10-K/A
P7 0001623613 true 2019 FY --12-31 0001623613 2019-01-01 2019-12-31 0001623613 2019-12-31 0001623613 2019-06-30 0001623613 2020-04-24 iso4217:USD xbrli:shares iso4217:USD xbrli:shares
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
10-K/A
(Amendment No. 1)
Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 2019
OR
Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from                  to                  .
Commission file number
333-199861
MYLAN N.V.
(Exact name of registrant as specified in its charter)
Netherlands
 
98-1493528
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
Building 4 , Trident Place , Mosquito Way , Hatfield , Hertfordshire, AL10 9UL , England
(Address of principal executive offices)
+ 44 (0)
  1707 - 853-000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class:
 
Trading
Symbol(s)
 
Name of Each Exchange 
on Which Registered: 
Ordinary shares, nominal value €0.01
 
MYL
 
The NASDAQ Stock Market
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  
     No   
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  
     No   
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes   
    No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
 S-T
(§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes   
    No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule
12b-2
of the Exchange Act:
Large accelerated filer
 
 
Accelerated filer
 
             
Non-accelerated
filer
 
 
Smaller reporting company
 
             
Emerging growth company
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    
Indicate by check mark whether the registrant is a shell company (as defined in Rule
12b-2
of the Act).    Yes  ☐     No   
The aggregate market value of the outstanding ordinary shares, nominal value
0.01 , of the registrant other than shares held by persons who may be deemed affiliates of the registrant, as of June 30, 2019, the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $ 12,814,190,996 .
The number of ordinary shares outstanding, nominal value
0.01 , of the registrant as of April 24, 2020 was 516,944,470 .
DOCUMENTS INCORPORATED BY REFERENCE
None.
 
 

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EXPLANATORY NOTE
This Amendment No. 1 on Form
10-K/A
(this “Amendment”) amends our Annual Report on Form
10-K
for the fiscal year ended December 31, 2019, originally filed on February 28, 2020 (the “Original Filing”). We are filing this Amendment to include the information required by Part III and not included in the Original Filing, as we do not intend to file a definitive proxy statement for an annual general meeting of shareholders within 120 days of the end of our fiscal year ended December 31, 2019. In addition, in connection with the filing of this Amendment and pursuant to the rules of the Securities and Exchange Commission (the “SEC”), we are including with this Amendment new certifications of our principal executive officer and principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Accordingly, Item 15 of Part IV has also been amended to reflect the filing of these new certifications.
Except as described above, no other changes have been made to the Original Filing. The Original Filing continues to speak as of the date of the Original Filing, and we have not updated the disclosures contained therein to reflect any events which occurred at a date subsequent to the filing of the Original Filing.
As used in this Amendment, unless the context requires otherwise, the “Company,” “Mylan,” “our,” and “we” mean Mylan N.V. and its consolidated subsidiaries, “NASDAQ” means The NASDAQ Global Select Stock Market, and “U.S. GAAP” means accounting principles generally accepted in the United States (“U.S.”).
On July 29, 2019, Mylan, Pfizer Inc. (“Pfizer”), Upjohn Inc. (“Upjohn”), a wholly-owned subsidiary of Pfizer, and certain other affiliated entities entered into a Business Combination Agreement pursuant to which the Company will combine with Pfizer’s Upjohn Business (the “Upjohn Business”) in a Reverse Morris Trust transaction (the “Combination”). Upjohn will be the parent entity of the combined Upjohn Business and Mylan business and will be renamed “Viatris” effective as of the closing of the Combination. The consummation of the Combination is subject to various customary closing conditions, including receipt of regulatory approvals and approval of the Combination by Mylan’s shareholders, and is anticipated to close in the second half of 2020.
Forward-Looking Statements
This Amendment contains “forward-looking statements.” Such forward-looking statements may include, without limitation, statements about the proposed Combination, the expected timetable for completing the Combination, the benefits and synergies of the Combination, future opportunities for the combined company and products and any other statements regarding Mylan’s, the Upjohn Business’s or the combined company’s future operations, financial or operating results, capital allocation, dividend policy, debt ratio, anticipated business levels, future earnings, planned activities, anticipated growth, market opportunities, strategies, competitions, 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,” “pipeline,” “intend,” “continue,” “target,” “seek” 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:
 
with respect to the Combination, the parties’ ability to meet expectations regarding the timing, completion and accounting and tax treatments of the Combination, changes in relevant tax and other laws, the parties’ ability to consummate the Combination, the conditions to the completion of the Combination, including receipt of approval of Mylan’s shareholders, not being satisfied or waived on the anticipated timeframe or at all, the regulatory approvals required for the Combination not being obtained on the terms expected or on the anticipated schedule or at all, the integration of Mylan and the Upjohn Business being more difficult, time consuming or costly than expected, Mylan’s and the Upjohn Business’s failure to achieve expected or targeted future financial and operating performance and results, the possibility that the combined company may be unable to achieve expected benefits, synergies and operating efficiencies in connection with the Combination within the expected timeframes or at all or to successfully integrate Mylan and the Upjohn Business, customer loss and
 
 
 
 
 

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business disruption being greater than expected following the Combination, the retention of key employees being more difficult following the Combination, changes in third-party relationships and changes in the economic and financial conditions of the business of Mylan or the Upjohn Business;
 
 
 
the potential impact of public health outbreaks, epidemics and pandemics, such as the
COVID-19
pandemic;
 
 
 
actions and decisions of healthcare and pharmaceutical regulators;
 
 
 
failure to achieve expected or targeted future financial and operating performance and results;
 
 
 
uncertainties regarding future demand, pricing and reimbursement for our or the Upjohn Business’s products;
 
 
 
any regulatory, legal or other impediments to Mylan’s or the Upjohn Business’s ability to bring new products to market, including, but not limited to, where Mylan or the Upjohn Business 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”);
 
 
 
success of clinical trials and Mylan’s or the Upjohn Business’s ability to execute on new product opportunities;
 
 
 
any changes in or difficulties with our or the Upjohn Business’s manufacturing facilities, including with respect to remediation and restructuring activities, supply chain or inventory or the ability to meet anticipated demand;
 
 
 
the scope, timing and outcome of any ongoing legal proceedings, including government investigations, and the impact of any such proceedings on our or the Upjohn Business’s financial condition, results of operations and/or cash flows;
 
 
 
the ability to meet expectations regarding the accounting and tax treatments of acquisitions;
 
 
 
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;
 
 
 
any significant breach of data security or data privacy or disruptions to our or the Upjohn Business’s information technology systems;
 
 
 
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;
 
 
 
the impact of competition;
 
 
 
identifying, acquiring and integrating complementary or strategic acquisitions of other companies, products or assets being more difficult, time-consuming or costly than anticipated;
 
 
 
the possibility that Mylan may be unable to achieve expected synergies and operating efficiencies in connection with business transformation initiatives, strategic acquisitions, strategic initiatives or restructuring programs within the expected timeframes or at all;
 
 
 
uncertainties and matters beyond the control of management, including but not limited to general political and economic conditions and global exchange rates; 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 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 the Original Filing and our other filings with the SEC. These risks, as well as other risks associated with Mylan, the Upjohn Business, the combined company and the Combination are also more fully

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discussed in the Registration Statement on Form
S-4
(as amended, the “Form S-4”), which was filed by Upjohn with the SEC and subsequently amended, and declared effective by the SEC on February 13, 2020, the Registration Statement on Form 10 (as amended, the “Form 10”), which has been filed by Upjohn with the SEC and subsequently amended and withdrawn, and is expected to be refiled prior to its effectiveness, a definitive proxy statement, which was filed by Mylan with the SEC on February 13, 2020 (the “Proxy Statement”), and the prospectus, which was filed by Upjohn with the SEC on February 13, 2020 (the “Prospectus”).
You can access Mylan’s filings with the SEC through the SEC website at www.sec.gov or through our website, and Mylan strongly encourages you to do so. Mylan routinely posts information that may be important to investors on our website at investor.mylan.com, and we use this website address as a means of disclosing material information to the public in a broad,
non-exclusionary
manner for purposes of the SEC’s Regulation Fair Disclosure (Reg FD). The contents of our website are not incorporated by reference in this Amendment and shall not be deemed “filed” under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Mylan undertakes no obligation to update any statements herein for revisions or changes after the filing date of this Amendment other than as required by law.
Additional Information and Where to Find It
This communication shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended. In connection with the proposed transaction, Upjohn and Mylan have filed certain materials with the SEC, including, among other materials, the Form S-4, Form 10 and Prospectus filed by Upjohn and the Proxy Statement filed by Mylan. The Form S-4 was declared effective on February 13, 2020 and the Proxy Statement and the Prospectus were first mailed to shareholders of Mylan on or about February 14, 2020 to seek approval of the proposed transaction. The Form 10 has not yet become effective. After the Form 10 is effective, a definitive information statement will be made available to the Pfizer stockholders relating to the proposed transaction. Upjohn and Mylan intend to file additional relevant materials with the SEC in connection with the proposed transaction. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ DOCUMENTS FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT MYLAN, UPJOHN AND THE PROPOSED TRANSACTION. The documents relating to the proposed transaction (when they are available) can be obtained free of charge from the SEC’s website at www.sec.gov. These documents (when they are available) can also be obtained free of charge from Mylan, upon written request to Mylan or by contacting Mylan at (724) 514-1813 or investor.relations@mylan.com or from Pfizer on Pfizer’s internet website at https://investors.Pfizer.com/financials/sec-filings/default.aspx or by contacting Pfizer’s Investor Relations Department at (212) 733-2323, as applicable.
Participants in the Solicitation
This communication is not a solicitation of a proxy from any investor or security holder. However, Pfizer, Mylan, Upjohn and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies in connection with the proposed transaction under the rules of the SEC. Information about the directors and executive officers of Pfizer may be found in its Annual Report on Form 10-K filed with the SEC on February 27, 2020 and its definitive proxy statement relating to its 2020 Annual Meeting filed with the SEC on March 13, 2020. Information about the directors and executive officers of Mylan may be found in this Amendment. Additional information regarding the interests of these participants can also be found in the Form S-4, the Proxy Statement and the Prospectus. These documents can be obtained free of charge from the sources indicated above.

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Reconciliation of
Non-GAAP
Financial Measures
This Amendment includes 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 EPS (as defined herein), adjusted free cash flow, Adjusted FCF/Credit Agreement Debt (as defined herein), and ROIC (as defined herein), 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. Primarily due to acquisitions and other significant events which may impact comparability of our periodic operating results, 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 was 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 adjusted metrics included herein, along with other performance metrics. Historically, management’s annual incentive compensation has been derived, in part, based on the adjusted EPS metric and the adjusted free cash flow metric. Appendix A to this Amendment 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.

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Mylan N.V.
INDEX TO FORM
10-K/A
For the Year Ended December 31, 2019
             
 
 
Page
 
PART III
 
 
 
ITEM 10.
     
1
 
ITEM 11.
     
17
 
ITEM 12.
     
50
 
ITEM 13.
     
51
 
ITEM 14.
     
53
 
         
PART IV
 
 
 
ITEM 15.
     
