UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934 (Amendment No. )

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MYLAN INC.

 

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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April 5, 2010

 

Dear Shareholder:

 

You are cordially invited to attend the 2010 Annual Meeting of Shareholders of Mylan Inc., which will be held at 9:30 a.m. (Pacific time) on May 14, 2010, at the Intercontinental — Mark Hopkins Hotel, One Nob Hill, in San Francisco, California. Details about the business to be conducted at the Annual Meeting are described in the accompanying Notice of Annual Meeting and Proxy Statement.

 

It is important that your shares be represented at the Annual Meeting, regardless of the number of shares you own. Whether or not you currently plan to attend, you can ensure that your shares are represented and voted at the Annual Meeting by promptly signing, dating and returning the enclosed proxy card. A return envelope, which requires no additional postage if mailed in the United States, is enclosed for your convenience. Alternatively, you may vote over the Internet or by telephone by following the instructions set forth on the enclosed proxy card.

 

We look forward to seeing you at the Annual Meeting.

 

Sincerely,

 

 

Robert J. Coury
Chairman and Chief Executive Officer

 

 

1500 Corporate Drive

Canonsburg, PA 15317

 

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

 

The 2010 Annual Meeting of Shareholders of Mylan Inc. (the “Company”) will be held at the Intercontinental — Mark Hopkins Hotel, One Nob Hill, in San Francisco, California on Friday, May 14, 2010, at 9:30 a.m. (Pacific time), for the following purposes:

 

 

Shareholders of record of the Company’s common stock at the close of business on March 25, 2010 are entitled to notice of, and to vote at, the meeting and any adjournment or postponement thereof. We will make available at the Annual Meeting a complete list of shareholders entitled to vote at the Annual Meeting.

 

By order of the Board of Directors,

 

 

Joseph F. Haggerty
Corporate Secretary

 

 

April 5, 2010

 

 

 

TABLE OF CONTENTS

 

MYLAN INC.
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
May 14, 2010

 

We are furnishing this Proxy Statement to shareholders of Mylan Inc., a Pennsylvania corporation (“Mylan” or the “Company”), in connection with the solicitation of proxies by our Board of Directors (the “Board”) for use at our 2010 Annual Meeting of Shareholders (the “Annual Meeting”) and at any adjournment or postponement thereof. The Annual Meeting is scheduled to be held on Friday, May 14, 2010, at 9:30 a.m. (Pacific time), at the Intercontinental — Mark Hopkins Hotel, One Nob Hill, in San Francisco, California, for the purposes set forth in the accompanying Notice of Annual Meeting. We are mailing this Proxy Statement and the enclosed proxy card to shareholders on or about April 9, 2010.

 

Our Board has fixed the close of business on March 25, 2010 (the “Record Date”) as the record date for the determination of shareholders entitled to notice of, and to vote at, the Annual Meeting and any adjournment or postponement thereof. As of the close of business on the Record Date, there were 308,257,273 shares of our common stock, par value $0.50 per share (“Common Stock”), outstanding and entitled to vote. Each share of Common Stock is entitled to one vote on each matter properly brought before the Annual Meeting. Shareholders do not have cumulative voting rights.

 

Holders of a majority of the outstanding shares of our Common Stock entitled to vote on the Record Date must be present in person or represented by proxy to constitute a quorum. Proxies marked as abstaining and proxies returned by brokers as “non-votes” because they have not received voting instructions from the beneficial owners of the shares each will be treated as shares present for purposes of determining the presence of a quorum.

 

Shareholders may cast their votes at the meeting, over the Internet, by submitting a printed proxy card, or by calling a toll-free number.

 

If you vote by proxy, the individuals named on the enclosed proxy card will vote your shares in the manner you indicate. If you do not specify voting instructions, then the proxy will be voted in accordance with recommendations of the Board, as described in this Proxy Statement. If any other matter properly comes before the Annual Meeting, the designated proxies will vote on that matter in their discretion.

 

If your shares are held in the name of a brokerage firm, bank nominee or other institution, please sign, date and mail the enclosed instruction card in the enclosed postage-paid envelope or contact your broker, bank nominee or other institution to determine whether you will be able to vote over the Internet or by telephone.

 

If you come to the Annual Meeting to cast your vote in person and you are holding your shares in a brokerage account or through a bank or other nominee (“street name”), you will need to bring a legal proxy obtained from your broker, bank or nominee which will authorize you to vote your shares in person.

 

Your vote is important. We encourage you to sign and date your proxy card and return it in the enclosed postage-paid envelope, or vote over the Internet or by telephone, so that your shares may be represented and voted at the Annual Meeting.

 

You may revoke your proxy at any time before it is voted by submitting another properly executed proxy showing a later date, by filing a written notice of revocation with Mylan’s Corporate Secretary, by casting a new

vote over the Internet or by telephone, or by voting in person at the Annual Meeting. The contact information for the Company’s Secretary is stated on page 38 under “Communications With Directors.”

 

Election of Directors

 

Mylan has adopted a standard requiring that a director nominee receive a majority of the votes cast; in other words, the number of shares voted “for” a Director must exceed 50% of the votes cast with respect to that Director. If a Director receives less than a majority, the Director shall submit his or her resignation to the Chairman of the Board for consideration by the Governance and Nominating Committee, who will make a recommendation to the Board on whether to accept or reject the resignation, or whether other action should be taken. The Board will act on the Committee’s recommendation and publicly disclose its decision and the rationale behind it within 90 days from the date of the certification of the election results.

 

You may vote either “FOR” or “AGAINST” with respect to each nominee for the Board.

 

Plurality voting will still apply to contested elections.

