<PAGE>
MYLAN LABORATORIES INC.
1030 Century Building
130 Seventh Street
Pittsburgh, Pennsylvania 15222
Notice of Annual Meeting of Shareholders
June 28, 1995
To The Shareholders of Mylan Laboratories Inc.
An annual meeting of shareholders of Mylan Laboratories Inc. will be
held at the Lakeview Resort & Conference Center, Morgantown, West Virginia, on
Wednesday, June 28, 1995 at 10:30 a.m. for the following purposes:
1. To elect seven directors to serve until the next annual meeting of
shareholders and until their respective successors shall have been elected
and shall have qualified.
2. To ratify the actions of the Board of Directors of the Company in
accelerating the effective date of certain amendments to the Company's 1986
Incentive Stock Option Plan which were previously approved by the
shareholders of the Company.
3. To approve the Executive Bonus Plan which sets forth parameters for
awarding performance-based compensation to participating executives.
4. To consider the proposal of the Executive Council of the Domestic
and Foreign Missionary Society of the Protestant Episcopal Church in the
United States of America encouraging inclusiveness on the Board of Directors.
The Board recommends a vote AGAINST this proposal.
5. To elect independent auditors of the Company for the fiscal year
ending March 31, 1996.
6. To transact such other business as may properly come before the meeting.
Shareholders of record at the close of business on April 30, 1995 are
entitled to notice of and to vote at the meeting.
All shareholders, whether or not they expect to be present in person,
are requested to sign, date and return the enclosed proxy in the accompanying
envelope as promptly as possible.
Shareholders who plan to attend the Annual Meeting are requested to
complete and return the enclosed reservation card by June 15, 1995.
By Order of the Board of Directors
Robert W. Smiley, Secretary
May 18, 1995
Pittsburgh, Pennsylvania
<PAGE>
MYLAN LABORATORIES INC.
1030 Century Building
130 Seventh Street
Pittsburgh, Pennsylvania 15222
---------------------------------------------
PROXY STATEMENT
---------------------------------------------
Annual Meeting of Shareholders June 28, 1995
This proxy statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Mylan Laboratories Inc., a
Pennsylvania corporation (the ''Company''), for an annual meeting of
shareholders to be held on June 28, 1995. The approximate date on which this
proxy statement and proxy are being sent to shareholders of the Company is May
20, 1995.
The shares represented by each properly executed proxy, in the form
enclosed and received by the Company will be voted as specified thereon by the
shareholder. If no specification is made, such shares will be voted FOR the
nominees named and proposals described below, except with respect to the
shareholder proposal for Board inclusiveness, as to which such shares shall be
voted AGAINST. Any proxy given by a shareholder may be revoked in writing at
any time prior to its exercise, but the revocation of the proxy shall not be
effective until notice thereof has been received by the Secretary of the
Company. Abstentions and broker non-votes will be included in determining the
number of shares present and entitled to vote at the meeting but will not be
considered to be voted for any proposal. Because the election of directors is
based on a plurality and the other proposals being considered on a majority of
the votes cast, abstentions and broker non-votes will not affect the outcome
of those matters.
References herein to ''fiscal 1995'' mean the Company's fiscal year
ended March 31, 1995.
VOTING SECURITIES AND RECORD DATE
Persons who as of the close of business on April 30, 1995 held of
record shares of the Company's common stock, par value $.50 per share
(''Common Stock''), are entitled to notice of and to vote at the annual
meeting. As of such date, there were 79,975,200 shares of Common Stock
outstanding. Holders of Common Stock are entitled to one vote per share and do
not have cumulative voting rights in the election of directors.
See ''Security Ownership'' herein for information with respect to the
share ownership of the directors of the Company.
ELECTION OF DIRECTORS [Proposal No. 1]
Directors are elected to serve until the next annual meeting of
shareholders and until their respective successors are elected and qualify.
Proxies received in the accompanying form will be voted for the election to
the Board of Directors of the seven nominees listed below except in such
instance that authority to vote for any of the nominees is withheld. The seven
nominees receiving the highest number of votes shall be elected. Each of the
nominees has consented to serve as a director if elected. Information
concerning the nominees, all of whom are presently members of the Board of
Directors, is set forth below.