54
 
   
55
 
 
 

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PART III
ITEM 10.
Directors, Executive Officers and Corporate Governance
 
 
Executive Officers
The names, ages, and positions of Mylan’s executive officers as of April 29, 2020 are as follows:
             
Robert J. Coury
   
59
   
Executive Chairman (effective as of April 15, 2020)
Heather Bresch
   
50
   
Chief Executive Officer (principal executive officer)
Rajiv Malik
   
59
   
President
Kenneth S. Parks
   
56
   
Chief Financial Officer (principal financial officer)
Anthony Mauro
   
47
   
Chief Commercial Officer
 
 
Executive Chairman
- Mr. Coury has served as Executive Chairman since April 2020. Mr. Coury first was elected to Mylan’s Board in February 2002, having served since 1995 as a strategic advisor to the Company. He became the Board’s Vice Chairman shortly after his election and served as CEO from September 2002 until January 2012. He previously served as Executive Chairman from 2012 until he became
non-executive
Chairman in June 2016. Mr. Coury’s primary responsibilities include the overall leadership and strategic direction of Mylan; providing guidance to Mylan’s CEO and senior management; coordination of activities of the Mylan Board; oversight and key involvement in talent management; communication with shareholders and other important constituencies; government and health policy; strategic business development; mergers and acquisitions; responsibilities of the Chairman as specified in the Rules of the Board of Mylan N.V.; leadership and strategic direction in navigating the unique challenges posed to the Company and the pharmaceutical industry by the
COVID-19
pandemic; and oversight of work related to the proposed Combination, including leading planning for the integration of the Mylan and Upjohn Business management teams. Additional details regarding Mr. Coury’s background can be
found beginning on page 4.
Chief Executive Officer
- Ms. Bresch has served as Mylan’s Chief Executive Officer (“CEO”) since January 1, 2012. She has executed on a strategy that has produced a sustainable organization that is built for long-term value creation. Among many other areas of focus, Ms. Bresch is leading a business transformation initiative to further enhance the long-term success and sustainability of the Company, and continues to lead the diversification of the Company in terms of products, markets and channels, a process proven to expand access to the medicines upon which patients depend, while generating durable cash flows that serve to enhance Mylan’s business and the interests of shareholders and other stakeholders.
Ms. Bresch is a recognized leader in the industry and a vocal champion of initiatives and policy changes aimed at removing access barriers. Among her policy priorities are increasing generic utilization, driving biosimilars interchangeability, stemming the tide of HIV/AIDS, ensuring a fair and level playing field, and strengthening the global supply chain to make it safer for all patients. Additional details regarding Ms. Bresch’s background can be
found beginning on page 3.
President
- Mr. Malik has served as Mylan’s President since January 1, 2012. He has more than 37 years of experience in the pharmaceutical industry, with a unique combination of scientific, manufacturing, supply chain, and commercial expertise. He oversees the
day-to-day
operations of the Company, including commercial, scientific affairs, quality, manufacturing, supply chain, business development and information technology. Mr. Malik has been instrumental in, among other things, expanding and optimizing Mylan’s product portfolio, leveraging Mylan’s global research and development (“R&D”) capabilities, and expanding Mylan’s presence in emerging markets. Additional details regarding Mr. Malik’s background can be found on page 7.
Mr. Coury, Ms. Bresch and Mr. Malik are also members of Mylan’s Board of Directors (the “Board” or “Mylan Board”).
Chief Financial Officer
- Mr. Parks has served as Chief Financial Officer since June 2016. Mr. Parks is responsible for all of our global finance functions, including accounting and control, financial planning and
1

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analysis, investor relations, treasury and tax. He also leads our Global Integrated Services organization, which centralizes the management of transaction-intensive Finance, Human Relations, Information Technology and other activities to drive scale, efficiency and consistency. In addition, Mr. Parks heads up Global Data and Strategic Analytics, which provides actionable insights to our leaders as well as analytics solutions to our broader business. Mr. Parks previously served as chief financial officer for WESCO International, Inc. (“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 at WESCO. From June 2012 to December 2013, Mr. Parks also served as a vice president, and starting in January 2014, he 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. As previously disclosed, Mr. Parks has agreed to depart from Mylan upon the close of the Combination.
Chief Commercial Officer
- Mr. Mauro has served as Chief Commercial Officer since January 2016. Mr. Mauro oversees all of Mylan’s commercial businesses around the world, and is responsible for leveraging Mylan’s diverse portfolio, pipeline and expansive commercial infrastructure to drive business growth across multiple markets and channels. Prior to 2016, Mr. Mauro served as President, North America since January 1, 2012. He served as President of Mylan Pharmaceuticals Inc. from 2009 through February 2013. In his 23 years at Mylan, Mr. Mauro also 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.
Each executive officer listed above, other than Mr. Parks, was an executive officer of Mylan Inc. on February 27, 2015, the date on which Mylan N.V. completed the acquisition of Mylan Inc. and Abbott Laboratories’
non-U.S.
developed markets specialty and branded generics business (the “EPD Business Acquisition”), and became an officer of Mylan N.V. on such date in connection with the EPD Business Acquisition.
Pursuant to the Rules for the Board of Directors of Mylan N.V. (“Board Rules”), each officer holds office until his or her successor shall have been appointed, or until his or her death, resignation or removal.
Mylan’s Board
Mylan’s Board consists of 13 directors, each of whom is either an executive director or a
non-executive
director pursuant to applicable Dutch law. Executive directors are responsible for the daily management and operation of the Company and, in addition to their critical strategic and oversight role,
non-executive
directors are responsible for overseeing the performance of the executive directors and management.
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 Mylan’s Board. 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.
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Name
 
Age
(2)
 
 
Other Positions with Mylan and Principal Occupation
 
Has
served
as
director
since
(3)
 
Heather Bresch
(1)
   
50
   
Chief Executive Officer
   
2011
 
                     
Hon. Robert J. Cindrich
   
76
   
President, Cindrich Consulting, LLC
   
2011
 
                     
Robert J. Coury
   
59
   
Executive Chairman
   
2002
 
                     
JoEllen Lyons Dillon
   
56
   
Retired Executive Vice President, Chief Legal Officer and Corporate Secretary, The ExOne Company
   
2014
 
                     
Neil Dimick, C.P.A.
(4)
   
70
   
Retired Executive Vice President and Chief Financial Officer, AmerisourceBergen Corporation
   
2005
 
                     
Melina Higgins
   
52
   
Retired Partner and Managing Director, Goldman Sachs
   
2013
 
                     
Harry A. Korman
   
62
   
Retired Chief Operating Officer and Former Consultant to Mylan Inc.
   
2018
 
                     
Rajiv Malik
(1)
   
59
   
President
   
2013
 
                     
Richard Mark, C.P.A.
   
67
   
Retired Partner at Deloitte & Touche LLP
   
2019
 
                     
Mark W. Parrish
   
64
   
Lead Independent Director and Vice Chairman; Executive Chairman, TridentUSA Health Services
   
2009
 
                     
Pauline van der Meer Mohr
   
60
   
Former President of the Executive Board at Erasmus University, Rotterdam
   
2018
 
                     
Randall L. (Pete) Vanderveen, Ph.D.
   
69
   
Retired 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
   
2002
 
                     
Sjoerd S. Vollebregt
   
65
   
Chairman, Supervisory Board of Heijmans N.V.; Chair, Supervisory Board of Joulz B.V.; Chairman, Economic Development Board Drecht Cities
   
2017
 
 
 
 
(1)
Refers to an executive director. All other directors listed above are
non-executive
directors.
 
 
(2)
Ages as of April 29, 2020.
 
 
(3)
Includes service as director of Mylan Inc. and Mylan N.V. Each director listed above, other than Mr. Korman, Mr. Mark, Ms. van der Meer Mohr and Mr. Vollebregt, was a director of Mylan Inc. on February 27, 2015, the date on which Mylan N.V. completed the EPD Business Acquisition and became a director of Mylan N.V. following that transaction.
 
 
(4)
C.P.A. distinction is “inactive” status.
 
 
Heather Bresch
.
Ms. Bresch has served as Mylan’s CEO since January 1, 2012. Throughout her
28-year
career with Mylan, Ms. Bresch has held roles of increasing responsibility in more than 15 functional areas. Prior to becoming CEO, Ms. Bresch served as the Company’s President, where she was responsible for its
day-to-day
operations. Before that, she served as Chief Operating Officer and Chief Integration Officer, leading the successful integration of two international acquisitions – Matrix Laboratories and Merck KGaA’s generics business – which more than doubled Mylan’s size and transformed it from a purely U.S. company to a global one.
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As CEO, Ms. Bresch has been leading the latest chapter of Mylan’s growth and performance, pursuing a strategy that has produced a sustainable organization that is making great strides in its mission of delivering better health for a better world by providing seven billion people access to high quality medicine. In continuing to execute on this strategy, Ms. Bresch is focused on further diversifying the Company in terms of products, markets and channels, a process proven to expand access and generate durable cash flows that can be reinvested to further differentiate Mylan and position it to support the transformation of outdated healthcare systems.
Ms. Bresch emphasizes a collaborative company culture focused on leading, learning, teaching and performing to inspire innovation and help set new standards in healthcare. She also remains a vocal champion of initiatives and policy changes aimed at removing access barriers. Among her policy priorities is increasing generic utilization, driving biosimilars interchangeability, stemming the tide of HIV/AIDS, ensuring a fair and a level competitive playing field, and strengthening the global supply chain to make it safer.
Ms. Bresch is a frequent speaker on issues such as affordable healthcare and global competitiveness and has testified before the U.S. Congress and U.S. Food and Drug Administration (“FDA”) on issues related to access to medicine. Ms. Bresch is the pharmaceutical industry’s first female chief executive officer of a Fortune 500 company and was previously named by Fortune magazine as one of its “50 Most Powerful Women.”
In July 2019, the Company announced a definitive agreement to combine with the Upjohn Business, creating a new champion for global health. Ms. Bresch also announced her retirement as CEO and board member upon closing, which is anticipated for the second half of 2020.
Ms. Bresch’s qualifications to serve on Mylan’s Board, include, among others, her leadership and unique and deep knowledge of the Company, its businesses, markets and strategies, as well as its global research, supply chain, manufacturing and commercial platforms; her knowledge and experience regarding issues, risks and opportunities in the global healthcare industry; and her knowledge and expertise regarding human capital management, political and public policy healthcare-related matters, public company management and leadership and international business transactions and integration.
Hon. Robert J. Cindrich
.
Since February 2011, Judge Cindrich has been president of Cindrich Consulting, LLC, a business and healthcare consulting company that advises clients on corporate governance, compliance and business strategies. Since May 2015, Judge Cindrich has served on the Advisory Council of Innovu, LLC, a health and risk management consulting company. From October 1, 2013, through January 31, 2014, he served as interim general counsel for United States Steel Corporation (“U.S. Steel”) (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 U.S. Steel as interim general counsel, returning to Schnader after his time there and remaining until December 2017. 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 U.S. District Court for the Western District of Pennsylvania. Prior to that appointment, he was an attorney in 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 will not serve as a director of Viatris upon closing of the Combination. Judge Cindrich’s qualifications to serve on Mylan’s Board include, among others, his knowledge and expertise regarding legal and regulatory matters, compliance, corporate governance, issues affecting the healthcare industry, and public company risk management oversight and strategy.
Robert J. Coury
.
Robert J. Coury is the Executive 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, earning spots on both the S&P 500 and, prior to the Company’s
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reincorporation outside of the U.S. in 2015, the Fortune 500. Mr. Coury first was elected to Mylan’s Board in February 2002, having served since 1995 as a strategic advisor to the Company. He became the Board’s Vice Chairman shortly after his election and served as CEO from September 2002 until January 2012. He then served as Executive Chairman from 2012 until he became
non-executive
Chairman in June 2016. The Board reappointed Mr. Coury to Executive Chairman in April 2020.
Since 2007, Mr. Coury has led Mylan 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 approximately 35,000, and which markets products in more than 165 countries and territories. 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 Mylan into new therapeutic categories and greatly enhanced its geographic and commercial footprint. In 2010, Mylan acquired Bioniche Pharma (“Bioniche”), a global injectables business in Ireland; in 2013, Mylan acquired India-based Agila Specialties, a global injectables company; in 2015, Mylan acquired Abbott Laboratories’
non-U.S.
developed markets specialty and branded generics business (the “EPD Business”) and Famy Care Ltd.’s women’s healthcare
businesses; and in 2016, Mylan acquired Meda AB (publ.) (“Meda”), a leading international specialty pharmaceutical company that sells prescription and
 