 

Consideration of the Shareholder Proposals and Ratification of Selection of Deloitte & Touche LLP as Our Independent Registered Public Accounting Firm

 

The consideration of the shareholder proposals (i.e., the advisory non-binding vote on executive compensation and the executive officers’ share retention following separation) and the ratification of the selection of Deloitte & Touche LLP as our independent registered public accounting firm for the year ending December 31, 2010 each will require the affirmative vote of a majority of the votes cast by all shareholders entitled to vote. Abstentions and broker non-votes, if any, will have no effect on the outcome of the vote on any of these proposals. If the selection of Deloitte & Touche LLP is not ratified by our shareholders, the audit committee will reconsider its recommendation.

 

In accordance with the notices we previously sent to street name shareholders who share a single address, we are sending only one Proxy Statement to that address unless we have received contrary instructions from any shareholder at that address. This practice, known as “householding,” is designed to reduce our printing and postage costs. However, if any shareholder residing at such an address wishes to receive a separate Proxy Statement, we will promptly deliver the requested documents upon written or oral request to Mylan’s Corporate Secretary. If you are receiving multiple copies of our Proxy Statement, you can request householding by contacting Mylan’s Corporate Secretary. The contact information for the Company’s Secretary is stated on page 38 under “Communications With Directors.”

 

Mylan will bear the entire cost of this solicitation, including the preparation, assembly, printing and mailing of this Proxy Statement and any additional materials furnished by our Board to our shareholders. Proxies may be solicited without additional compensation by directors, officers and employees of Mylan and its subsidiaries. Copies of solicitation material will be furnished to brokerage firms, banks and other nominees holding shares in their names that are beneficially owned by others so that they may forward this solicitation material to these beneficial owners. If asked, we will reimburse these persons for their reasonable expenses in forwarding the solicitation material to the beneficial owners. The original solicitation of proxies by mail may be supplemented by telephone, telegram, facsimile, Internet and personal solicitation by our directors, officers or other regular employees. In addition, the Company has retained Morrow & Co., LLC, 470 West Ave., Stamford, CT 06902 to assist in soliciting proxies at a cost of approximately $9,500 plus expenses.

 

In October 2007, we changed our fiscal year end from March 31 to December 31. As a result, certain information in this Proxy Statement is presented for the nine-month period from April 1, 2007 to December 31, 2007, which is referred to in this Proxy Statement as the 2007 Transitional Period.

 

Mylan’s Board currently consists of nine members. All nominees listed below have previously been elected as directors by shareholders, except Mr. Parrish. Our directors are elected to serve for a one-year term and until his or her successor is duly elected and qualified. Each of the nine nominees listed below has consented to act as a director of Mylan if elected. If, however, a nominee is unavailable for election, proxy holders will vote for another nominee proposed by the Board or, as an alternative, the Board may reduce the number of directors to be elected at the Annual Meeting.

 

Information about each director nominee is set forth below, including the nominee’s principal occupation and business experience, other directorships, age and tenure on the Company’s Board.

 

 

 

 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE

“FOR” THE ELECTION OF EACH OF THE NOMINEES NAMED ABOVE.

 

In 2009, our Board met 10 times. In addition to meetings of the Board, directors attended meetings of individual Board committees. In 2009, all of the directors attended at least 75% of the Board meetings and meetings of Board committees of which they were a member during the periods for which he or she served. In addition to Board and committee meetings, it is the Company’s policy that directors are expected to attend the Annual Meeting. All members of the Board attended the 2009 Annual Meeting of Shareholders.

 

Non-management members of the Board meet in executive sessions on a regular basis. Neither the Chief Executive Officer nor any other member of management attends such meetings of non-management directors. Rodney Piatt, the Vice Chairman of the Board, has been chosen to preside at such executive sessions. For information regarding how to communicate with non-management directors as a group and one or more individual members of the Board, see “Communications with Directors” below.

 

The principal standing committees of the Board include the Audit Committee, the Compensation Committee and the Governance and Nominating Committee. Each such committee operates under a written charter, current copies of which are available on the Company’s corporate website at www.mylan.com under the heading “Corporate Governance.” Copies of the charters are also available in print to shareholders upon request, addressed to Mylan’s Corporate Secretary at 1500 Corporate Drive, Canonsburg, Pennsylvania 15317.

 

The table below provides 2009 membership and meeting information for our principal Board committees.

 

 

 

C = Chairperson

 

X = Member

 

Audit Committee and Audit Committee Financial Expert.  The Audit Committee’s responsibilities include the appointment, compensation, retention and oversight of the Company’s independent registered public accounting firm; reviewing with the independent registered public accounting firm the scope of the audit plan and audit fees; and reviewing the Company’s financial statements and related disclosures. All of the members of the Audit Committee are independent directors, as required by and as defined in the audit committee independence standards of the Securities and Exchange Commission (the “SEC”) and the NASDAQ listing standards. The Board has determined that each of the Audit Committee members — Mr. Leech, Mr. Dimick and Mr. Piatt — is an “audit committee financial expert”, as that term is defined in the rules of the SEC. The Board has determined with regard to Mr. Dimick, who serves on the audit committees of more than three public companies, that such simultaneous service does not impair his ability to effectively serve on our Audit Committee.

Compensation Committee.  The Compensation Committee establishes and regularly reviews the Company’s compensation philosophy, strategy, objectives and ethics and oversees and approves the compensation program for the Company’s executive officers. The Compensation Committee plays a very active role, including the regular review of the Company’s compensation programs against industry practices, the Company’s strategic goals and emerging trends as well as to ensure strong links between executive pay and performance, as well as alignment with shareholder interests. The Compensation Committee also administers the Company’s equity compensation and benefit plans. All of the members of the Compensation Committee are independent directors as defined in the applicable NASDAQ listing standards.