<PAGE> 2
<TABLE>
<CAPTION>
Director
Name Principal Occupation Age Since
- ---------------- ---------------------------------- ------ ------------
<S> <C> <C> <C>
Milan Puskar Chairman of the Board
C.E.O. and President of
the Company 60 1976
Dana G. Barnett Executive Vice President of
the Company 54 1982
Laurence S. DeLynn Retail Consultant 70 1975
John C. Gaisford, M.D. Director of Burn Research
West Penn Hospital 79 1993
Richard A. Graciano Partner in Graciano
Enterprises, a construction
and development company 72 1966
Robert W. Smiley, Esq. Senior Counsel to the law
firm of Doepken Keevican
Weiss & Medved
Professional Corporation;
Secretary of the Company 73 1972
C.B. Todd Senior Vice President
of the Company 61 1993
</TABLE>
Mr. Puskar was employed by the manufacturing subsidiary of the Company
from 1961 to 1972 and served in various positions, including
Secretary-Treasurer, Executive Vice President and a member of the Board of
Directors. From 1972 to 1975, Mr. Puskar served as Vice President and General
Manager of the Cincinnati division of ICN Pharmaceuticals Inc. In addition, he
has served as partner of several pharmaceutical firms in foreign countries and
is currently a director of Huntington National Bank, West Virginia. Mr. Puskar
has served as President of the Company since 1976 and as Vice Chairman of the
Board since 1980. He was elected Chairman of the Board and C.E.O. on
November 9, 1993.
Mr. Barnett has been a Vice President of the Company since 1974. His
principal occupation since 1966 has been in various management positions with
the manufacturing subsidiary of the Company. His responsibilities have covered
production, quality control and product development. He became Senior Vice
President in 1978 and Executive Vice President in 1987. Since June of 1991, he
also has served as President and Chief Executive Officer of Somerset
Pharmaceuticals, Inc., a joint-venture subsidiary of the Company.
Mr. Todd has been employed by the Company since 1970. Prior to assuming
his present position in October, 1987 as Senior Vice President, Mr. Todd
served as Vice President-Quality Control. He also serves as President of Mylan
Pharmaceuticals Inc., a subsidiary of the Company.
Messrs. DeLynn, Gaisford and Graciano have been engaged for more than
the past five years in the principal occupations set forth in the table above.
Mr. Smiley joined the law firm of Doepken Keevican Weiss & Medved Professional
Corporation in October, 1992. Previously, he was a partner of Smiley, McGinty
& Steger for more than the five previous years. Mr. DeLynn is currently a
Director of One Valley Bank, Morgantown, West Virginia.
<PAGE> 3
The Board of Directors has established an Executive Committee, an Audit
Committee, an Executive Bonus Committee, a Stock Option Committee and certain
other committees. The Company does not have a nominating committee. The
Executive Committee, which met formally and informally on numerous occasions
during fiscal 1995, is composed of Messrs. Puskar, Barnett, Todd and Smiley of
the Board of Directors of the Company. The Audit Committee, which met twice
during the fiscal year, reviews the preparations for and scope of the annual
audit of the Company's financial statements, reviews drafts of such
statements, makes recommendations as to the retention of independent auditors
and as to their fees, and performs such other duties relative to the financial
statements of the Company and other matters as the Board of Directors may
assign from time to time. The Audit Committee is composed of Messrs. DeLynn,
Gaisford and Graciano. The Compensation Committee was formerly named the
Executive Bonus Committee. In October 1994, the Compensation Committee assumed
the functions of the Stock Option Committee, which was then dissolved. As more
fully described under ''Executive Compensation-Report on Executive
Compensation,'' the Compensation Committee has responsibility for establishing
compensation policies and objectives, determining the compensation payable to
the Chief Executive Officer and awarding stock options to employees. The
Compensation Committee, which met once in fiscal 1995, is composed of Messrs.
DeLynn and Smiley. The Board of Directors met four times during fiscal 1995.
Section 16(a) Compliance. Section 16(a) of the Securities Exchange
Act of 1934 requires the Company's directors and executive officers to file
reports of ownership of the Company's equity securities (and derivative
securities) and changes in such ownership with the Securities and Exchange
Commission and the New York Stock Exchange and to provide copies of those
filings to the Company. Based solely upon a review of such reports and certain
written representations, the Company believes that its directors and executive
officers are in compliance with their respective Section 16(a) filing
requirements.
Compensation of Directors
The Company presently has seven directors, three of whom (Messrs.
Puskar, Barnett and Todd) are executive officers of the Company and do not
receive any additional compensation for serving as directors of the Company.
Messrs. DeLynn and Graciano were each paid a director's fee of $25,500 during
fiscal 1995. Dr. Gaisford was paid a director's fee of $24,000 during the
fiscal year 1995. Mr. Smiley received $43,500 as compensation during the
fiscal year for services as a director and a member of the Executive and
Compensation Committees.
Under Service Benefit Agreements entered into with the Company in
January 1995, Messrs. DeLynn, Graciano and Smiley are entitled to receive
$18,000 annually and Dr. Gaisford is entitled to receive $6,000 annually,
payable in monthly installments for a 10 year period from the date of their
termination of service to the Company. Upon the death or at the election of
the director, the aggregate amount of any unpaid benefit is payable in a lump
sum, discounted to present value at the per annum rate of 7%.
