On June 22, Mylan, the maker of EpiPen, will hold a shareholder meeting, and ahead of that meeting shareholders are being advised to vote against almost every single board member at the company — in other words, they’re being told to go scorched earth.
On Monday Institutional Shareholder Services (ISS) released a report recommending shareholders vote against 10 of Mylan’s 11 current board members, including CEO Heather Bresch.
“Because Mylan’s Board has determined that risk oversight is the responsibility of the full board, all incumbent directors should be considered accountable for material failures of risk oversight over a number of years, when warning signs were available to the company but no actions appear to have been taken to mitigate or head off the significant potential risks that have since materialised. Votes against all incumbent directors are considered warranted,” the report said.
Bresch has presided over a disaster. Since Mylan bought EpiPen in 2007, the company raised the price of the life saving anti-allergy medication over 500%. Consumers took notice and took the company to task. Bresch was forced to testify before Congress, and the company’s stock price has plunged nearly 13% over the past year. The company is also accused of overcharging the government for EpiPen by $US1.7 billion. Through all that, the price of an EpiPen has not been lowered one cent.
That is, in part, because the price of EpiPen is tied to Mylan’s stock performance, and Mylan’s stock performance is tied to executive compensation. ISS is also recommending that shareholders vote against Mylan’s compensation program.
In agreement with ISS are big shareholders like the New York City and State pension funds and the California Teachers’ Retirement System. They started a “vote no” campaign against the compensation plan and six directors last month.
“The case for holding Mylan’s entrenched Chairman and board accountable could not be stronger. The company’s EpiPen price-hiking debacle spawned a global backlash that hurt both the company’s reputation and share price,” said NYC Comptroller Scott Stringer. “This was ultimately another misstep by a board with a costly history of oversight failures. From Mylan allegedly overcharging the government for life-saving drugs to the board overpaying top executives, it’s clear why share owners are demanding change.”
Another shareholder advisery group, Glass Lewis, is also recommending changes at Mylan. It supports voting “no” on the compensation plan and is advising against three boardmembers, Compensation Committee Chair Wendy Cameron, Audit Committee Chair Neil Dimick , and Compliance Committee Chair Mark Parrish.
Do what you gotta do, guys.
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