over-the-counter
 
(“OTC”) 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 seven billion people with access to high quality medicine and benefiting patients, investors, customers, and other stakeholders. Mr. Coury is the founder and president of the Robert J. Coury Family Foundation, which is a private foundation 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.
As previously disclosed, Mr. Coury also will serve as Executive Chairman of Viatris upon the closing of the Combination.
Mr. Coury’s qualifications to serve on Mylan’s Board include, among others, his unique strategic vision, leadership, extensive knowledge of the industry and the Company’s history, management, and businesses around the world, demonstrated outstanding business acumen, proven ability to proactively anticipate and respond to opportunities and challenges, and strong business judgment.
JoEllen Lyons Dillon
.
Ms. Dillon served from March 2013 to August 2017 as an executive officer of The ExOne Company (“ExOne”) (NASDAQ: XONE), an emerging growth company and global provider of three-dimensional printing machines and services. She was promoted as the Company’s only executive vice president in December 2014, adding to her original duties as chief legal officer and corporate secretary. She held responsibilities for, among other things, capital markets development, corporate strategic planning, human resources, global compliance, investor relations, as well as international business development within Europe and Asia. Prior to joining ExOne, she was a legal consultant on ExOne’s initial public offering and joined the company shortly after the public filing. Previously, Ms. Dillon had an almost
25-year
legal career in corporate mergers and acquisitions and securities, where she represented both public and private companies in a variety of complex matters. She was a partner with Reed Smith LLP, a law firm, from 2002 until 2011. She previously had been at the law firm Buchanan Ingersoll & Rooney PC from 1988 until 2002, where she became a partner in 1997. Ms. Dillon serves as a member of the board of trustees of the Allegheny District chapter of the National Multiple Sclerosis Society and served as chair and Audit Committee chair. As previously disclosed, Ms. Dillon will serve as a director of Viatris upon the closing of the Combination. Ms. Dillon’s qualifications to serve on Mylan’s Board include, among others, her knowledge and expertise regarding legal and regulatory matters, financial matters, compliance, corporate governance, public company management and international business and strategy.
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Neil Dimick, C.P.A
.
*
Mr. Dimick serves on the board of directors of Resources Connection, Inc. (NASDAQ: RECN), chairing its Audit Committee and serving on its Compensation Committee. 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, Mr. Dimick served as a partner with Deloitte & Touche LLP (“Deloitte”) for eight years. Mr. Dimick also served on the boards of directors of WebMD Health Corp. from 2005 to September 2017, at which time it was purchased by Internet Brands, a portfolio company of investment funds affiliated with Kohlberg Kravis Roberts & Co., LP; Alliance HealthCare Services, Inc. from 2002 to August 2017, at which time it was purchased by Tahoe Investment Group Co., Ltd.; and Thoratec Corporation from 2003 to October 2015, at which time it was purchased by St. Jude Medical, Inc. As previously disclosed, Mr. Dimick will serve as a director of Viatris upon the closing of the Combination.
Mr. Dimick’s qualifications to serve on Mylan’s Board include, among others, his experience and expertise regarding accounting, finance, the healthcare industry, international business, corporate governance, public company management, oversight and strategy, and international business transactions.
Melina Higgins
.
Ms. Higgins has been a member of the board of directors of Genworth Financial Inc. (NYSE: GNW), an insurance company, since September 2013, and serves on its Management Development & Compensation and Nominating & Corporate Governance Committees. In January 2016, Ms. Higgins became
non-executive
chairman of the board of directors of Antares Midco Inc., a private company that provides financing solutions for middle market, private equity-backed transactions. Ms. Higgins previously held senior roles of increasing responsibility at The Goldman Sachs Group, Inc. (NYSE: GS), 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 there, 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 for Private Debt and as
co-chairperson
of the Investment Advisory Committee for GS Mezzanine Partners funds, which managed over $30 billion of assets and were global leaders in their industry. Ms. Higgins also is a member of the Women’s Leadership Board of Harvard University’s John F. Kennedy School of Government. As previously disclosed, Ms. Higgins will serve as a director of Viatris upon the closing of the Combination. Ms. Higgins’ qualifications to serve on Mylan’s Board include, among others, her experience and expertise in finance, capital markets, international business and strategy, international business transactions, corporate governance, and risk oversight and compliance.
Harry A. Korman
.
Mr. Korman held senior executive roles of increasing responsibility at Mylan Inc. and its subsidiaries from 1996 until July 2014. He served as Mylan Inc.’s global Chief Operating Officer from January 2012 until July 2014, after which he served in a consultant role with Mylan Inc. for one year. Prior to his service as Chief Operating Officer, he was the President, North America of Mylan Inc. commencing in October 2007. Mr. Korman also served as President of Mylan Pharmaceuticals Inc. from February 2005 to December 2009. During his time as an executive at Mylan, Mr. Korman was instrumental in identifying, evaluating and executing on significant commercial and business development opportunities in the United States and other countries, including the expansion of Mylan’s global generics businesses around the world, among many other important contributions to the Company. He joined Mylan in 1996 after the Company’s acquisition of UDL Laboratories, Inc. (n/k/a Mylan Institutional Inc.), and served as its president, among other prior responsibilities. Mr. Korman has served as a past director and vice chairman of the Generic Pharmaceutical Association, now known as the Association for Accessible Medicines. He also previously served as a director and vice chairman of the HDMA Foundation, which serves the healthcare industry by providing research and education focused on healthcare supply issues. As previously disclosed, Mr. Korman will serve as a director of Viatris upon the closing of the Combination. Mr. Korman’s qualifications to serve on Mylan’s Board include, among others, his extensive industry experience, his knowledge of healthcare systems and the U.S. and global commercial markets, and his leadership experience in the areas of global strategy, risk oversight, sales and marketing, commercial operations, supply chain, and business development, among other areas relevant and important to Mylan’s global business.
 
*
C.P.A. distinction is “inactive” status.
 
 
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Rajiv Malik
.
Mr. Malik has served as Mylan’s President since January 1, 2012 and has more than 37 years of experience in the pharmaceutical industry. Mr. Malik is responsible for the
day-to-day
operations of the Company, which includes Commercial, Scientific Affairs, Manufacturing, Supply Chain and Quality. In his role, he also oversees Business Development and Information Technology. 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. Mr. Malik has been integral in developing the strategies for the Company’s acquisitions, and, in the execution and integration of acquisitions, including the generics business of Merck KGaA; the injectables business of Bioniche; Agila Specialties, a global injectables company; the EPD Business; Famy Care’s women’s healthcare businesses; Meda, a leading international specialty pharmaceutical company that sells prescription and OTC products; and the
non-sterile,
topicals-focused business of Renaissance Acquisition Holdings, LLC.
Mr. Malik also has been instrumental in expanding and optimizing Mylan’s product portfolio, leveraging Mylan’s global R&D capabilities, and expanding Mylan’s presence in emerging markets. Prior to joining Mylan, 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.
As previously disclosed, Mr. Malik will serve as President and a director of Viatris upon the closing of the Combination.
Mr. Malik’s qualifications to serve on Mylan’s Board include, among others, his leadership and unique and deep knowledge of the Company, its businesses, markets and strategies, as well as its global research, supply chain, manufacturing and commercial platforms; his knowledge and experience regarding issues, risks and opportunities in the global healthcare industry; and his knowledge and expertise regarding human capital management, global regulatory matters, public company management and leadership, and international business transactions and integration.
Richard A. Mark, C.P.A
.
Mr. Mark currently serves on the board of directors of Goldman Sachs Middle Market Lending Corp., chairing its Audit Committee as an audit committee financial expert and serving on its Compliance, Governance and Nominating, and Contract Review committees. He previously served as a partner with Deloitte from June 2002 to May 2015, most recently leading the advisory corporate development function. Prior to joining Deloitte, Mr. Mark held various positions with Arthur Andersen & Co., including audit partner. Mr. Mark also served from July 2015 until August 2016 as Chairman of the Board of Directors and as a member of the Audit Committee of Katy Industries, Inc., a manufacturer, importer and distributor of commercial cleaning and consumer storage products. He also served on the board of directors of Cadence Health from 1993 until its acquisition by Northwestern Memorial Healthcare (“Northwestern”) in September 2014. Following the acquisition of Cadence Health, Mr. Mark was a director of Northwestern from September 2014 to August 2015, serving on its Executive and Nominating and Governance committees. Mr. Mark currently serves as a director of Almost Home Kids, a
not-for-profit
corporation affiliated with Lurie Children’s Hospital of Chicago, which provides transitional care to children with complicated health needs, training for their families, and respite care. As previously disclosed, Mr. Mark will serve as a director of Viatris upon the closing of the Combination. Mr. Mark’s qualifications to serve on Mylan’s Board include, among others, his experience and expertise regarding finance, the healthcare industry, global business, corporate governance, public company management, risk oversight and strategy, and international M&A.
Mark W. Parrish
.
Mr. Parrish has served as the Lead Independent Director and Vice Chairman of Mylan’s Board since August 2017. He served as chief executive officer of TridentUSA Health Services (“TridentUSA”), a provider of mobile
X-ray
and laboratory services to the long-term care industry, from 2008 to August 2018, and as executive chairman from 2008 to 2013. Since August 2018, he has served as executive chairman of TridentUSA. In February 2019, TridentUSA filed for protection under Chapter 11 of the U.S. Bankruptcy Code
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and emerged from bankruptcy in September 2019. Since January 2013, Mr. Parrish also has served on the board of directors of Omnicell, Inc. (NASDAQ: OMCL), a company that specializes in healthcare technology, and serves on its Audit and Compensation committees; and since May 2019, he has served on the board of directors, and is the chairman of the Audit Committee, of Comprehensive Pharmacy Services, a private company that specializes in the outsourcing of hospital pharmacies. He served on the board of directors of Silvergate Pharmaceuticals, a private company that develops and commercializes pediatric medications, until June 2019, when it was acquired by CutisPharma, Inc.; and on the board of directors of Golden State Medical Supply, a private company that specializes in meeting unique labeling and sizing needs for its customers and pharmaceutical packaging, serialization and distribution, until August 2019, when it was acquired by Court Square. From 1993 to 2007, Mr. Parrish held management roles of increasing responsibility with Cardinal Health Inc. (NYSE: CAH) (“Cardinal”) and its affiliates, including chief executive officer of healthcare supply chain services for Cardinal 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 as senior adviser to Frazier Healthcare Ventures, a healthcare oriented growth equity firm. As previously disclosed, Mr. Parrish will serve as a director of Viatris upon the closing of the Combination. Mr. Parrish’s qualifications to serve on Mylan’s Board include, among others, his experience as a chief executive officer; his knowledge and experience regarding issues, risks and opportunities in the global healthcare industry; and his knowledge and expertise regarding compliance, corporate governance, risk management oversight, supply chain, the healthcare industry and technology, human capital management, public company management and strategy, and international business transactions.
Pauline van der Meer Mohr
.
Ms. van der Meer Mohr is currently an independent
non-executive
director of HSBC Holdings plc (LON: HSBA), chairing that company’s Group Remuneration Committee and serving as a member of its Group
Audit Committee, Group Risk Committee and the Nomination & Corporate Governance Committee. She also is a member of the supervisory boards of Royal DSM N.V. (AMS: DSM), currently serving as Deputy Chair, chairing its Remuneration Committee and serving on its Nomination Committee, and EY Netherlands LLP, currently serving as Chair. Ms. van der Meer Mohr also serves as the Chair of the Dutch Corporate Governance Code Monitoring Committee and as Chair of the Appointment Advisory Committee for the President of the Supreme Court of the Netherlands, and she is a member of the Capital Markets Committee of the Dutch Authority for Financial Markets. Previously, Ms. van der Meer Mohr served on the supervisory board of ASML Holding N.V. (NASDAQ and AMS: ASML) until April 2018, and as president of the Executive Board of Erasmus University in Rotterdam from 2010 to 2016. Ms. van der Meer Mohr began her career in the legal profession and previously held several legal and management positions at Royal Dutch Shell Group from 1989 to 2004. In 2004, she was appointed group human resources director at TNT N.V., now known as PostNL (AMS: PNL), before becoming senior executive vice president and head of group human resources at ABN AMRO NV in 2006. She served as a member of the Dutch Banking Code Monitoring Commission in the Netherlands from 2010 to 2013, and began her own human capital consulting firm in 2008. As previously disclosed, Ms. van der Meer Mohr will serve as a director of Viatris upon the closing of the Combination. Ms. Van der Meer Mohr’s qualifications to serve on Mylan’s Board include, among others, her experience and expertise regarding corporate governance, finance, public company oversight, legal and regulatory matters, human resources, human capital management and executive compensation, risk management and oversight, corporate social responsibility and governance and oversight experience with respect to Dutch companies.
Randall L. (Pete) Vanderveen, Ph.D
.
Dr. Vanderveen was 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 from 2015 to August 2017. 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 will not serve as a director of
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Viatris upon closing of the Combination. Dr. Vanderveen’s qualifications to serve on Mylan’s Board include, among others, his experience and expertise regarding the healthcare industry, pharmaceuticals and pharmacy practice, public healthcare policy and economics, and scientific matters.
Sjoerd S. Vollebregt
.
Mr. Vollebregt has served as 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. In March 2020, Mr. Vollebregt began serving as chair of the supervisory board of Joulz B.V., a private company that provides medium voltage electricity infrastructure and equipment in Europe, and is a portfolio company of 3i Group plc, a global investment management business listed on the London Stock Exchange. Mr. Vollebregt also serves as chairman of the Economic Development Board of Drecht Cities, a strategic collaboration between business, education and government in Drecht Cities, Netherlands, since December 2016. Mr. Vollebregt was chairman and chief executive officer 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), that was a global provider of knowledge-based maintenance, modification and asset integrity products and services for oil related industries, 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; 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 from 2015 to 2019; and held various other senior positions at Exel plc, Ocean plc, Intexo Holding and Royal Van Ommeren. Mr. Vollebregt will not serve as a director of Viatris upon closing of the Combination. Mr. Vollebregt’s qualifications to serve on Mylan’s Board include, among others, his experience and expertise as a chief executive officer, in human capital management, public company management, strategic decision making, manufacturing, supply chain, technology, international business transactions, and governance and oversight experience.
Meetings of Mylan’s Board
Mylan’s Board met five times in 2019 and conducted multiple additional informational sessions (where Board members received updates on ongoing events related to the Company from the Chairman (now, the Executive Chairman) and management). In addition to meetings of the Board, directors attended meetings of individual Board committees of which they were members. Each of the directors attended at least 75% of the aggregate of Mylan’s Board meetings and meetings of committees of which they were a member during the periods for which they served in 2019. Directors are expected to attend the annual general meeting of shareholders of Mylan where practicable. All members of the Board attended the 2019 annual general meeting of shareholders (“2019 AGM”).
As noted, Mark W. Parrish has served as Vice Chairman and Lead Independent Director of Mylan’s Board since August 2017. Mylan’s Corporate Governance Principles require the independent directors of the Board to meet in executive session from
time-to-time,
and at least twice annually, without any members of management present. During 2019, the independent directors of the Board met four times in executive session, with Mr. Parrish presiding at each such executive session.
Mylan’s Board Committees
The standing committees of Mylan’s Board are the Audit Committee, the Compensation Committee, the Compliance Committee, the Executive Committee, the Finance Committee, the Governance and Nominating Committee, the Risk Oversight Committee, and the Science and Technology Committee. Each committee operates under a written charter, a current copy of which, along with our Articles of Association, Board Rules, and Corporate Governance Principles, is available on Mylan’s website at www.mylan.com/en/about-mylan/corporate-governance.
All members of the Audit, Compensation, Compliance, Finance, Governance and Nominating, and Risk Oversight Committees are independent directors, as defined in the applicable NASDAQ listing standards,
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applicable SEC rules and the Dutch Corporate Governance Code (the “DCGC”). Mylan’s Board has determined that each member of the Audit Committee – Mr. Dimick, Ms. Dillon, Ms. Higgins, Mr. Mark and Mr. Parrish – is an “audit committee financial expert,” as that term is defined in the rules of the SEC. Board approval of any director appointment to the Audit, Compensation, Compliance, Governance and Nominating, and Risk Oversight Committees must include at least a majority of the independent directors, as defined in the applicable NASDAQ listing standards.
In addition, on August 8, 2018, Mylan’s Board announced the formation of a new
non-standing
committee, the Strategic Review Committee, to evaluate a wide range of alternatives to unlock the true value of the Company’s
one-of-a-kind
platform. The Strategic Review Committee consisted entirely of independent directors and was led by the Lead Independent Director. Following Board approval of the Combination, the Strategic Review Committee was dissolved in July 2019.
Information about each of the standing committees is provided on the following pages, and pages 15 to 16 provide an additional discussion of committee responsibilities in relation to risk oversight. 
The table below provides the current membership and 2019 meeting information for each of the Board committees.
                                                                 
