Sat. Feb 4th, 2023
Heather Bresch, chief executive officer of drugmaker Mylan, is facing backlash and a shareholder ouster.
Enlarge / Heather Bresch, chief executive officer of drugmaker Mylan, is facing backlash and a shareholder ouster.

An influential consulting firm, the Institutional Shareholder Services (ISS), has urged Mylan’s already mutinous shareholders to vote against the company’s incumbent board of directors following the damaging EpiPen scandal and exorbitant executive salaries, report Reuters and Bloomberg.

The incumbent board’s apparent price-gouging and greed led to “significant shareholder value destruction” and “long-term reputational damage,” ISS wrote in an emailed report. In an unusually aggressive move, it urged shareholders to try to oust ten nominees for Mylan’s chief executive, including Chief Executive Heather Bresch, President Rajiv Malik and Chairman Robert Coury, as well as the members of the remuneration committee.

“All incumbent directors should be held accountable for material risk oversight failures over a number of years when warning signs were available to the company but no action appeared to have been taken,” the company concluded.

In addition, ISS called executive compensation decisions “blatant”, urging shareholders to reject the company’s compensation packages. Those include paying Coury more than $160 million in compensation and payments last year.

ISS’s recommendations echo those of a campaign by a group of shareholders urging their co-investors to vote against the board, which the group says “reached new lows in corporate stewardship in 2016.” It also follows a government report that Mylan overcharged taxpayers up to $1.27 billion over 10 years by misclassifying EpiPens under the Medicaid Drug Rebate Program. Mylan had previously agreed to settle the matter with the federal government for just $465 million.

In an email to Ars, Mylan responded to the ISS report, saying:

“We are confident that our shareholders recognize that this board has experienced a period of strong and sustainable long-term growth, and that the recommendation and rationale to fire the board and leave the company without any leadership is simply irrational and is not in the best interest. of the company, its shareholders and other stakeholders.”

In the past, the company has universally defended its pricing and compensation decisions. In one piece last week The New York TimesCoury reportedly suggested that anyone criticizing the company’s pricing decisions should “copulate with themselves.”

In an unusual move, Mylan met with ISS last week to try to curry favor with the company. Mylan publicly urged ISS to notify its advice to shareholders. But ISS refused, FiercePharma reported.

While Mylan’s board rules make it difficult to fire executives — requiring a two-thirds majority — ISS’s damning report does add to the ongoing turmoil for the infamous drugmaker. That includes investigations from regulators and the Justice Department into its decision to raise the price of its lifesaving epinephrine auto-injector, EpiPen, from about $100 per two-pack to more than $600.

The shareholder vote will take place during a meeting on 22 June in Amsterdam. ISS advised shareholders to vote for the new director candidate Sjoerd Vollebregt.

Editor’s Note: This post has been updated with a comment from Mylan.

By akfire1

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