17/2026                          
                                        324,061 (4)       12,362,927  
                            10,528       401,643       47,375 (5)       1,807,356  
                            34,992       1,334,945       58,354 (5)       2,226,205  

Anthony Mauro

    4,757             22.66       3/2/2021                          
    4,266             23.44       2/22/2022                          
    3,236             30.90       3/6/2023                          
    8,006       4,003       55.84       3/5/2024                          
    5,422       10,843       50.66       11/17/2025                          
          27,314       46.27       2/17/2026                          
                                        67,512 (4)       2,575,583  
                            4,112       156,873       18,506 (5)       706,004  
                            16,076       613,299       31,771 (5)       1,212,064  

John D. Sheehan

    17,740             55.84       3/5/2024                          
    20,298             50.66       11/17/2025                          

Robert J. Coury

    14,196             21.13       3/3/2020                          
    4,413             22.66       3/2/2021                          
    4,266             23.44       2/22/2022                          
    3,236             30.90       3/6/2023                          
    58,952             55.84       3/5/2024                          
    63,235             50.66       11/17/2025                          
    82,776             46.27       2/17/2026          
                                        270,051 (4)       10,302,446  
                            1,000,000       38,150,000              

 

 

 

 

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(1) Vesting dates applicable to unvested stock options are as follows, in each case generally subject to continued employment with Mylan: on March 5, 2017, the unvested options at the $55.84 exercise price for Ms. Bresch and Messrs. Malik and Mauro vested; on March 4, 2017, one-half of the unvested options at the $50.66 exercise price for Ms. Bresch and Messrs. Malik and Mauro vested, and the remaining options will vest on March 4, 2018; on February 17, 2017, one-third of the unvested options at the $46.27 exercise price for Ms. Bresch and Messrs. Malik and Mauro vested and one-third of the unvested options at the $46.52 exercise price for Mr. Parks vested, and, in each case, the remaining options will vest 50% on each of February 17, 2018 and 2019. 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; (iii) in the case of death, including within two years following termination because of disability, or, in the case of options granted prior to January 1, 2017, retirement, 100% of options become vested and vested options will remain exercisable for the remainder of the original term; and (iv) in the case of an involuntary termination without cause or a voluntary resignation for good reason that occurs within two years following a change in control, 100% of options become vested (double-trigger awards). In the case of options granted in 2013, 2014, 2015, or 2016 to Ms. Bresch, and in 2014, 2015, or 2016 to Mr. Malik, following termination of employment without “cause” or resignation for “good reason” as defined in the applicable employment agreement, 100% of options become vested and vested options will remain exercisable for one year following termination.
(2) One-half of Ms. Bresch’s 17,108 RSUs, Mr. Malik’s 10,528 RSUs, and Mr. Mauro’s 4,112 RSUs vested on March 4, 2017, and the remainder will vest on March 4, 2018. All of the other RSUs in the column for Ms. Bresch and Messrs. Parks, Malik, and Mauro vested one-third on February 17, 2017, and the remaining such RSUs will vest 50% on each of February 17, 2018 and 2019. In accordance with their terms, all of these awards would vest upon an involuntary termination without cause or a voluntary resignation for good reason that occurs within two years following a change in control (double trigger awards) or upon the executive’s death or disability. In the case of awards granted to Ms. Bresch and Mr. Malik the awards would also vest upon the executive’s termination without “cause,” or resignation for “good reason” as defined in the applicable employment agreement. In the case of Mr. Coury, represents his one-time five-year Chairman’s award, which is scheduled to vest 75% on the third anniversary following the 2016 AGM and 25% on the fifth anniversary following the 2016 AGM, except that the award would also vest upon the termination of Mr. Coury’s service as Chairman as a Non-Employee Director due to his death or disability or without “cause” or his resignation for “good reason” as defined in the letter agreement relating to Mr. Coury’s transition.
(3) The market value of restricted ordinary shares, RSUs, and PRSUs was calculated using the closing price of the Company’s ordinary shares as of December 31, 2016. In the case of Mr. Coury, the value includes his one-time five-year Chairman’s award.
(4) These awards consist of restricted ordinary shares under the One-Time Special Performance-Based Incentive Program. The restricted ordinary shares remain subject to forfeiture and additional vesting conditions, including achievement of adjusted EPS of $6.00 for full vesting and continued service through December 31, 2018, and the other terms and conditions of the program. The One-Time Special Performance-Based Incentive Program is described in detail in the Form 10-K/A for Mylan Inc.’s fiscal year ending December 31, 2014. In accordance with their terms, the restricted ordinary shares would vest upon a change in control. In the case of awards granted to Ms. Bresch and Mr. Malik, the restricted ordinary shares would also vest upon the executive’s termination due to death or disability or without “cause” or resignation for “good reason” as defined in the applicable employment agreement, subject to the achievement of the applicable performance goals, except that, if such termination or resignation occurred prior to January 1, 2017, only a pro-rated portion of the restricted ordinary shares would have vested. In the case of awards granted to Mr. Coury, the restricted ordinary shares would also vest upon the involuntary termination of his service as Chairman as a Non-Employee Director due to death or disability or without “cause” or his resignation for “good reason” as defined in the letter agreement relating to Mr. Coury’s transition.
(5) The vesting of these PRSUs is subject to the attainment of performance goals. On March 4, 2018, Ms. Bresch is expected to vest in PRSUs relating to 76,984 ordinary shares, Mr. Malik is expected to vest in PRSUs relating to 47,375 ordinary shares, and Mr. Mauro is expected to vest in PRSUs relating to 18,506 ordinary shares. On February 17, 2019, Ms. Bresch is expected to vest in PRSUs relating to 101,146 ordinary shares, Mr. Parks is expected to vest in PRSUs relating to 19,347 ordinary shares, Mr. Malik is expected to vest in PRSUs relating to 58,354 ordinary shares, and Mr. Mauro is expected to vest in PRSUs relating to 31,771 ordinary shares. The PRSUs are expected to vest upon the earliest to occur of (i) March 4, 2018 or February 17, 2019, as applicable, provided that the performance goals have been satisfied, (ii) an involuntary termination without cause or a voluntary resignation for good reason within two years following the change in control, (iii) the executive’s death or disability, and (iv) in the case of awards granted to Ms. Bresch and Mr. Malik, the executive’s termination without “cause,” or resignation for “good reason” as defined in the applicable employment agreement. Any outstanding ordinary shares subject to the award that remain unvested as of March 4, 2018 or February 17, 2019, as applicable, will be forfeited.