Director
 
Audit
 
 
Compensation
 
 
Compliance
 
 
Executive
 
 
Finance
 
 
Governance
and
Nominating
 
 
Risk
Oversight
 
 
Science
and
Technology
 
Heather Bresch
   
     
     
     
     
     
     
     
X
 
Hon. Robert J. Cindrich
   
     
     
X
     
     
     
X
     
X
     
X
 
Robert J. Coury
   
     
     
     
C
     
     
     
     
 
JoEllen Lyons Dillon
   
X
     
C
     
     
X
     
     
C
     
     
 
Neil Dimick
   
C
     
     
     
X
     
X
     
     
X
     
 
Melina Higgins
(1)
   
X
     
X
     
     
X
     
C
     
     
     
 
Harry A. Korman
   
     
     
X
     
     
     
     
C
     
X
 
Rajiv Malik
   
     
     
     
     
     
     
     
X
 
Richard A. Mark
(1)
   
X
     
     
     
     
X
     
     
     
 
Mark W. Parrish
   
X
     
     
C
     
X
     
     
X
     
X
     
 
Pauline van der Meer Mohr
   
     
X
     
     
     
     
     
X
     
 
Randall L. (Pete) Vanderveen, Ph.D.
   
     
     
X
     
     
     
     
     
C
 
Sjoerd S. Vollebregt
   
     
     
X
     
     
X
     
X
     
     
 
Meetings during 2019
   
4
     
4
     
4
     
3
     
3
     
4
     
4
     
3
 
 
 
 
(1)
Ms. Higgins joined the Executive Committee in February 2020 and Mr. Mark joined the Audit Committee and Finance Committee in August 2019.
 
 
C = Chair
X = Member
Audit Committee
The Audit Committee’s key oversight responsibilities include, but are not limited to:
  Integrity of the Company’s financial statements and its accounting and financial reporting processes
 
 
  The effectiveness of the Company’s internal control over financial reporting
 
 
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  Compliance with applicable legal and regulatory requirements
 
 
  The qualifications, independence and performance of both the independent registered public accounting firm for U.S. public reporting purposes and the Company’s external auditor for purposes of Dutch law
 
 
  Services provided by and fees payable to the independent registered public accounting firm for U.S. public reporting purposes and the Company’s external auditor for purposes of Dutch law
 
 
  The Internal Audit group
 
 
  The Company’s processes and procedures related to risk assessment and risk management
 
 
  Review of any critical audit matters identified by the global independent auditor in connection with its audit
 
 
  Related party transactions
 
 
Compensation Committee
The Compensation Committee’s key oversight responsibilities include, but are not limited to:
  Executive Chairman, CEO and senior management compensation, including the corporate goals and objectives relevant to such compensation and evaluating performance relative to those goals and objectives
 
 
  Board and committee compensation
 
 
  Equity compensation plans in which executives participate
 
 
  Relationship between risk management and the Company’s compensation policies and practices
 
 
  Compensation and benefits-related disclosures
 
 
Compliance Committee
The Compliance Committee’s key oversight responsibilities include, but are not limited to:
  Chief Compliance Officer’s implementation of Mylan’s corporate compliance program
 
 
  Compliance with applicable legal and regulatory requirements
 
 
  Considering or evaluating significant global compliance-related policies, including with respect to pricing and/or commercialization of Company products
 
 
  Making recommendations to the Board with respect to the formulation, implementation, maintenance and monitoring of Mylan’s corporate compliance program and Code of Business Conduct and Ethics
 
 
Executive Committee
The Executive Committee’s key oversight responsibilities include, but are not limited to:
  Assisting the Board in fulfilling its fiduciary responsibilities by exercising those powers of the Board not otherwise limited by a resolution of the Board or by law
 
 
  Strategic planning and additional oversight of strategy implementation
 
 
Finance Committee
The Finance Committee’s key oversight responsibilities include, but are not limited to:
  Material mergers, acquisitions and combinations with other companies
 
 
  Swaps and derivatives transactions
 
 
  Establishment of credit facilities
 
 
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  Financings with commercial lenders
 
 
  Issuance and repurchase of the Company’s debt, equity, hybrid or other securities
 
 
Governance and Nominating Committee
The Governance and Nominating Committee’s key oversight responsibilities include, but are not limited to:
  Corporate governance matters
 
 
  Nomination or
re-nomination
of director candidates
 
 
  The Board’s review and consideration of shareholder recommendations for director candidates
 
 
  The annual self-evaluation of the Board and its committees
 
 
Risk Oversight Committee
The Risk Oversight Committee’s key oversight responsibilities include, but are not limited to:
  Mylan’s enterprise risk framework
 
 
  Material risks not allocated to the Board or another committee, including, for example, data security programs and cybersecurity and information technology
 
 
  Management’s efforts with respect to environmental, social, and corporate governance
 
(“ESG”) matters
 
 
Science and Technology Committee
The Science and Technology Committee’s key oversight responsibilities include, but are not limited to:
  R&D strategy and portfolio from a scientific and technological perspective
 