 

Governance and Nominating Committee.  The Governance and Nominating Committee (the “G&N Committee”) is responsible for the nomination of candidates for the Board and the oversight of all aspects of the Company’s corporate governance initiatives. All of the members of the G&N Committee are independent directors as defined in the applicable NASDAQ listing standards. The G&N Committee did not convene any in-person meetings in 2009.

 

For purposes of identifying individuals qualified to become members of the Board, the G&N Committee has adopted the following criteria with regard to traits, abilities and experience that the Board looks for in determining candidates for election to the Board:

 

 

In addition, a majority of the members of the Board should be “independent,” not only as that term may be defined legally or mandated by the applicable NASDAQ listing standards, but also without the appearance of any conflict in serving as a director. For a director to be considered independent, the Board must determine that he or she does not have any material relationship with the Company, either directly or indirectly (other than in his or her capacity as a director).

 

The G&N Committee will consider director candidates properly submitted by shareholders. In considering candidates submitted by shareholders, the G&N Committee will take into consideration the needs of the Board and the qualifications of the candidate, including those traits, abilities and experience identified above. Any submission of a proposed candidate for consideration by the G&N Committee should include the name of the proposing shareholder and evidence of such person’s ownership of Mylan stock, and the name of the proposed candidate, his or her resume or a listing of his or her qualifications to be a director of the Company, and the proposed candidate’s signed consent to be named as a director if recommended by the G&N Committee. Such information will be considered by the Chairman of the G&N Committee, who will present the information on the proposed candidate to the entire G&N Committee.

 

Any shareholder recommendation of a proposed candidate must be sent to Mylan’s Corporate Secretary at 1500 Corporate Drive, Canonsburg, Pennsylvania 15317, not later than 120 days prior to the anniversary date of the Company’s most recent annual meeting of shareholders.

 

The G&N Committee identifies new potential nominees by asking current directors and executive officers to notify the G&N Committee if they become aware of persons, meeting the criteria described above, who would be good candidates for service on the Board. The G&N Committee also, from time to time, may engage firms that specialize in identifying director candidates. As described above, the G&N Committee will also consider candidates recommended by shareholders.

Once a person has been identified by the G&N Committee as a potential candidate, the G&N Committee may collect and review publicly available information regarding the person to assess whether the person should be considered further. If the G&N Committee determines that the candidate warrants further consideration, the Chairman or another member of the G&N Committee will contact the person. Generally, if the person expresses a willingness to be considered and to serve on the Board, the G&N Committee will request information from the candidate, review the candidate’s accomplishments and qualifications, including in light of any other candidates that the G&N Committee might be considering, and conduct one or more interviews with the candidate. In certain instances, G&N Committee members may contact one or more references provided by the candidate or may contact other members of the business community or other persons that may have greater first-hand knowledge of the candidate’s accomplishments. The G&N Committee’s evaluation process does not vary based on whether or not a candidate is recommended by a shareholder.

 

The Board has determined that Ms. Cameron, Mr. Dimick, Mr. Leech, Dr. Maroon, Mr. Parrish, Mr. Piatt, Mr. Todd and Dr. Vanderveen have no material relationships with the Company and concluded that they are independent directors under the applicable NASDAQ listing standards. With respect to Messrs. Leech, Piatt and Todd, the Board considered their past relationships with the Company, which relationships are no longer in existence, and determined that such past relationships are not material. Mr. Coury is not an independent director due to his current service as Chief Executive Officer of the Company.

 

Mylan’s Board annually elects one of its own members as the Chairman of the Board. Mr. Coury has served as both the Chairman of our Board and our Chief Executive Officer since being appointed as chairman in May 2009. Our Board has no fixed policy with respect to the separation of the offices of Chairman of the Board and chief executive officer. Our Board retains the discretion to make this determination on a case-by-case basis from time to time as it deems to be in the best interest of the Company and our shareholders at any given time. We believe our current board leadership structure is appropriate because it recognizes that in most cases one person should speak for and lead the company and the Board in order to promote unified leadership and direction. In addition, the Board believes that Mr. Coury has served extremely effectively as a liaison between the Board and management by serving the company in both capacities. In addition, our governance structure provides effective oversight of the Board in the following ways:

 

 

Our Audit Committee is primarily responsible for overseeing the Company’s risk management processes on behalf of the full Board. The Audit Committee focuses on financial reporting risk and oversight of the internal audit process. It receives reports from management at least quarterly regarding the Company’s assessment of risks and the adequacy and effectiveness of internal control systems, as well as reviewing credit and market risk (including liquidity and interest rate risk), and operational risk (including compliance and legal risk). The Audit Committee also receives reports from management addressing risks impacting the day-to-day operations of the Company. Our internal auditing function meets with the Audit Committee on a quarterly basis to discuss any potential risk or control issues. The Audit Committee reports regularly to the full Board, which also considers the Company’s entire risk profile. The full Board focuses on the most significant risks facing the Company and the Company’s general

risk management strategy, and also ensures that risks undertaken by the Company are consistent with the Board’s approval for risk. While the Board oversees the Company’s risk management, management is responsible for the day-to-day risk management processes. We believe this division of responsibility is a highly effective approach for addressing the risks facing our Company and that our Board leadership structure supports this approach.

 

The Board has adopted a Code of Ethics for the Chief Executive Officer, Chief Financial Officer and Corporate Controller. The Board also has adopted Corporate Governance Principles as well as a Code of Business Conduct and Ethics applicable to all directors, officers and employees. Current copies of the Code of Ethics, the Corporate Governance Principles and the Code of Business Conduct and Ethics are posted on the Company’s website at www.mylan.com under the heading “Corporate Governance.” Copies of the Code of Ethics, the Corporate Governance Principles and the Code of Business Conduct and Ethics are also available in print to shareholders upon request, addressed to Mylan’s Corporate Secretary at 1500 Corporate Drive, Canonsburg, Pennsylvania 15317. The Company intends to post any amendments to or waivers from the Code of Ethics on its website.