<PAGE> 4
EXECUTIVE COMPENSATION
Report on Executive Compensation
Overview and Philosophy
The Company's executive compensation policy is to (i) provide
compensation to employees at such levels as will enable the Company to attract
and retain employees of the highest caliber, (ii) compensate employees in a
manner best calculated to recognize individual, group and Company performances
and (iii) seek to align the interests of the employees with the interests of
the Company's shareholders. Total compensation includes base salary, annual
cash bonuses, long-term incentives and employee benefits. The Company seeks to
reward outstanding executive performance contributing to superior operating
results and enhanced shareholder value.
The Company's compensation policies are administered through the
Compensation Committee. In October 1994, the Compensation Committee, formerly
named the Executive Bonus Committee, assumed the functions of the Stock Option
Committee, which was then dissolved. The Compensation Committee is charged
with responsibility for (i) establishing the objectives and policies governing
the compensation of the Company's employees generally; (ii) determining the
amount of compensation payable annually to the Chairman and Chief Executive
Officer and any other executive officer of the Company whose annual
compensation is subject to the limitations of Section 162(m) of the Internal
Revenue Code of 1986, as amended (the ''Code''); (iii) awarding stock options
to employees of the Company pursuant to the Company's 1986 Incentive Stock
Option Plan (the ''Option Plan''); and (iv) making such recommendations to the
Board from time to time as it deems appropriate concerning the Company's
compensation of employees and its award of stock options. The actions of the
Compensation Committee in fulfilling the obligations described in items (ii)
and (iii) of the preceding sentence do not require the approval of the full
Board to become effective.
The Board and the Compensation Committee have taken actions, described
below, designed to enable the Company to deduct all compensation paid to
highly compensated officers for Federal income tax purposes. The acceleration
of the effective date of certain provisions of the Option Plan and adoption of
an executive bonus plan are being presented to the shareholders for
ratification or approval. However, final regulations under Section 162(m) of
the Code have not been adopted and many questions governing the deductability
of such compensation have not been addressed or resolved by the Internal
Revenue Service (''IRS''). Consequently, no assurances can be given that the
actions proposed to be voted upon by the shareholders will ensure the
deductibility for Federal income tax purposes of all executive compensation
paid by the Company. Furthermore, neither the Board nor the Compensation
Committee subscribes to the view that any executive's compensation should be
limited to the amount deductible if such executive deserves compensation in
excess of $1 million and it is not reasonably practicable to compensate him or
her in a manner such that the compensation payable is fully deductible by the
Company.
Acceleration of Effective Date of Option Plan
At a special meeting of shareholders held April 7, 1993, the
shareholders of the Company approved certain amendments to the Option Plan
which were intended to bring the Option Plan into compliance with the new Rule
16b-3 of the Rules of the Securities and Exchange Commission (the
''Commission''). These amendments were originally scheduled to become
effective when compliance became mandatory under Rule 16b-3. The Commission
has, however, twice postponed the mandatory effective date, most recently
until September 1, 1995.
Since the time that the shareholders approved the amendments to the
Option Plan in April 1993, Section 162(m) of the Code was amended to provide
that a company could not deduct, for Federal income tax purposes, executive
compensation in excess of $1 million annually. Generally, (i)
performance-based compensation (based upon objective performance goals meeting
certain requirements relating to the uncertainty of its realization) which is
approved by a committee of two or more outside directors, within the meaning
of such term under Code
<PAGE> 5
Section 162(m), and which bonus plan is subsequently
approved by the shareholders, and (ii) compensation attributable to stock
option grants awarded by a committee of two or more ''outside directors,'' in
accordance with a stock option plan which complies with the provisions of Rule
16b-3 of the Commission's Rules and other criteria established by Section
162(m) of the Code, are deductible by the Company for Federal income tax
purposes without regard to the $1 million limitation.
The Company did not award or reprice any options under the Option Plan
during fiscal 1995. However, due to the Commission's delay of the mandatory
effective date of Rule 16b-3 of the Commission's Rules and the potential
non-deductibility for Federal income tax purposes of the compensation realized
by Company executives attributable to options awarded to them under the Option
Plan, the Board of Directors, upon the recommendation of the Compensation
Committee, accelerated the effective date of the amendments to the Option Plan
approved in April 1993 to October 25, 1994, subject to ratification of the
shareholders. In addition, the Board appointed Laurence S. DeLynn and Robert
W. Smiley, each of whom is believed to qualify as a ''disinterested director''
within the meaning of Section 16b-3 of the Commission's Rules and as an
''outside director'' within the meaning of Section 162(m) of the Code, to
serve as the sole members of the Compensation Committee.