 
  Significant emerging scientific and technological developments relevant to Mylan
 
 
Board Structure
Mylan operates in a complex environment involving global scientific, manufacturing, supply chain, and commercial platforms; evolving commercial, regulatory, pricing, and supply chain dynamics; and intense and often differing regulations, healthcare systems, and governmental and regulatory scrutiny, among numerous other aspects impacting our business and performance. The Board has a proven expertise in developing and overseeing strategies in the context of this complex environment that have resulted in the creation of a unique, durable, and sustainable global platform that serves the interests of shareholders and other stakeholders. The Board has a deep understanding of the management team and the culture within the Company, our business and global platform, the healthcare systems in which we operate, and the opportunities and challenges facing the Company around the world. The collective experience and expertise of our directors has enabled the Board to effectively guide and oversee the management team as we navigate the ongoing, complex, and often unpredictable developments that continue to impact the industry.
Each year the Mylan Board elects one of its members as the Chairman of the Board. Since May 2009, Mr. Coury has served as the Chairman of the Board of Mylan Inc. and, after Mylan Inc.’s reincorporation in the Netherlands in 2015, Mylan N.V. During 2019, Mr. Coury served as
non-executive
Chairman and, effective as of April 15, 2020, he now serves as Executive Chairman. Mr. Coury’s primary responsibilities include the overall leadership and strategic direction of Mylan; coordination of the activities of the Board; providing guidance to Mylan’s CEO and senior management; oversight and key involvement in talent management; communication with shareholders and other important constituencies; government and health policy; strategic business development; mergers and acquisitions; responsibilities of the Chairman as specified in the Board Rules; leadership and strategic direction
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in navigating the unique challenges posed to the Company and the pharmaceutical industry by the
COVID-19
pandemic; and oversight of work related to the Combination, including leading planning for the integration of the Mylan and Upjohn Business management teams.
Mr. Parrish has served as Lead Independent Director and Vice Chairman of the Board since 2017. Among the responsibilities of the Lead Independent Director are calling and presiding over meetings of the independent directors, consulting with the Executive Chairman and approving Board schedules, agendas, and information sent to the Board, and serving as a contact person for shareholders and other stakeholders.
Recognizing the opportunities and challenges referenced above, and given the steady and successful leadership of the Board during these evolving and unpredictable times, the Board has determined that its current leadership structure — Mr. Coury as Executive Chairman, Mr. Parrish as Lead Independent Director and Vice Chairman, Ms. Bresch as CEO, and a strong, independent majority of directors — enables it to best oversee and empower the management team and is optimal for Mylan and its shareholders and other stakeholders.
The Board’s current structure enables it to continue to provide robust and highly effective oversight and direction based on, among other factors:
  10 out of 13 directors (all of whom are being
re-nominated)
are independent;
 
 
  The Board operates pursuant to robust Corporate Governance Principles and Board Rules, which are reviewed by the Governance and Nominating Committee at least annually;
 
 
  Our Executive Chairman possesses deep experience in and knowledge of our management, business, and the healthcare industry, and he has fostered a culture of robust Board involvement, interaction, and oversight. He has a proven unique and successful strategic insight and vision that has led to our transformation from the third largest generics pharmaceutical company in the U.S. into one of the largest pharmaceutical companies in the world. He continues to provide the overall strategic leadership for the Company, a role that remains critically important as our industry continues to experience significant change and disruption at a rapid rate;
 
 
  The Board has a strong Lead Independent Director, who is also Vice Chairman, with key areas of expertise and experience (including, among others, public company management, corporate governance, and healthcare industry) that help enhance the Board’s oversight of management and the Company. The Lead Independent Director is responsible for, among other things:
 
 
  Calling and presiding at executive sessions and meetings of the independent directors;
 
 
  Consulting with the Executive Chairman in determining information to be sent to the Board: meeting agendas and meeting schedules, and separately approving those items;
 
 
  Serving as a contact person for shareholders and other stakeholders wishing to communicate with the Board; and
 
 
  Acting as liaison between the Executive Chairman and independent directors;
 
 
  The Audit, Compensation, Compliance, Finance, Governance and Nominating and Risk Oversight Committees are composed entirely of independent directors (as defined in the applicable NASDAQ listing standards and within the meaning of the DCGC);
 
 
  Approval of any appointment of members to the Audit, Compensation, Compliance, Governance and Nominating, and Risk Oversight Committees must include at least a majority of the independent directors;
 
 
  All Board committees operate pursuant to written charters and conduct annual self-assessments, which are currently led by outside counsel;
 
 
  The Risk Oversight Committee, formed in February 2018, assists the Board in its oversight of management’s efforts with respect to ESG and the Company’s enterprise risk framework;
 
 
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  The independent directors on Mylan’s Board and its committees receive extensive information and input from multiple layers of 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;
 
 
  Mylan’s Board and its committees have unrestricted access to management;
 
 
  Mylan’s Board and its committees have ability to retain, at Company expense, legal, financial or other advisors as they deem necessary with respect to any matter brought before them; and
 
 
  In 2019, Mylan’s Board held four executive sessions of independent directors, and its committees collectively held 18 executive sessions.
 
 
Setting and Overseeing Strategy
The Board actively discusses and determines the Company’s strategy and continues to focus on those strategies designed to ensure the continued durability and sustainability of the Company, while creating long-term value for our shareholders and serving the interests of other stakeholders.
The Board regularly and extensively reviews strategies to support the long-term growth and sustainability of the Company, including conducting multiple days of focused strategy discussions in 2019, and considers and evaluates, among other matters, the ongoing development of our unique and powerful global platform, market opportunities and challenges, the complex and often unpredictable changes impacting healthcare systems around the world, and the interests of shareholders and other stakeholders. The Board’s strategic planning, under the leadership and vision of our Executive Chairman, has led to the creation of a diversified and differentiated portfolio that is not reliant on a single market or product, resulting in stable and durable cash flows despite challenging, and often unpredictable, market conditions.
Mr. Coury is responsible for, among other things, leading the development of our strategy. His leadership as Chairman and now as Executive Chairman is unique and critically important to the Company, and he brings to his role extensive knowledge of the Company’s history, management, platforms, and businesses around the world as well as the global healthcare industry more generally. Mr. Coury has played a key role in identifying and leading the Board in the consideration of various strategic opportunities, an especially important task in today’s challenging environment, and his vison and insight have been instrumental in making the Combination a possibility, including through his critical role in the negotiation of the transaction and his continued leadership and direction following signing.
On August 8, 2018, Mylan’s Board announced the formation of a new committee, the Strategic Review Committee, to evaluate a wide range of alternatives to unlock the true value of the Company’s
one-of-a-kind
platform. The Strategic Review Committee consisted entirely of independent directors and was led by the Lead Independent Director.
In connection with the work of the Executive Chairman, together with the Strategic Review Committee and the overall Board’s strategic planning and efforts to create long-term value for shareholders while serving the interests of other stakeholders, we announced the Combination on July 29, 2019. We expect that Viatris, the new company that will be formed pursuant to the Combination, will transform and accelerate the ability of the Mylan business and the Upjohn Business to serve patients’ needs and expand their respective capabilities across more than 165 markets by bringing together two highly complementary businesses. Mylan brings a diverse portfolio across many geographies and key therapeutic areas, such as central nervous system and anesthesia, infectious disease and cardiovascular, as well as a robust pipeline, high-quality manufacturing, and supply chain excellence. The Upjohn Business brings trusted iconic brands, such as Lipitor (atorvastatin calcium), Celebrex (celecoxib) and Viagra (sildenafil), and proven commercialization capabilities, including leadership positions in China and other emerging markets.
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The Combination will also allow Viatris to meaningfully expand the geographic reach of Mylan’s existing broad product portfolio and future pipeline – including significant investments that have been made across complex generics and biosimilars – into new growth markets where the Upjohn Business has existing sales infrastructure and local market expertise.
Once the transaction closes, we expect that Viatris, with its attractive financial profile and robust balance sheet, will immediately begin delivering on its commitments through strong execution, rapid de-levering, and returning capital to shareholders by instituting a dividend policy for future shareholders following the first full quarter after the closing.
The Board expects that this continued advancement of its strategy will further drive a sustainable, diverse and differentiated portfolio of prescription medicines, complex generics, OTC products and biosimilars supported by commercial and regulatory expertise, established infrastructure,
best-in-class
R&D capabilities, and high-quality manufacturing and supply chain excellence.
The Board is committed to maintaining a dialogue with shareholders to ensure that they understand our differentiated strategy and business model and have an opportunity to discuss and engage on a broad range of topics, including the proposed Combination. The Board also reviews the implementation of our strategy at the annual general meeting of shareholders and provides attendees the opportunity to discuss our annual Dutch board report and the accompanying financial statements prepared in accordance with International Financial Reporting Standards as adopted by the European Union.
Risk Oversight
Mylan, similar to other pharmaceutical companies, operates in a complex and rapidly changing environment that involves many potential risks. In addition to general market, R&D, and economic risks, the Company faces potential risks related to its industry; information technology and cybersecurity; data privacy; financial controls and reporting; legal, regulatory and compliance requirements and developments; finances and taxation; the global nature of our operations; environment and social responsibility; and product portfolio and commercialization, among others. As a company committed to operating ethically and with integrity, we proactively seek to manage and, where possible, mitigate risks to help ensure compliance with applicable rules and regulations, maintain integrity and continuity in our operations and business, and protect our assets. Risk management is an enterprise-wide objective subject to oversight by the Board and its committees.
It is the responsibility of Mylan’s management and employees to implement and administer risk management processes and to identify material risks to our business. In addition, management must assess, manage and monitor those risks, all while maintaining flexibility in how we operate. To further embed risk management and compliance into our culture, Mylan implements relevant policies and procedures and extensively trains employees on how to implement and comply with them. All of our committees have regular access to management and other levels within the Company, and our Board and committees also meet without members of management present.
Mylan’s Board, in turn, directly or through its committees, oversees management’s implementation of risk management processes and controls. The Board has approved a Code of Business Conduct and Ethics and other related policies, and the Board and its committees rigorously review with management actual and potential significant risks at least quarterly.
Board Committees’ Role in Risk Oversight
 
The Audit Committee
focuses on financial and disclosure controls and reporting risks as well as oversight of Mylan’s internal audit function. The Committee oversees, among other matters, certain processes and procedures relating to risk assessment and risk management and the quality and
 
 
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  adequacy of the Company’s internal control over financial reporting. Mylan’s internal audit function meets with the Committee at least quarterly to discuss potential risk or control issues, and the Committee regularly discusses the performance of the group and the adequacy of resources available to the team. The Committee also meets quarterly with Mylan’s global independent auditor and Dutch independent auditor, among other subject matter experts.
 
 
 
The Compensation Committee
focuses on compensation-related risks that may be inherent in our business and the design of compensation-related plans and programs. The Committee receives reports, on at least a quarterly basis, from management and/or outside advisors and experts regarding various compensation-related matters. The Compensation Committee also considers risk management in determining compensation structure.
 
 
 
The Compliance Committee
is responsible for overseeing the Chief Compliance Officer’s implementation of Mylan’s Corporate Compliance Program and related policies and procedures. The Committee is responsible for appointing and, as applicable, replacing this individual, and reviews his or her performance, responsibilities, plans and resources. The Committee also makes recommendations to the Board with respect to the Corporate Compliance Program and Code of Business Conduct and Ethics, and is responsible for evaluating any significant reports of actual or alleged violations by employees and executive officers, third-party risks, and significant global compliance-related policies, including policies related to pricing and/or commercialization of Company products and services.
 
 
 
The Finance Committee
is responsible for reviewing and providing advice to Mylan’s Board with respect to the Company’s capital structure, capital management, financing and material business transactions and the risks related to such activities.
 
 
 
The Governance and Nominating Committee
is responsible for identifying, assisting in recruiting, and nominating qualified individuals to become members of Mylan’s Board, recommending committee assignments, overseeing the Board’s annual evaluation of the independence of directors, and evaluating and assisting the Board in considering other risks related to corporate governance.
 
 
 
The Risk Oversight Committee
assists the Board in its oversight of Mylan’s enterprise risk management framework. The Committee reviews the enterprise risk framework, infrastructure, and controls implemented by management to help identify, assess, manage, and monitor material risks; reviews management’s exercise of its responsibility to identify, assess, and manage material risks not allocated to the Board or another committee, including, for example, data security programs, and cybersecurity and information technology; oversees management’s activities with respect to global social responsibility; and reviews management’s efforts to foster a culture of risk-adjusted decision-making without constraining reasonable risk-taking and innovation.
 