 

The Board has selected Deloitte & Touche LLP as our independent registered public accounting firm to audit our consolidated financial statements for the year ending December 31, 2010, and has directed that management submit the selection of Deloitte & Touche LLP as our independent registered public accounting firm for ratification by the shareholders at the Annual Meeting. A representative of Deloitte & Touche LLP is expected to be present at the Annual Meeting and will be available to respond to appropriate questions from our shareholders and will be given an opportunity to make a statement if he or she desires to do so.

 

Shareholder ratification of the selection of Deloitte & Touche LLP as our independent registered public accounting firm is not required by our Bylaws or otherwise. However, the Board is submitting the selection of Deloitte & Touche LLP to shareholders for ratification as a matter of good corporate governance. If shareholders fail to ratify the selection, the Audit Committee will reconsider whether or not to retain that firm. Even if the selection is ratified, the Audit Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if they determine that such a change would be in the best interests of Mylan and its shareholders.

 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” RATIFICATION OF THE SELECTION OF DELOITTE & TOUCHE LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.

 

Deloitte & Touche LLP served as Mylan’s independent registered public accounting firm during 2009 and 2008, and no relationship exists other than the usual relationship between independent registered public accounting firm and client. Details about the nature of the services provided by, and the fees the Company paid to, Deloitte & Touche LLP for such services during 2009 and 2008 are set forth below.

 

 

 

 

The Audit Committee has adopted a policy regarding pre-approval of audit, audit-related, tax and other services that the independent registered public accounting firm may perform for the Company. Under the policy, the Audit Committee must pre-approve on an individual basis any requests for audit, audit-related, tax and other services not covered by certain services that are pre-approved annually by the Audit Committee. The policy also prohibits the engagement of the independent registered public accounting firm for non-audit related financial information systems design and implementation, for certain other services considered to have an impact on independence and for all services prohibited by the Sarbanes-Oxley Act of 2002. All services performed by Deloitte & Touche LLP during 2009 and 2008 were pre-approved by the Audit Committee in accordance with its policy.

 

The Nathan Cummings Foundation (“NCF”), 475 Tenth Avenue, 14^th Floor, New York, New York 10018, a beneficial holder of 500 shares of Mylan common stock, has given notice of its intention to introduce the following resolution at the Annual Meeting:

 

Advisory Vote on Executive Compensation

 

RESOLVED, that shareholders of Mylan Inc. request the board of directors to adopt a policy that provides shareholders the opportunity at each annual shareholder meeting to vote on an advisory resolution, proposed by management, to ratify the compensation of the named executive officers (“NEOs”) set forth in the proxy statement’s Summary Compensation Table (the “SCT”) and the accompanying narrative disclosure of material factors provided to understand the SCT (but not the Compensation Discussion and Analysis). The proposal submitted to shareholders should make clear that the vote is non-binding and would not affect any compensation paid or awarded to any NEO.

 

Supporting Statement

 

Concerns about executive compensation have reached new levels of intensity among both investors and the public at large. A 2009 report by The Conference Board Task Force on Executive Compensation, noting that pay has become a flashpoint, recommends taking immediate and credible action “in order to restore trust in the ability of boards to oversee executive compensation” and calls for compensation programs which are “transparent, understandable and effectively communicated to shareholders.”

 

One way in which companies can begin to restore trust in the ability of their boards to oversee executive compensation while enhancing communication on the issue with their shareholders is by providing their shareholders with say on pay. More than 25 leading companies have already agreed to do so, including Apple, Ingersoll Rand, Microsoft, Occidental Petroleum, Hewlett-Packard, Intel, Verizon and PG&E. Following Aflac’s first advisory vote on compensation in 2008, the company’s Chairman and CEO said that, “An advisory vote on our compensation report is a helpful avenue for our shareholders to provide feedback on our pay-for-performance compensation philosophy and pay package.”

 

Investors filed close to 100 “Say on Pay” proposals last year asking companies to provide them with an advisory vote on executive compensation. Votes on these proposals averaged more than 46% in favor, and more than 20 proposals saw votes over 50%, demonstrating strong shareholder support for this reform.

The influential proxy voting advisory service RiskMetrics Group recommends voting in favor of “Say on Pay” resolutions, noting, “RiskMetrics encourages companies to allow shareholders to express their opinions of executive compensation practices by establishing an annual referendum process. An advisory vote on executive compensation is another step forward in enhancing board accountability.”

 

RiskMetrics is not alone in its support of allowing investors to have a say on pay. A bill mandating annual advisory votes passed the House of Representatives, and similar legislation is expected to pass in the Senate. We believe, however, that companies should demonstrate leadership and proactively adopt this reform before the law requires it.

 

The Council of Institutional Investors, which has also endorsed advisory votes on pay, has stated that, “Executive compensation is the most critical and visible aspect of a company’s governance.” We urge Mylan to institute this best-practice governance reform and allow shareholders to have a say on pay.

 

Board of Directors’ Statement in Opposition

 

The Board recognizes that executive compensation is a part of good corporate governance and has carefully considered this proposal and issues associated with shareholder advisory votes on executive compensation. While the Board welcomes dialogue between shareholders and the Board, it does not believe the proposal effectively serves that interest or that it is in the best interests of Mylan’s shareholders to provide for shareholder advisory votes on executive compensation for the following reasons.

 

As discussed under the heading “Compensation Discussion and Analysis” beginning on page 20, Mylan has implemented a carefully crafted executive compensation program designed to attract, retain and reward executives for their leadership and performance, and has a proven track record of attracting and retaining high caliber executives. The compensation program directly aligns executives’ interests with those of the Company’s shareholders. The Compensation Committee has determined that an executive compensation program comprising various elements of compensation, including base salaries, incentive bonuses, and various performance-based equity awards, best meets its dual objectives of attracting and retaining highly talented executives and aligning compensation with shareholder returns. The Board believes that the proposal, if implemented, could put the Company at a competitive disadvantage to public companies that have not adopted this practice.