 

 

Option Exercises and Stock Vested for 2016

 

 

The option awards and ordinary share awards reflected in the table below were exercised or became vested for the NEOs during 2016. In the case of Mr. Coury, a portion of the vested ordinary share awards reflected below were included in the table above entitled “Chairman Payments and Benefits in Connection with Transition” on page [ ] of this Proxy Statement.

 

                            Option Awards                               Stock Awards  

Name

  Number of Shares Acquired
on Exercise
(#)
   

Value Realized

on Exercise
($)

    Number of Shares Acquired
on Vesting
(#)
    Value Realized
on Vesting
($)
 

Heather Bresch

                8,554       383,048  

Kenneth S. Parks

                       

Rajiv Malik

                5,264       235,722  

Anthony Mauro

                2,057       92,112  

John D. Sheehan

    20,741       451,614       2,567       114,950  

Robert J. Coury (1)

                252,519       11,009,482  

 

 

(1) Since he was retirement eligible at the time of his transition to Chairman as a Non-Employee Director, Mr. Coury was eligible for accelerated vesting of his outstanding RSUs and PRSUs in accordance with the terms of his award agreements. The value of those accelerated awards was $10,651,465 on June 24, 2016, the time at which such awards became vested, and $9,098,738 on December 28, 2016, the time at which such awards were settled.

 

 

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Pension Benefits for 2016

 

 

The following table summarizes the benefits accrued by the NEOs as of December 31, 2016 under the RBA (or Executive Plan, in the case of Mr. Malik) in effect with the NEOs during 2016. The Company does not sponsor any other defined benefit pension programs covering the NEOs.

 

Name

  Plan Name (1)  

Number of Years

Credited Service
(#)

  Present Value of
Accumulated
Benefit
($) (2)
    Payments During
Last Fiscal Year
($)
 

Heather Bresch

  Retirement Benefit Agreement   12     6,933,326        

Kenneth S. Parks

  N/A   N/A     N/A       N/A  

Rajiv Malik

  The Executive Plan for Rajiv Malik (3)   N/A     308,496        

Rajiv Malik

  Retirement Benefit Agreement   10     4,301,387        

Anthony Mauro

  N/A   N/A     N/A       N/A  

John D. Sheehan

  Retirement Benefit Agreement   6           1,492,196  

Robert J. Coury

  Retirement Benefit Agreement   15           50,437,336 (4)  

 

 

(1) Messrs. Parks and Mauro are not party to an RBA.
(2) See page [ ] of this Proxy Statement for further information on the value of the accumulated pension benefit.
(3) This is a deferred compensation plan established for the benefit of Mr. Malik. The Company is no longer contributing to this plan.
(4) This amount, which reflects the distribution Mr. Coury received under his RBA in connection with his transition to Chairman as a Non-Employee Director, is included in the table above entitled “Chairman Payments and Benefits in Connection with Transition” on page [ ] of this Proxy Statement.

 

 

Nonqualified Deferred Compensation

 

 

The following table sets forth information relating to the Restoration Plan for 2016. There was no NEO participation in the Mylan Executive Income Deferral Plan in 2016.

 

Name

  Aggregate
Balance
at Last FYE
($)
    Executive
Contributions
in Last FY
($)
   

Company Profit

Sharing
Contributions

in Last FY
($)