 
Board Education
Mylan’s Board or individual members participate in director educational seminars, conferences and other director education programs presented by external and internal resources, on matters that may relate to, among other topics: compensation, governance, board process, risk oversight, business, industry, audit and accounting, credit and financial, regulatory and other current issues. Directors also may elect to attend additional third-party educational events. The Company reimburses the directors for costs associated with any seminars and conferences, including travel expenses.
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ITEM 11. Executive Compensation
Compensation Discussion and Analysis
This Compensation Discussion and Analysis (“CD&A”) describes the compensation of our named executive officers (“NEOs”) for 2019.
Overview
 
Business and Execution
Mylan is a global pharmaceutical company committed to setting new standards in healthcare and providing the world’s more than seven billion people access to high quality medicine. We offer a growing portfolio of more than 7,500 products, including prescription generic, branded generic, brand-name, and biosimilar drugs, as well as OTC remedies. We market our products in more than 165 countries and territories — and every member of our approximately
35,000-strong
workforce is dedicated to creating better health for a better world.
Over approximately the last decade, Mylan has transformed into a durable, global company that has been built to last through a clear, consistent and differentiated strategy and outstanding execution by our executive management team and employees around the world. Fueling that durability is a business model anchored in Mylan’s core purpose: providing patient access to medicines around the world.
Providing access requires that we satisfy the needs of an incredibly diverse global marketplace whose economic and political systems, approaches to delivering and paying for healthcare, languages and traditions, and customer and patient requirements vary by location and over time.
With these considerations in mind, we built and scaled our commercial, operational, and scientific platforms to meet customers’ evolving needs in ways that are globally consistent and locally sensitive. As a result, not only are we succeeding in expanding access to medicine, we are continually diversifying our business.
That diversification is what drives our durability. Durability allows us to withstand and overcome competitive pressures while continuing to innovate. It also allows us to generate consistent financial results, including reliable cash flows capable of supporting ongoing investments in long-term growth and long-term value creation.
We believe that our employees are our greatest asset. Rewarding employees for their performance and execution is a powerful way to motivate their continued best efforts and to promote their engagement and continued contributions to the Company’s mission and success.
2019 Business Performance and How It Aligns to Compensation and Shareholder Interests
The highlights below are examples of ways in which our outstanding executive team drove performance in 2019 to help ensure long-term sustainability and growth, and serve the interests of shareholders and other stakeholders. Increasing access and diversifying our business to further enhance sustainability are closely tied to our adjusted earnings, adjusted cash flows and submissions, linking these achievements with our key performance metrics.
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Recent Highlights
     
 
Access – These achievements help us strengthen our business and enhance future growth prospects while meeting the diverse needs of patients
 
 
 
 
         
 
  
     Filed 139 global regulatory submissions in 2019, demonstrating the depth of our global pipeline. New submissions increase the opportunity for new product approvals, which are important drivers of our business because they further diversify our product portfolio and generate additional cash flow opportunities
 
  
     Provided patients living with asthma and chronic obstructive pulmonary disease in the U.S. with a high quality, more affordable treatment option through the launch of Wixela
Inhub
, the first
FDA-approved
generic of ADVAIR DISKUS
®
 
  
     Launched the first biosimilar trastuzumab in Canada, Australia, and South Africa with partner Biocon Biologics, increasing access to this treatment option for breast and gastric cancer patients. We also launched the biosimilar trastuzumab in the U.S., where Mylan was the first to receive FDA approval
 
  
     Received FDA approval of Pretomanid for the treatment of extensively drug-resistant TB
(XDR-TB)
or multidrug-resistant TB
(MDR-TB)
cases that are treatment-intolerant or
non-responsive
 
  
     Launched the Mylan HIV Self-Test in Portugal, Botswana, Laos, and Namibia
 
  
     Increased access for patients with metastatic breast cancer by entering into a marketing license agreement with Eisai India to commercialize TECERIS
®
 
  
     Announced the expansion of our current development and commercialization agreement with Theravance Biopharma Ireland Limited for nebulized revefenacin to include China and certain adjacent territories
 
  
     Launched a fixed dose combination of rosuvastatin and ezetimibe to improve control of
LDL-c
(cholesterol), in five additional countries – France, Belgium, Romania, Slovakia and Bulgaria – and expanded to newer strengths in Spain, Czech Republic, Portugal, and Slovenia to help more patients achieve their
LDL-c
goals
 
   
 
     
 
Diversification – These achievements highlight our ability to withstand industry pressure and disruption in individual markets
 
 
 
 
         
 
  
     Generated $11.5 billion in 2019 total revenues, with more than 60% from outside the U.S., demonstrating that we are not dependent on any one geography or product
 
  
     Advanced our global commercial strategy across geographies and channels to further distinguish us as customers’ partner of choice
 
  
     Enhanced portfolio strategy by increasing emphasis on moving up the value chain with a focus on complex, specialty and biologic opportunities and new chemical entities
 
   
 
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Durability – These achievements enhance sustainability for shareholders, patients and other stakeholders
 
 
 
 
 
 
         
 
  
     Generated U.S. GAAP net cash provided by operating activities of $1.8 billion
 
  
     Generated adjusted free cash flow, a key compensation metric, of $2.1 billion
 
  
     Repaid over $1.1 billion of debt
 
  
     Continued to leverage the integration of acquisitions and take advantage of opportunities to optimize our global platform 
 
   
 
 
 
Compensation Philosophy & Process
 
Compensation Philosophy
The Board and Compensation Committee have implemented a simplified approach to executive compensation over the past three years, which streamlined our NEOs’ 2018 and 2019 pay mix. Executive compensation consists primarily of salary, annual cash incentives and long-term equity incentives. Mylan’s approach to executive compensation is designed to, among other things:
Reinforce Mylan’s performance-driven culture:
Our performance metrics align to the creation and sustainability of shareholder and other stakeholder value and encourage the behaviors and values expected of Mylan leaders. Our simplified program is weighted more heavily toward long-term incentives to align executives’ performance with ensuring the durability of the business and interests of shareholders and other stakeholders.
Drive and reward performance:
The Board and Compensation Committee have designed programs to ensure continued execution against our strategy to create and maintain a leading, robust, sustainable organization, while aligning compensation with Company performance, shareholder value creation and other stakeholder interests.
Recruit, retain and reward outstanding executive talent:
Mylan provides market competitive compensation with an emphasis on long-term incentives to retain high-performing leaders.
Given the continuing disruptions and changes in the management of many companies in our industry, the market for outstanding executive leadership talent remains highly competitive. Recognizing the significant execution and results generated by our current, long-tenured executive team, as well as the important contributions of so many others in our organization, we design our compensation programs to help ensure that the Company, shareholders and other stakeholders continue to benefit from the talents of our leadership team and global workforce, while also recruiting new talent on an on-going basis.
Our
Pay-for-Performance
Culture in Practice
The Compensation Committee and Board believe that each member of the executive team has the critical experience, business skills, leadership, executional capabilities, and commitment to our mission and strategy necessary to lead the Company to the benefit of shareholders and all other stakeholders. Their leadership and execution have led to the development of a durable, diversified, and sustainable company, and they continued to perform and execute at high levels during 2019, including while leading the Company’s business transformation efforts and the significant integration planning work related to the Combination.
2019 was marked by continued, significant headwinds in the pharmaceutical industry in many countries around the world, impacting Mylan as well as many other companies in the industry. Although the Company reported strong operational and financial performance in 2019, given the many headwinds faced, we did not meet all of our challenging compensation metric targets for the three-year performance period ended December 31, 2019 applicable to the performance-based restricted stock units (“PRSUs”) granted in 2017. And – consistent with our
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long-standing
pay-for-performance
philosophy — our executive compensation program once again demonstrated the strong alignment with business objectives, Company performance, and shareholder interests.
 
2017 PRSUs
granted to our current NEOs were earned at 50% of target due to achievement of target performance for return on invested capital (“ROIC”) and below threshold performance on relative total shareholder return (“TSR”) over the three-year performance period ending on December 31, 2019; accordingly, the realized value of the 2017 PRSUs on the vesting date was 18% of the awarded PRSUs’ target grant date value when factoring in the Mylan stock price at vesting (calculated as of March 3, 2020). See pages 27 to 29 for additional discussion of the long-term incentive plan, including the 2017 PRSU targets.
 
 
                         
Neo
 
2017 PRSU Target
Grant Date Value
 
 
Realized
Value
 
 
% of Target Grant Date  
Value Realized
  
 
 
Heather Bresch
 
   
 
$4,550,033
 
     
 
$820,283
 
     
 
18%
 
 
 
Rajiv Malik
 
   
 
$2,800,031
 
     
 
$504,795
 
     
 
18%
 
 
 
Kenneth S. Parks
 
   
 
$   900,031
 
     
 
$162,265
 
     
 
18%
 
 
 
Anthony Mauro
 
   
 
$1,250,040
 
     
 
$225,356
 
     
 
18%
 
 
 
 
  Our annual incentive plan resulted in a payout of 150.5% of target due to above-target achievement on the adjusted diluted earnings per ordinary share (“adjusted EPS”) goal and maximum results from the product submission goal, along with target achievement of our adjusted free cash flow metric. See pages 25 to 26 for additional discussion of the annual incentive plan, including the 2019 annual incentive payout.
 
 
Shareholder Engagement Relating to Executive Compensation and Board Responsiveness
Engaging directly with shareholders remains a key priority for the Board, and the Board is committed to maintaining this dialogue. In addition to discussing the various facets of our business model and Mylan’s differentiated platform, this dialogue also ensures that we are informed by shareholder perspectives on topics that matter most to them, including with respect to compensation.
Board Responsiveness to
Say-on-Pay
Proposal and Other Compensation Matters
Last year, our
 
Say-on-Pay
 
proposal received the support of approximately 88.6% of votes cast — a significant increase from the prior year. While we were encouraged by the strong level of support compared to the prior year, we have continued our robust outreach efforts over the past year. Since the 2019 AGM, our Executive Chairman and members of management met with shareholders representing approximately 46% of ordinary shares outstanding as of December 31, 2019, including approximately 65% of the ordinary shares held by our 50 largest shareholders as of such date. These meetings included institutional investor executives, governance team leads, and portfolio managers, among others.
Shareholders generally expressed support for the structure of our ongoing compensation program. In addition, in response to the views expressed by shareholders at the 2019 AGM, we amended our clawback policy to include a misconduct standard and disclosure of actions taken under the policy under certain circumstances.
In addition, to date in 2020, Mylan has reached out to shareholders representing approximately 53% of our ordinary shares outstanding as of December 31, 2019, including approximately 75% of the ordinary shares held by our 50 largest shareholders as of such date, to offer engagement meetings/discussions during the first and second quarters of 2020. However, as the situation surrounding the COVID-19 pandemic continues to evolve, many of these meetings have been temporarily postponed or deferred. These meetings, which we expect to re-schedule in the near future, will likely include our Executive Chairman and four of our independent Directors, including the Lead Independent Director and the Chairs of the Audit, Compensation, Compliance, Finance, and
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Governance and Nominating Committees. As we have done in the past, we expect these meetings will include discussions exclusively with the independent Directors, without the Executive Chairman or other members of management present.
The Board welcomes these opportunities to discuss executive compensation with shareholders and will continue to take their feedback into consideration as we further evolve our compensation program. We believe the consistent improvement in our Say-on-Pay voting results over the past three years reflects the important changes that we have implemented in our executive compensation program as well as the significant engagement efforts of our Board over that timeframe.
 