 

An advisory vote on executive compensation would ask shareholders to endorse or reject compensation decisions without the benefit of all relevant information and observations throughout the relevant period, that are available to the Board or the Compensation Committee members, meaning that it would be impossible for shareholders to make a fully informed decision. The Compensation Committee, composed entirely of independent directors, is responsible for bringing its knowledge, skill and experience to the process of reviewing, approving and overseeing Mylan’s compensation plans and practices. The Compensation Committee determines executive compensation only after considering numerous factors, including the strategic and financial objectives and performance of Mylan and the performance of the individuals involved. The Compensation Committee considers both public and confidential information. In this process, the Compensation Committee uses comparative market data from a number of other companies and has retained independent professional advisors who provide expert advice on compensation variables and levels. As a result, it is critical that the Compensation Committee retain flexibility to select the appropriate incentives.

 

Further, the advisory vote would put Mylan at a competitive disadvantage and, if such a vote were implemented, the requirements should only be applied consistently to all public companies. As acknowledged by the proponent, there appears to be support in Congress and the executive branch for legislation relating to annual shareholder advisory votes on executive compensation. Any such legislation presumably would apply consistently to all public companies, and we believe these types of discussions belong at those levels, as opposed to the inconsistency that would result from application of these requirements only to certain companies. Further, the Board believes that it would be an inefficient use of the Company’s time and resources to develop and implement an advisory vote when the substance of the resolutions and the procedures for carrying out the vote may be established by law in the near future.

Finally, an advisory vote is not necessary because Mylan shareholders already have an efficient and effective method of communicating directly with the Board and its Compensation Committee. Shareholders may communicate with any member or committee of the Mylan Board (including the Compensation Committee or the Board generally) as described on page 38 under the heading “Communications with Directors.” By contacting the Board or members of the Compensation Committee directly, shareholders can directly express, with specificity, clarity and accuracy, their concerns regarding the Company’s compensation policies and practices to those charged with designing and administering Mylan’s executive compensation program. The Board believes that an advisory vote, which would not provide the Board with particular and sufficient information to address specific shareholder concerns, is not an effective or meaningful method for shareholders to communicate their views regarding executive compensation.

 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “AGAINST” THE SHAREHOLDER PROPOSAL.

 

The American Federation of State, County and Municipal Employees (“AFSCME”) Employees Pension Plan, 1625 l Street, N.W., Washington, D.C. 20036-5687, a beneficial holder of 2,100 shares of Mylan common stock, has given notice of its intention to introduce the following resolution at the Annual Meeting:

 

RESOLVED, that shareholders of Mylan urge the Compensation Committee of the Board of Directors (the “Committee”) to adopt a policy requiring that senior executives retain a significant percentage of shares acquired through equity compensation programs until two years following the termination of their employment (through retirement or otherwise), and to report to shareholders regarding the policy before Mylan’s 2011 annual meeting of shareholders. The shareholders recommend that the Committee not adopt a percentage lower than 75% of net after-tax shares. The policy shall apply to future grants and awards of equity compensation and should address the permissibility of transactions such as hedging transactions which are not sales but reduce the risk of loss to the executive.

 

SUPPORTING STATEMENT

 

Equity-based compensation is an important component of senior executive compensation at Mylan. According to Mylan’s 2009 proxy statement, option and equity awards represented approximately 42 to 48% of the total direct compensation value provided to named executive officers in 2008, and these awards align executive interests with those of shareholders. In the last three years, Mylan’s named executive officers have acquired more shares through vesting and option exercises than the shares they own outright. They have exercised over 2,367,039 options and acquired 627,546 shares through vesting for realized value over $32.8 million while owning 768,626 shares outright, along with 2,803,196 shares in options. We believe that the alignment benefits touted by Mylan are not being fully realized.

 

We believe there is a link between shareholder wealth and executive wealth that correlates to direct stock ownership by executives. According to an analysis conducted by Watson Wyatt Worldwide, companies whose CFOs held more shares generally showed higher stock returns and better operating performance. (Alix Stuart, “Skin in the Game,” CFO Magazine (March 1, 2008))

 

Requiring senior executives to hold a significant portion of shares obtained through compensation plans after the termination of employment would focus them on Mylan’s long-term success and would better align their interests with those of Mylan shareholders. In the context of the current financial crisis, we believe it is imperative that companies reshape their compensation policies and practices to discourage excessive risk-taking and promote long-term, sustainable value creation. A 2009 report by the Conference Board Task Force on Executive Compensation stated that hold-to-retirement requirements give executives “an evergrowing incentive to focus on long-term stock price performance.” (http://www.conference-board.org/pdf_free/ExecCompensation2009.pdf)

Mylan has a minimum stock ownership guideline requiring executives to own a number of shares of Mylan stock as a multiple of salary. The executives covered by the policy have until 2011 and 2013 to comply. We believe this policy does not go far enough to ensure that equity compensation builds executive ownership, especially given the extended time period for compliance. We also view a retention requirement approach as superior to a stock ownership guideline because a guideline loses effectiveness once it has been satisfied.

 

We urge shareholders to vote for this proposal.

 

Board of Directors’ Statement in Opposition

 

The Board recognizes that meaningful, long-term stock ownership aligns executives’ interests with those of shareholders and promotes a focus on sustainable value creation. However, the Board believes that Mylan’s current policies and programs achieve this goal effectively, and does not believe that it is in the best interests of Mylan’s shareholders to provide for a share retention policy for the reasons set forth below.

