Last year, the drug maker Mylan faced the wrath of lawmakers and the public for the high prices on its EpiPen, a controversy that has spilled into 2017 as a government analysis raised new questions about how much taxpayers may have overpaid for the emergency allergy treatment. This year, it's come under fire from shareholders, several of whom launched a campaign to oust several members of the board and questioned a compensation package valued at nearly $100 million for the company's chairman that drew criticism from a major proxy adviser as "egregious."
Those issues came to a head Thursday, when shareholders met at the company's annual meeting. Investors re-elected the company's directors to its board, but they rejected the company's executive compensation program, likely because of the eye-popping value of the $97.6 million package awarded to the company's chairman, Robert Coury.
As a result, Mylan appears to be only the third company in the Standard & Poor's 500-stock index this year to not receive a majority of investors' support on what's known as a "say on pay" vote, in which shareholders get to cast a non-binding thumb's up or down for the pay awarded to top executives at public companies.
For perspective on how rare a failed vote really is, the median approval rate on compensation at S&P 500 companies this year is 95 percent, according to John Roe, head of ISS Analytics, part of the influential proxy advisory firm Institutional Shareholder Services. Just 10 percent of companies received less than 83 percent.
But even among the tiny group of companies whose pay doesn't meet shareholders' muster, Mylan has a particularly poor track record. It's one of only four companies in the S&P 500 that has failed to get majority support more than once since 2011, when the first "say on pay" votes were cast.
And it's one of only two companies that's never received 70 percent support in any year since say-on-pay votes began, Roe said. "This is a company that's had broad dissent from their pay package year after year, and hasn't seemed to adequately respond to shareholder criticism."
In May, the company filed its proxy statement, which outlined compensation for Coury, who was CEO from 2002 to 2012 but remained as executive chairman until mid-2016, when he became a non-executive chair.
In a report criticizing the package, ISS noted a front-loaded $43.6 million stock grant for Coury, among other things, as well as that executives' "incentive awards increased year-over-year despite a substantial loss of shareholder value." The company's stock price dropped more than 25 percent in 2016. CEO Heather Bresch made $13.8 million in 2016, down from $18.9 million in 2015.
In an emailed statement, a spokeswoman for Mylan said the board would "carefully consider these results, as well as future shareholder input, as we continue our investor outreach and in designing our compensation programs going forward," and noted that it has considered feedback in recent years to simplify its program.
She also said that "any allegations of disregard for consumers, government officials, shareholders, regulators or any other of our valued stakeholders are patently false and wholly inconsistent with the company's culture, mission and track record of delivering access to medicine.''
In a letter to ISS filed with the Securities and Exchange Commission, the company wrote that because Mylan is incorporated as a Dutch company, Coury's chairman role "is not merely an honorary title (as is sometimes here in the United States), but rather a vitally important role for the company."
Whether Mylan will actually make changes based on the vote is unclear. Compensation votes are advisory, meaning companies can choose to ignore the results, though most make improvements, said Rosanna Landis Weaver, program manager at As You Sow, a nonprofit that focuses on corporate accountability.
But in Mylan's case, Weaver said, "the board has shown itself to be willing to shrug off a great deal of criticism," given the low levels of support their compensation has received in the past.
Ronny Gal, an analyst at Bernstein Research, said in an interview that "nobody likes it," referring to Mylan's compensation or governance, which he said investors view as a weakness. But "people who do own the stock think there are enough positives that outweigh it."