Compensation-Related Actions Over the Past Three Years Include:
 
  
     Amended our clawback policy to include a misconduct standard and disclosure of actions taken under the policy under certain circumstances;
 
  
     Since the beginning of 2017, completely refreshed the Compensation Committee (including the appointment of a new Chair);
 
  
     Implemented a simplified approach to executive compensation and streamlined our NEOs’ 2018 and 2019 pay mix, which consists primarily of salary, annual cash incentives and long-term equity incentives;
 
  
     Adopted a third performance metric applicable to PRSUs granted since 2018 — the ratio of adjusted free cash flow to “indebtedness” (as defined in our revolving credit agreement dated as of November 22, 2016) (“Adjusted FCF/Credit Agreement Debt”) — to further incentivize prudent balance sheet management, while maintaining the two previously used performance metrics of ROIC and relative TSR;
 
  
     Consulted with an independent compensation advisor to review and refresh the market analysis of CEO compensation and reconfirm that it is in line with peer practices;
 
  
     Solicited additional perspective from a second independent compensation consultant specific to NEO market data and compensation program design, which
re-confirmed
that our program design and CEO and NEO compensation are in line with peers and market practice;
 
  
     Eliminated automatic vesting of PRSUs at target performance in the event of our CEO’s or President’s termination without cause or resignation for good reason beginning in 2019;
 
  
     Eliminated eligibility for severance payments for our CEO and President in the event the executive declines Mylan’s offer of renewal at the end of the applicable employment term;
 
  
     Continued Company policy of not exercising positive discretion in determining annual incentive and LTI payouts; and
 
  
     Revised our CD&A to enhance and streamline disclosure.
 
 
 
 
 
 
 
Components of 2019 Executive Compensation
 
Mylan’s executive compensation program is designed to motivate our NEOs to meet business objectives and deliver long-term shareholder value, and to align their interests with those of our shareholders and other stakeholders. (See page 19 for additional discussion of our philosophy.)
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 annual and long-term incentive (“LTI”) outcomes are primarily dependent on the achievement of outstanding performance results. In 2019, approximately 60% of
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CEO and 58% of other NEOs’ compensation was performance-based. Our Board and Compensation Committee do not exercise positive discretion in determining annual incentive and LTI payouts.
The primary components of our compensation program are:
                 
Pay Element
 
 
Form
 
2019
Weightings
 
2019 Metrics
 
2019 Performance /
Shareholder Alignment
 
Base Salary
 
 
Cash
 
 
N/A
 
 
N/A
 
 
Attracts and retains highly talented executives through market-competitive base compensation
 
 
Annual Incentive
Compensation
 
 
Cash
 
 
33.3%
 
 
Adjusted EPS
 
 
Earnings are expected to have a direct relationship to the price of Mylan’s ordinary shares
 
 
 
Cash
 
 
33.3%
 
 
Adjusted Free Cash Flow
 
 
Captures the potential impact of other actions, including business transactions, on the generation of adjusted free cash flow
 
 
 
Cash
 
 
33.3%
 
 
Global Regulatory Submissions
 
 
Encourages the development of new products to both benefit patients and yield new revenue sources that are essential for Mylan to remain competitive, and as such are fundamental to our short- and long-term sustainable growth strategy
 
 
Long-Term
Incentive
Compensation
 
 
PRSUs
 
 
50%
 
 
ROIC (50%)
 
Adjusted FCF/Credit Agreement Debt (50%)
 
 
Encourages NEOs to earn an appropriate return on investment
 
Encourages NEOs to prudently manage our balance sheet
 
   
 
 
 
 
Modifier
(+/-20%)
 
 
 
Relative TSR
 
 
Encourages NEOs to deliver superior total shareholder return relative to competitors
 
PRSUs paid to NEOs directly linked to achieved performance against ROIC and Adjusted FCF/Credit Agreement Debt performance goals, subject to TSR multiplier
 
 
 
Stock Options
 
 
 
10%
 
 
 
Stock Price
 
 
Encourages NEOs to increase stock price in excess of grant date stock price
 
The value of shares paid to NEOs is directly linked to share price appreciation through date of exercise
 
 
 
Restricted Stock Units (“RSUs”)
 
 
 
40%
 
 
Stock Price
 
 
 
The value of RSUs paid to NEOs is directly linked to share price at the time of vesting
 
 
 
 
 
 
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2019 Pay Mix
 
 
 
 
 
 
 
 
 
 
        
 
 
 
Note:
Other NEOs including Messrs. Malik, Mauro and Parks
 
     
 
 
 
 
 
2019 CEO Compensation Summary
The following summary describes the compensation for our CEO for the last two years as disclosed in the Summary Compensation Table below. Please see page 37 for the compensation of our other NEOs.
 
 
  Chief Executive Officer            
 
 
 
 
 
 
                     
 
 
 
 
2018
 
 
 
 
2019
 
 
                     
Heather Bresch
 
Base Salary:
 
 
$1,300,000
 
 
 
$1,500,000
 
Annual Incentive Payout:
 
 
$2,599,935
 
 
 
$3,386,250
 
Annual LTI Grant:
 
 
$9,100,043
 
 
 
$10,500,022
 
Change in Pension Value:
 
 
 
 
 
$2,371,743
 
All Other Compensation:
 
 
$332,390
 
 
 
$751,245
 
                 
 
 
 
 
Summary Compensation Total:
 
 
 
$13,332,368
 
 
 
 
$18,509,260
 
 
 
 
 
 
 
 
2019 Compensation Decisions
 
Base Salary:
Ms. Bresch’s base salary was increased to $1.5 million based on her leadership and performance, and following a review of peer group CEO compensation benchmarks. This was Ms. Bresch’s first salary increase since March 2015. Following this change, Ms. Bresch’s total realizable pay over a three-year period is fully aligned with Mylan’s TSR relative to the Company’s 2019 peer group as highlighted in the graph below.
 
 
 
 
 
 
Annual Incentive:
No change was made to Ms. Bresch’s target opportunity in 2019 as a percentage of base salary and, as of the end of 2019, it had remained the same since 2015.
 
 
 
 
 
 
Long-Term Incentive:
No change was made to Ms. Bresch’s target LTI opportunity as a percentage of base salary in 2019. Ms. Bresch received a LTI grant in March 2019 valued at $10,500,022, of which 60% of the total is performance-based. The LTI award was delivered through PRSUs, stock options and RSUs.
 
 
 
 
 
 
Change in Pension Val
ue
:
The increase in the value of Ms. Bresch’s pension benefit resulted from a decrease in the interest rate being used to determine the pension value and an increase to her annual base salary.
 
 
 
 
 
 
All Other Compensati
on
:
The increase for 2019 relates to the
one-time
distribution of a life insurance policy to Ms. Bresch in connection with the Company’s termination of the Mylan Inc. life insurance retention plan ($195,947), consistent with the treatment of all plan participants, personal use of the corporate aircraft, and company contributions to the 401(k), profit sharing and restoration plans.
 
 
 
 
 
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CEO Realizable Pay
The following graph demonstrates that the CEO’s total realizable pay over a three-year period is fully aligned with Mylan’s TSR relative to the Company’s 2019 peer group.
Three-Year CEO Realizable Pay vs TSR*
* Realizable pay includes cumulative salary and annual incentives paid for the most recent three years for which peer group data was publicly available (2016-2018), plus the current value (as of December 31, 2019) of stock options (intrinsic value) and time-based RSUs granted during the most recent three years, plus the value (as of December 31, 2019) of performance-based LTI awards, other than stock options, earned during the most recent three years, plus the change in pension value and all other compensation for the most recent three years. TSR data derived from the S&P Capital IQ. The 12 peer companies in this chart reflect the current peer group.
 
 
 
 
 
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 (including external benchmarks prepared by an independent compensation consultant); internal pay equity considerations; competitive recruitment for outstanding talent; 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 costs to hire a similarly qualified and experienced individual externally.
For 2019, the Compensation Committee, after review of all related factors and discussion with the independent compensation consultant, provided salary increases to all current NEOs. For Ms. Bresch and Mr. Malik, this was the first salary increase since March 2015. Mr. Mauro last received a salary increase in 2016 and Mr. Parks last received a salary increase in 2017.
                     
 
NEO
 
 
 
Position
 
 
 
2018
 
 
 
 
2019 
 
 
 
Heather Bresch
 
 
 
Chief Executive Officer
 
   
 
$1,300,000
 
     
 
$1,500,000 
 
 
 
Rajiv Malik
 
 
 
President
 
   
 
$1,000,000
 
     
$1,150,000 
 
 
 
Kenneth S. Parks
 
 
 
Chief Financial Officer
 
   
 
$685,000
 
     
 
$800,000 
 
 
 
Anthony Mauro
 
 
 
Chief Commercial Officer
 
   
 
$700,000
 
     
 
$800,000 
 
 
 
Daniel M. Gallagher
 
 
 
Former Chief Legal Officer
 
   
 
$800,000
 
     
 
$800,000 
 
 
 
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Annual Incentive Compensation
Mylan’s annual incentive compensation consists of performance-based annual cash awards that are determined according to the achievement of objective operational and financial measures identified by the Board and Compensation Committee as important to the successful execution of Mylan’s business strategy, which is aligned with the continued creation of shareholder value.
For 2019, the Compensation Committee once again 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 executive team and measure their ability to extract the greatest value from our assets. The Compensation Committee chose to use adjusted metrics for the two financial goals (adjusted EPS and adjusted free cash flow) because it believes that these adjusted metrics provide effective measures of evaluating Mylan’s financial performance, and the ongoing operations of the Company.
 
 
 
 
Important Facts About Our
2019 A
n
n
u
a
l
Incentive Targets
 
 
In order to promote long-term sustainable growth for the Company, it was necessary to make incremental investment in both sales and marketing and R&D efforts. These investments were expected to create long-term value for our shareholders and other stakeholders by furthering the Company’s efforts to move our portfolio and pipeline up the value chain, investing organically in our key brands, and executing on our commercial assets around the globe. These investments were also expected, however, to reduce adjusted EPS and adjusted free cash flow in 2019. In addition, global regulatory submissions were expected to be lower in 2019 as compared to 2018 due to a heavier weighting on more challenging specialty and complex generic products and the Company’s focus on submission of products expected to generate economic profit would potentially reduce the overall number of submissions for 2019.
                                         
 
  2018  
 
 
 
 
 
                                2019                                
 
Goal
 
Actual
 
 
Weighting
 
 
Threshold
 
 
Target
 
 
Maximum
 
Adjusted EPS*
   
$4.58
     
33.3%
     
$3.80
   
 
$4.30
 
   
$4.80
 
Adjusted Free Cash Flow*
($ in millions)
   
$2,713
     
33.3%
     
$1,900
   
 
$2,100
 
   
$2,300
 
Global Regulatory Submissions
   
168
     
33.3%
     
105
   
 
120
 
   
135
 
Payout Opportunity (as % of Target)
 
 
 
 
 
 
   
50%
   
 
100%
 
   
200%
 
 
No annual incentives are paid with respect to a metric 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.
  * The adjusted EPS amount is derived from Mylan’s audited financial statements in the same manner as Mylan publicly reported adjusted EPS (which for 2019 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 2019 is reconciled to the most directly comparable U.S. GAAP measure in Appendix A).
 
2019 NEO Annual Incentive Award Opportunity Subject to Company Performance
In 2019, the Compensation Committee did not make changes to NEO target annual incentives as a percentage of base salary.
                             