 

The proposal is nonsensical, in its concept of applying certain restrictions to some shareholders but not to others. For example, the vesting of an equity award, whether based on performance or the passage of time, is a mechanism for instilling a long-term perspective; however, once an award vests and shares are held, it would be inherently inconsistent and unfair to treat those shareholders differently than other shareholders are treated.

 

In addition, the proposal is not needed to align the financial interests of the Company’s senior executives with those of its shareholders. Unlike many of its peers, the Company has in place stock ownership guidelines for its executive officers. As a result of these guidelines, which require such officers to maintain from 200% to 500% of the officer’s base salary in Company equity, these interests are already well aligned. All of the Company’s officers have met or are on track to meet the ownership levels provided in the Company’s guidelines. Moreover, the Company believes that the effectiveness and intent of its guidelines will continue after the thresholds have been reached because officers will have a significant portion of their personal assets tied to the continued success of the Company. And, in contrast to the proposal, the Company’s guidelines provide clear, reasonable and meaningful standards for the amount of stock to be owned.

 

Further, the composition of the Company’s compensation packages already effectively motivates executives to deliver long-term results and discourages unreasonable risk-taking. A significant portion of executive officer compensation consists of stock option and RSU grants. The officer does not receive the full value of the award unless he or she remains with the Company through the final vesting date, which the Company believes strongly aligns and rewards officers for driving long-term results and taking a long-term view of the Company’s performance.

 

The proposal would also conflict with the Company’s objective of providing competitive total compensation to its executives, as described in “Compensation Discussion and Analysis” beginning on page 20. If implemented, the proposal would put the Company at a competitive disadvantage in its efforts to attract and retain top executives because the Company would be obligated to provide stock options and other stock awards that are subject to sale restrictions that are not imposed by its peers and competitors.

 

Finally, because equity compensation is the largest element of compensation for the Company’s executive officers, vested options and RSUs make up a substantial proportion of many officers’ net assets. Requiring officers to retain a high percentage of the shares awarded to them through equity compensation plans could actually encourage officers to rethink their position with the Company in order to realize the value of their compensation sooner, a result that is completely contrary to the retention aspect that is core to the granting of equity awards.

 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “AGAINST” THE SHAREHOLDER PROPOSAL.

 

The following table sets forth information concerning the compensation earned by the non-employee directors for 2009. Directors who are also employees of the Company do not receive any consideration for their service on the Board. A discussion of the elements of non-employee director compensation follows the table.

 

 

 

 

The non-employee directors receive $75,000 per year in cash compensation for their service on the Board. Mr. Puskar received an additional $70,330 for his services as Chairman through May 7, 2009. Non-employee directors are also reimbursed for actual expenses relating to meeting attendance.

 

In addition:

 

 

Non-employee directors, at the discretion of the full Board, are eligible to receive stock options or other awards under the 2003 Plan. In connection with the Board’s annual meeting following the Annual Meeting of Shareholders in May 2009, each non-employee director was awarded an option to purchase 14,286 shares of Common Stock, at an exercise price of $13.43 per share, the closing price per share of the Company’s Common Stock on the date of

grant, which option vests on the first anniversary of the date of grant, and 6,052 restricted stock units, also vesting on the first anniversary of the grant date.

 

The following table sets forth information regarding the beneficial ownership of our Common Stock as of March 29, 2010 by the Company’s Chief Executive Officer and the three other most highly compensated executive officers of the Company who were serving at the end of 2009, as well as by our directors, and by all directors and executive officers of the Company as a group (based on 308,315,363 shares of Common Stock outstanding as of such date). For purposes of this table, and in accordance with the rules of the SEC, shares are considered “beneficially owned” if the person, directly or indirectly, has sole or shared voting or investment power over such shares. A person is also considered to beneficially own shares that he or she has the right to acquire within 60 days of March 29, 2010. To the Company’s knowledge, the persons in the following table have sole voting and investment power, either directly or through one or more entities controlled by such person, with respect to all shares of the shares shown as beneficially owned by them, unless otherwise indicated in the footnotes below. Edward J. Borkowski and Jolene L. Varney, each former Chief Financial Officers shown in our Summary Compensation Table, are not included in the table below since they were no longer employed by the Company at March 29, 2010 and the Company does not have access to their stock ownership information as of that date.

 

 

 

 

 

The following table lists the names and addresses of the shareholders known to management to own beneficially more than five percent of our Common Stock as of February 26, 2010:

 

 

 

 

Section 16(a) of the Exchange Act requires our directors and executive officers and persons who own more than 10% of a registered class of our equity securities to file with the SEC within specified due dates reports of ownership and reports of changes of ownership of our Common Stock and our other equity securities. These persons are required by SEC regulations to furnish us with copies of all Section 16(a) reports they file. Based on reports and written representations furnished to us by these persons, we believe that all of our directors and executive officers complied with these filing requirements during 2009.

 

The names, ages and positions of our executive officers and Named Executive Officers as of March 25, 2010, are as follows:

 

 

See “Item 1 — Election of Directors — Director Nominees” for a description of the recent business experience of Mr. Coury.

 

Ms. Bresch has served as Mylan’s President since July 2009, before which she was Mylan’s Executive Vice President and Chief Operating Officer since October 2007. She previously served as Head of North American Operations since January 2007 and Senior Vice President, Strategic Corporate Development, beginning in February 2006. Ms. Bresch joined Mylan in 1992, and has held a number of management positions, including Vice President, Strategic Corporate Development from May 2005 to February 2006, Vice President of Public and Government Relations from February 2004 to April 2005, Director of Government Relations from March 2002 to February 2004, and Director of Business Development from January 2001 to March 2002.

 

Mr. Malik has served as Mylan’s Executive Vice President and Chief Operating Officer since July 2009, before which he was Mylan’s Head of Global Technical Operations since January 2007, as Executive Vice President since October 2007. Previously, he served as Chief Executive Officer of Matrix 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, Mr. Malik was Head of Global Regulatory Affairs and Head of Pharma Research for Ranbaxy from October 1999 to September 2003.

