Mylan shareholders today failed to dethrone the drugmaker’s board of directors, despite calls for impeachment over the EpiPen pricing scandals and remarkably high executive salaries.
In a vote at an annual meeting in Amsterdam, shareholders approved all incumbent nominees, including Chief Executive Heather Bresch, President Rajiv Malik and Chairman Robert Coury, who earned a salary of nearly $100 million last year amid intense reaction to the price hikes from EpiPen. However, the majority of shareholders rejected such executive compensation plans in a non-binding vote.
In recent weeks, a group of shareholders had been campaigning to overthrow the board of directors over what they called “significant reputational and financial damage” and “new lows in corporate stewardship.” The disgruntled shareholders were backed by an influential consulting firm, the Institutional Shareholder Services (ISS), who agreed that EpiPen price hikes and eye-watering executive salaries were causing “significant destruction of shareholder value” and “long-term reputational damage.” . As Ars has previously noted, Mylan’s board rules make it difficult to fire the board, requiring a two-thirds vote. Mylan has not released today’s vote breakdown, which has not gone down well with some shareholders.
In an emailed statement to Ars, New York City comptroller Scott Stringer, who oversees New York City pensions that own more than 1.1 million shares of Mylan and led the campaign against the board, said:
Mylan’s silence speaks volumes. By not announcing the voting results at today’s shareholder meeting, Mylan’s board of directors telegraphed that the directors were facing strong opposition. With its costly track record of oversight errors and PR debacles, this hardly comes as a surprise. This company massively raised the prices of life-saving drugs, allegedly overcharged the government for its products, and allowed excessive executive pay to go unchecked — all ultimately fundamental flaws of board oversight. Not only investors were harmed, ordinary consumers and American taxpayers also suffered.
A Mylan spokesperson would not disclose the vote breakdown to Ars, but said the company will include the information in Securities and Exchange Commission filings in the coming days, which it has done in the past.
Mylan, for its part, released a statement saying:
At Mylan’s Annual General Meeting on June 22, 2017, all directors nominated by Mylan’s Board of Directors were legally elected. We appreciate the continued support of our shareholders for Mylan’s Board of Directors, which has overseen the development of a differentiated, clear and consistent long-term strategy that has created sustainable long-term growth and shareholder value while serving the interests of other stakeholders . We look forward to continued shareholder engagement going forward.
Mylan’s statement further noted that shareholders have voted against the company’s compensation plans. “The Compensation Committee and Board of Directors will carefully consider these results, as well as future shareholder input, as we continue our engagement with investors and as we design our future compensation programs.”
However, analysts say the vote is unlikely to have an effect. Speaking to Bloomberg Markets, Ronny Gal, an analyst at Sanford C. Bernstein & Co., said, “There’s no way this can be forced.” He noted that when shareholders have reduced salaries in the past, “Mylan’s position has been that they need to educate shareholders more about why they are compensating management in this way. I would be surprised if they take a different path here.”