NEO
 
 
Position
 
 
 
Base Salary
 
 
 
Target       (% of Salary)
 
 
 
 
Target
Annual
Incentive
 
 
 
Heather Bresch
 
 
 
Chief Executive Officer
 
   
 
$1,500,000
 
     
 
150%
 
     
 
$2,250,000
 
 
 
Rajiv Malik
 
 
 
President
 
   
 
$1,150,000
 
     
 
125%
 
     
 
$1,437,500
 
 
 
Kenneth S. Parks
 
 
 
Chief Financial Officer
 
   
 
$800,000
 
     
 
115%
 
     
 
$920,000
 
 
 
Anthony Mauro
 
 
 
Chief Commercial Officer
 
   
 
$800,000
 
     
 
115%
 
     
 
$920,000
 
 
 
Daniel M. Gallagher
 
 
 
Former Chief Legal Officer
 
   
 
$800,000
 
     
 
115%
 
     
 
$920,000
 
 
 
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Table of Contents
The payout opportunities are 50% of the target amount for threshold performance and 200% of the target amount for maximum performance.
2019 Actual Annual Incentive Compensation
In 2019, the Company achieved:
  Between target and maximum performance with respect to the adjusted EPS metric;
 
 
 
  Target performance on the adjusted free cash flow metric; and
 
 
 
  Maximum performance on the global submissions metric
 
 
 
  As a result, the current NEOs received payouts of annual incentive awards for 2019 at 150.5% of target
 
 
 
                                                                         
Goal*
 
 
Weighting
 
 
 
 
2019
 
Target
 
 
 
2019 Actual Results
 
   
Weighted     
Score    
 
 
 
Adjusted EPS*
 
   
 
33.3%
 
     
 
$4.30
 
     
 
$4.55
 
     
 
Between Target & Maximum
 
     
 
50.0%
 
 
 
Adjusted Free Cash Flow* ($ in millions)
 
   
 
33.3%
 
     
 
$2,100
 
     
 
$2,103
 
     
 
At Target
 
     
 
33.8%
 
 
 
Global Regulatory Submissions
 
   
 
33.3%
 
     
 
120
 
     
 
139
 
     
 
Above Maximum
 
     
 
66.7%
 
 
 
2019 Company Performance
 
   
 
 
     
 
 
     
 
 
     
 
 
     
 
150.5%
 
 
 
 
 
*
The adjusted EPS amount is derived from Mylan’s audited financial statements in the same manner as Mylan publicly reported adjusted EPS (which for 2019 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 2019 is reconciled to the most directly comparable U.S. GAAP measure in Appendix A).
 
 
 
The graphic below demonstrates how Company performance, as shown in the table above, is applied to calculate the annual inventive payout.
 
 
The following table shows the results for each of the above components, including the 2019 actual incentive payout.
                                     
NEO
 
 
Position
 
 
Base Salary 
 
 
 
 
Target (% of Salary)
 
 
 
Company Performance
 
 
 
Actual Incentive Payout 
 
 
 
Heather Bresch
 
 
 
Chief Executive Officer
 
   
 
$1,500,000
 
     
 
150%
 
     
 
150.5%
 
     
$3,386,250
 
 
 
Rajiv Malik
 
 
 
President
 
   
 
$1,150,000
 
     
 
125%
 
     
 
150.5%
 
     
 
$2,163,438
 
 
 
Kenneth S. Parks
 
 
 
Chief Financial Officer
 
   
 
$800,000
 
     
 
115%
 
     
 
150.5%
 
     
 
$1,384,600
 
 
 
Anthony Mauro
 
 
 
Chief Commercial Officer
 
   
 
$800,000
 
     
 
115%
 
     
 
150.5%
 
     
 
$1,384,600
 
 
 
 
 
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Table of Contents
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 over several years, as well as other measures associated with the growth, success and long-term sustainability of Mylan. The Committee has historically approved annual LTI award grants in the first quarter of the fiscal year, with the grant effective following the release of
year-end
audited financial results, with exceptions for new hires, promotions and other special awards, grants or circumstances.
Long-Term Incentive Structure
. For 2019, LTI awards were granted to our NEOs in the form of PRSUs, stock options and RSUs in the proportions shown below.
                 
               
  
Vehicle
 
 
LTI Mix
 
 
 
Incentive Opportunity
 
 
Vesting Schedule
 
PRSUs
Performance-Based
 
   
 
50%
 
   
 
PRSUs provide value based on Mylan’s ROIC, Adjusted FCF/Credit Agreement Debt and relative TSR performance, strongly linking payouts with long-term value creation
 
 
PRSUs cliff-vest at the end of the three-year performance period based on the achievement of
pre-determined
performance criteria, generally provided that the NEO remains continuously employed by Mylan
 
 
Stock Options
Performance
-
Based
 
   
 
10%
 
   
 
Stock options provide value only if Mylan’s ordinary share price is greater than the grant date ordinary share price
 
 
Stock options vest in three equal annual installments, generally provided that the NEO remains continuously employed by Mylan
 
 
RSUs
Time
-
Based
   
 
40%
 
   
 
RSU value increases/decreases with ordinary share price performance and provides a strong retention incentive
 
RSUs vest in three equal annual installments, generally provided that the NEO remains continuously employed by Mylan
 
 
 
This mix of LTI awards provides our NEOs with a combination of incentive opportunities, aligns NEOs with the interests of shareholders, and ensures that each vehicle has its own risk-reward profile with a unique benefit.
For the mix of the 2019 LTI awards, the Company decreased the amount of the award granted as stock options by 10% and increased the amount of the award granted as RSUs by 10% relative to the mix of 2018 LTI awards. In implementing this change, the Compensation Committee believed that the increased percentage of RSUs would continue to align the long-term interests of our NEOs with the Company’s shareholders while balancing performance with the Company’s current risk tolerance. The RSUs create ownership alignment with shareholders and provide a stable element of long-term compensation to encourage retention of executive talent.
Each NEO’s 2019 LTI award had a targeted value at grant equal to a percentage of the NEO’s base salary. In setting each NEO’s LTI targeted value, the Compensation Committee considered a variety of factors, including, among others, peer group compensation, expectations regarding individual performance, and tenure.
For 2019, the Compensation Committee approved the following annual LTI award values for our current NEOs:
                                             
 
 
Performance-Based
   
 
 
Time
-Based
 
 
Total LTI
Award
 
  NEO
 
Position
 
PRSUs
 
 
Stock Options
 
 
 
 
RSUs
 
Heather Bresch
 
 
Chief Executive Officer
 
   
$5,250,005
 
     
$1,050,002
 
     
 
     
$4,200,015
 
     
$10,500,022
 
 
Rajiv Malik
 
 
President
 
   
$3,450,026
 
     
$690,009
 
     
 
     
$2,760,015
 
     
$6,900,050
 
 
Kenneth S. Parks
 
 
Chief Financial Officer
 
   
$1,600,006
 
     
$320,008
 
     
 
     
$1,280,021
 
     
$3,200,035
 
 
Anthony Mauro
 
 
Chief Commercial Officer
 
   
$1,600,006
 
     
$320,008
 
     
 
     
$1,280,021
 
     
$3,200,035
 
 
 
 
 
2019 Three-Year PRSU Performance Metrics
In 2019, the Compensation Committee approved the grant of PRSUs subject to two equally weighted financial performance metrics (i.e., ROIC and Adjusted FCF/Credit Agreement Debt) and one relative market performance
27

Table of Contents
metric (i.e., relative TSR), which is used as a modifier to determine the final payout percentage, as described below. The ROIC metric incentivizes effective use of the Company’s capital to drive cash flow generation, and the Adjusted FCF/Credit Agreement Debt performance metric incentivizes prudent balance sheet management. Each of these incentivized behaviors is closely aligned with our efforts to drive a durable and sustainable business. In addition, the relative TSR modifier impacts executive pay based on Mylan’s performance as compared to industry competitors.
Method For Calculating 2019 PRSU Performance Results
. As shown in the table below, payouts under the 2019 PRSUs will be determined in two steps. First, the outcome of the ROIC and Adjusted FCF/Credit Agreement Debt metrics will be assessed, resulting in an initial payout percentage of 50% for threshold performance (with 0% payout for below threshold performance) up to 150% for maximum performance, with linear interpolation for achievement between threshold and maximum. Second, the relative TSR metric will be applied as a modifier to the initial payout percentage, decreasing it by 20%, leaving it unaffected or increasing it by 20%, as indicated in the table below, in order to calculate the final payout percentage.
                                 
                         
Metric
 
Weighting
 
 
Threshold
 
 
Target
 
 
Maximum
 
ROIC*
   
50%
     
8%
     
10%
     
12%
 
Adjusted FCF/Credit Agreement Debt**
   
50%
     
13%
     
15%
     
18%
 
Relative TSR of Peer Group***
   
Multiplier
     
At or Below 25
th
 Percentile of Peer Group
     
Between 25
th
 and 75
th 
Percentiles of Peer Group
     
At or Above 75
th
 Percentile of
Peer Group
 
Payout Opportunity (as % of Target)
   
40%
     
100%
     
180%
 
 
 
 
*
ROIC is calculated from Mylan’s audited financial statements in the same manner as set forth in the reconciliations provided in Appendix A.
 
 
 
**
Adjusted FCF/Credit Agreement Debt is first calculated for each year in the performance period as the ratio of adjusted free cash flow (calculated in the same manner as for annual incentive compensation purposes) to ”indebtedness” (as defined in our revolving credit agreement dated as of November 22, 2016), and the values for each year in the performance period are then averaged to determine Adjusted FCF/Credit Agreement Debt. Credit Agreement Debt is calculated from Mylan’s audited financial statements in the same manner as set forth in the reconciliations provided in Appendix A, subject to adjustment following the end of the performance period on a pro forma basis in the event of a material acquisition of products or assets during the applicable fiscal year that has a material impact on indebtedness during the fiscal quarter in which such acquisition closes.
 
 
 
***
Relative TSR is calculated by comparing the difference between Mylan’s
30-day
trailing average closing ordinary share price at the day before the beginning of the performance period and the day before 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.
 
 
 
Compensation Related to PRSUs Granted in 2017 (Three-Year Performance Period)
For PRSUs granted prior to 2018, including the PRSUs granted in 2017, the Company utilized ROIC and relative TSR as metrics, equally weighted, and with a potential payout from 50% (for performance at threshold) to 150% (for performance at maximum), with linear interpolation if performance was between threshold and maximum. No payout would be made if performance was below threshold.
The Company achieved target performance with respect to the ROIC metric and below-threshold-performance with respect to the relative TSR metric. As a result, the NEOs’ 2017 PRSUs vested at 50% of the target number of shares, as shown below.
 
 
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Table of Contents
                                         
2017-2019 Goal
 
 
Weighting
 
 
 
 
Three-Year Target
 
 
 
2017-2019
 
 
 
Actual Result
 
 
 
Weighted Score
 
 
 
ROIC*
 
   
 
50%
     
 
10%
     
 
10%
     
 
At
Target
     
 
50%
 
 
Relative TSR**
 
   
 
50%
     
 
50
th 
percentile of
Peer Group
     
 
24
th 
Percentile
     
 
Below Threshold
     
 
0%
 
 
Total Payout (as % of Target)
 
   
 
 
     
 
 
     
     
     
50%
 
 
 
 
*
ROIC is calculated from Mylan’s audited financial statements in the same manner as set forth in the reconciliations provided in Appendix A.
 
 
 
**
Relative TSR is calculated by comparing the difference between Mylan’s
30-day
trailing average closing ordinary share price at the day before the beginning of the performance period and the day before 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.
 
 
 
When applying the Mylan closing ordinary share price ($16.29) on the vesting date of March 3, 2020, the current NEOs received approximately 18% of the targeted grant date value of the award. Mr. Gallagher’s award was forfeited upon his departure from the Company in April 2019.
                                             
NEO
 
 
Position
 
 
Target Shares (#)
 
 
 
Target Grant Date
 Value
 
 
 
Company Performance
 
 
 
 
Actual Shares
Earned (#)
 
 
 
 
Actual Award Value at $16.29 per Share
 
 
 
Heather Bresch
 
 
 
Chief Executive Officer
 
   
 
100,709
 
     
 
$4,550,033
 
     
 
50%
 
     
 
50,355
 
     
 
$820,283
 
 
 
Rajiv Malik
 
 
 
President
 
   
 
61,975
 
     
 
$2,800,031
 
     
 
50%
 
     
 
30,988
 
     
 
$504,795
 
 
 
Kenneth S. Parks