 

Mr. Korman has served as Senior Vice President and President, North America of Mylan since October 2007. From February 2005 to December 2009, he served as President of Mylan Pharmaceuticals Inc. Since joining Mylan through its acquisition of UDL Laboratories in 1996, Mr. Korman held several positions of increasing responsibility, including President of UDL and Vice President of Sales and Marketing for Mylan Pharmaceuticals.

 

Mr. Rizzo has served as the Company’s Corporate Controller since June 2006, as Senior Vice President since October 2007 and as principal financial officer since October 2009. He joined the Company as Vice President, Chief Accounting Officer and Corporate Controller in June 2006, prior to which he served as Vice President and General Controller of Hexion Specialty Chemicals, Inc. from October 2005 to May 2006, before which he served as Vice President and Corporate Controller at Gardner Denver, Inc. since 1998.

 

Officers of Mylan who are appointed by the Board can be removed by the Board, and officers appointed by the Chairman and Chief Executive Officer can be removed by him.

 

Overview

 

This Compensation Discussion and Analysis explains the material elements of the compensation of the Named Executive Officers and describes the objectives and principles underlying the Company’s executive compensation programs. We note, however, that two of the Named Executive Officers, Mr. Borkowski and Ms. Varney, both of whom held the position of principal financial officer during a portion of the year, separated from employment during 2009. Their compensation is discussed separately under the heading “Potential Payments Upon Termination or Change of Control”.

Objectives and Principles of Our Executive Compensation Program

 

The principal objectives of the Company’s executive compensation program are:

 

 

The Company strives to meet these objectives by implementing the principles listed below:

 

 

Our Executive Compensation Program

 

The primary elements of the Company’s executive compensation program are described below. We believe that these elements of compensation collectively support the objectives of the Company’s executive compensation program and encourage both the short-term and long-term success of the Company.

 

In connection with the development of our compensation program for our Named Executive Officers, our compensation consultant developed a list of peer companies. For 2009, this peer group consisted of the following 12 companies, including companies in both the generic and branded sectors: Allergan, Inc.; C.R. Bard, Inc.; Becton, Dickinson and Company; Biogen Idec, Inc.; Bristol-Myers Squibb Co.; Celgene Corporation; Eli Lilly and Company; Forest Laboratories, Inc.; Gilead Sciences, Inc.; Sepracor, Inc.; Warner Chilcott Limited.; and Watson Pharmaceuticals, Inc. Among other matters, we utilize these companies to assess competitive market data. A change was made to the peer group this year to reflect consolidation in the industry.

 

The competitive market data included the following components:

 

 

For 2009, actual adjusted diluted earnings per share, global regulatory submissions and synergies were $1.30, 185 and $234 million, respectively, in each case exceeding the target levels put in place by the Compensation Committee. This resulted in overall performance at 200% of the target level of performance under the Bonus Program (and 250% in the case of Mr. Coury). The Compensation Committee, in its deliberations on the actual awards, primarily took into consideration the performance criteria’s formulaic results; in addition, the Compensation Committee also considered subjective factors such as an executive’s individual performance, duties and responsibilities; an executive’s leadership as demonstrated by contributions to the strategic development, governance and vision of the Company; the executives’ titles; the Company’s overall progress in reaching organizational development and growth; and the executive’s commitment to the Company’s overall business philosophy. Accordingly, each of Mr. Coury, Ms. Bresch, and Messrs. Malik and Rizzo were paid annual incentive awards equal to 200% of their targets under the bonus program (i.e., 250% of base salary for Mr. Coury, 200% of base salary for Ms. Bresch and Mr. Malik, and 120% of base salary for Mr. Rizzo). Mr. Korman, whose employment agreement provides for an annual discretionary bonus target equal to 75% of his annual base salary, also received more than his target amount for reasons similar to the Compensation Committee’s considerations. The dollar amounts of short-term incentive compensation or bonus, as applicable, earned by each of the Named Executive Officers for 2009 are set forth below in the Summary Compensation Table.

 

Consistent with the philosophy and methodology used in 2009, for 2010 the short-term incentive compensation metrics are also adjusted diluted earnings per share, global regulatory submissions and attainment of synergies, likewise weighted at 50%, 25% and 25%, respectively.

 

 

The long-term equity grants awarded to the Named Executive Officers in 2009 included (i) stock options with an exercise price equal to the closing price of the Company’s common stock on the date of grant that vest ratably over a period of three years, provided that the executive remains continually employed by the Company; (ii) awards of RSUs that vest annually over a three-year period provided that the executive remains continually employed by the Company; and (iii) performance-based RSUs that generally vest at the end of a three-year period (subject to continued employment) based upon the achievement of performance criteria (those being adjusted diluted earnings per share, regulatory submissions and synergies, each weighted one-third).

 

Equity grants made to our Named Executive Officers in 2009 are set forth and described in the table below entitled “Grants of Plan-Based Awards for 2009.”

 

The current expectation of our Compensation Committee is to make annual equity grants, most likely in the first quarter of a fiscal year, with appropriate exceptions for new hires and promotions. The 2010 annual executive officer equity grant was made on March 3, 2010. Messrs. Coury, Malik, Rizzo and Korman and Ms. Bresch received a grant of options and restricted stock units (RSUs) that each time-vest over three years, beginning on the first anniversary of the date of grant. Currently, there is no exact date for the making of these grants each year, but our Compensation Committee intends to review its equity grant policy from time to time to ensure that it is in line with corporate best practices. We believe these annual grants serve as a retention incentive as well as another manner in which to align executives’ interests with those of our shareholders.

 

Also on March 3, 2010, the Named Executive Officers were granted long-term performance-based incentives in the form of RSUs that cliff-vest after a three-year period, assuming specified performance criteria are met (in this case, adjusted diluted earnings per share targets).

 

 

 

In addition, in December 2009, the Company adopted a 401(k) Restoration Plan (the “Restoration Plan”) , The Restoration Plan permits employees (including the Named Executive Officers) who earn compensation in excess of the limits imposed by Section 401(a)(17) of the Internal Revenue Code of 1986, as amended (the “Code”), to (i) defer a portion of base salary and bonus compensation, (ii) be credited with a Company matching contribution in respect of deferrals under the Restoration Plan, and (iii) be credited with Company non-elective contributions (to the extent so made by the Company), in each case, to the extent that participants otherwise would be able to defer or be credited with such amounts, as applicable, under the Company’s Profit Sharing 401(k) Plan if not for the limits on contributions and deferrals imposed by the Code.

 

Also in December 2009, the Company adopted an Income Deferral Plan, which permits certain management or highly compensated employees (including the Named Executive Officers) who are designated by the plan administrator to participate in the Income Deferral Plan to elect to defer up to 50% of base salary and up to 100% of bonus compensation, in each case, in addition to any amounts that may be deferred by such participants under the Profit Sharing 401(k) Plan and the Restoration Plan. In addition, under this Plan, eligible participants may be granted employee deferral awards, which awards will be subject to the terms and conditions (including vesting) as determined by the plan administrator at the time such awards are granted.

 

The Company has also entered into Retirement Benefit Agreements (“RBAs”) with three of the Named Executive Officers, Messrs. Coury and Malik and Ms. Bresch, in recognition of their service to the Company and to provide a supplemental form of retirement and death benefit. For a detailed description of the RBAs, see the section below entitled “Retirement Benefit Agreements.”

 

When Mr. Malik joined the Company in January 2007, the Company put in place a nonqualified deferred compensation plan on his behalf until such time as he relocates to, and is paid through, the U.S. and can participate in the Company’s 401(k) plan. The Company contributes to Mr. Malik’s account each pay period.

The plan account will be distributed to Mr. Malik upon the Company’s termination of the plan, the termination of Mr. Malik’s employment, or other qualifying distribution events, such as his retirement, disability or death.

 

 

Deductibility Cap on Executive Compensation

 

Section 162(m) restricts the deductibility for federal income tax purposes of the compensation paid to the Chief Executive Officer and each of the other Named Executive Officers for any fiscal year to the extent that such compensation for such executive exceeds $1,000,000 and does not qualify as “performance-based” compensation as defined under Section 162(m). The Board and our Compensation Committee have taken actions, including the grant of stock options, performance-based restricted stock awards and annual bonuses described in this Compensation Discussion and Analysis, intended to enhance Mylan’s opportunity to deduct compensation paid to executive officers for federal income tax purposes. Our Compensation Committee intends, to the extent appropriate, to preserve the deductibility of executive compensation without breaching Mylan’s contractual commitments or sacrificing the flexibility needed to recognize and reward desired performance.

 

We have reviewed and discussed the Compensation Discussion and Analysis with management. Based on such review and discussions, we recommended to the Board that the Compensation Discussion and Analysis be included in the Company’s Form 10-K and this Proxy Statement on Schedule 14A.

 

Respectfully submitted,

 

Rodney L. Piatt, C.P.A., Chairman

Wendy Cameron

Joseph C. Maroon, M.D.

 

The following summary compensation table sets forth the cash and non-cash compensation paid to or earned by the Named Executive Officers for 2009, 2008, and the 2007 Transitional Period (abbreviated below as “2007T”).

 

 

 

 

 

																								401(k) and
																				401(k) and				Profit
				Use of				Personal												Profit				Sharing Plan
				Company-				Use of								Income				Sharing Plan				Profit				Cash
				Provided				Company				Lodging				Tax				Matching				Sharing				Separation
				Automobile				Aircraft				Reimbursement				Gross-up				Contribution				Contribution				Payments				Other
Name		Fiscal Year		($)(a)				($)(b)				($)(c)				($)(d)				($)				($)				($)				($)(e)
Robert J. Coury		2009			28,498				433,387				—				79,321				9,800				16,100				—				3,401
		2008			26,787				348,988				—				59,803				9,200				15,750				—				3,509
		2007T			20,191				147,139				—				27,368				200				15,750				—				2,925
Heather Bresch		2009			19,200				—				—				—				9,800				16,100				—				1,660
		2008			17,775				5,457				—				37				9,200				15,750				—				660
		2007T			13,399				6,561				—				102				6,511				15,750				—				—
Rajiv Malik		2009			14,712				—				28,634				—				—				—				—				112,218
		2008			13,998				—				21,551				—				—				—				—				146,271
		2007T			4,100				—				20,769				—				—				—				—				51,730
Harry Korman		2009			700				—				—				—				9,800				16,100				—				2,754
Daniel C. Rizzo, Jr		2009			14,418				—				—				—				9,800				16,100				—				1,172
Edward J. Borkowski		2009			8,618				1,461								—				9,800				16,100				2,672,313				1,109
		2008			24,523				20,856				—				12,763				9,200				15,750				—				809
		2007T			20,853				22,234				—				14,700				5,731				15,750				—				—
Jolene L. Varney		2009			6,027				—				—				—				3,023				—				138,462				314

 

 

 

The following table summarizes grants of plan-based awards made to each Named Executive Officer during 2009.

 

 

 

 

The following table sets forth information concerning all of the outstanding equity-based awards held by each Named Executive Officer as of December 31, 2009. Edward J. Borkowski and Jolene L. Varney, each former Chief Financial Officers shown in our Summary Compensation Table, are not included in the table below since they were no longer employed by the Company at December 31, 2009.