[Proposal No. 2]
The shareholders are being asked to ratify the action of the Company's
Board of Directors in accelerating the effective date of certain of the
amendments to the Option Plan. The Board of Directors of the Company
recommends that the shareholders vote FOR the proposal to ratify the
acceleration of the effective date of certain of the amendments to the Option
Plan.
Executive Bonus Plan
The Committee reviewed and considered numerous proposals for establishing
objective performance-based criteria to award the Chairman and Chief Executive
Officer of the Company and any other executive officers who, from time to
time, are determined by the Committee to be eligible to receive a bonus based
on such criteria. Among the criteria considered by the Committee in
establishing an executive bonus plan (the ''Executive Bonus Plan'') were (i)
earnings per share above fixed benchmarks, (ii) earnings per share above prior
year's earnings per share, (iii) stock prices reaching certain benchmarks,
(iv) percentage increases in stock prices, (v) the approval by the Food and
Drug Administration (''FDA'') of a fixed number of applications submitted by
the Company, (vi) sales above fixed benchmarks and (vii) sales above prior
year's sales.
The Committee believed that using earnings per share above fixed benchmarks
provided the most meaningful objective measure of the Company's performance
and provides an appropriate vehicle for rewarding the Chairman and Chief
Executive Officer and other executives participating in the Executive Bonus
Plan. The other alternatives considered were dismissed by the Compensation
Committee for the following reasons:
First, as to earnings per share in excess of prior year's earnings, factors
beyond the control of the executives (such as the onset of a recessionary
environment in the pharmaceutical industry or sharply higher costs resulting
from implementation of new government regulations relating to the approval or
marketing of drugs) could make a comparison with prior year's earnings
meaningless. For example the exemplary performance by an executive in the face
of sharply higher costs due to new governmental burdens could go unrewarded if
a comparison with prior year's earnings were made. Further, the comparison of
current earnings with those of a prior period could operate as a disincentive
for the executive to approve new ventures, to enter into new markets, to
introduce new products or to seek new merger, acquisition or joint venture
opportunities if the start-up costs associated therewith would reduce earnings
in the short term.
Second, as to stock prices, the Compensation Committee was concerned that
stock prices are subject to fluctuation based on general economic factors,
interest rates, the national and international political climate, trade
<PAGE> 6
balances and other factors which bear no relationship to the effectiveness of
an executive or the performance of a particular corporation. Consequently, the
Compensation Committee did not believe that use of stock prices alone would be
an appropriate way to create incentives for its executives.
Third, measuring performance through FDA approvals appeared to the
Compensation Committee to be too imperfect measure of performance in that the
groundwork for an approval could precede the approval by a considerable time,
the timing of approvals is too uncertain, and the number of expected approvals
in any period of time is too small a class.
Finally, the Compensation Committee felt that sales provided the best
method of measuring the Company's performance next to earnings. However, in
that a measure based on sales alone does not provide an incentive to
executives to control costs, the Compensation Committee felt that this measure
provided a less satisfactory measure of performance than earnings.
Accordingly, the Compensation Committee approved the Executive Bonus Plan
set forth below, subject to shareholder approval.
[Proposal No. 3]
The Executive Bonus Plan set forth below has been approved by the
Compensation Committee. It is being presented to the shareholders of the
Company for approval. If the Executive Bonus Plan is approved by the
shareholders, Milan Puskar, the Chairman and Chief Executive Officer of the
Company, will receive additional compensation for fiscal 1995 of $500,000. No
other executive officer participated in the Executive Bonus Plan in fiscal
1995.
The Executive Bonus Plan provides for awards to participating executives of
cash bonuses of an amount fixed by the Compensation Committee of up to
$100,000 per $.01 by which earnings per share exceed benchmarks fixed by the
Compensation Committee. Although broad latitude is afforded to the
Compensation Committee to fix the benchmarks and amount of the award per $.01
increase, the bonuses payable to any executive cannot exceed $1,500,000 per
annum under the Executive Bonus Plan and the aggregate amount of bonuses
payable under in any fiscal year to all participating executives cannot exceed
$2,500,000.
Set forth below is the Executive Bonus Plan in its entirety. The Board of
Directors of the Company recommends that the shareholders vote FOR the
proposal to approve the Executive Bonus Plan.
Executive Bonus Plan
The Compensation Committee (the ''Committee'') of the Board of
Directors of the Mylan Laboratories Inc. (the ''Company'') may award
bonuses annually to the Chairman and Chief Executive Officer of the
Company and any other executive officer or officers of the Company whose
inclusion in the Executive Bonus Plan would benefit the Company by
providing an incentive to such executive officer to seek to maximize the
Company's performance. Not later than June 30 in each year (October 31,
1994 in the case of the balance of the 1995 fiscal year), the Committee
shall establish benchmarks on earnings per share for the remaining months
or quarters in the fiscal year the satisfaction of which shall entitle
each executive officer participating in the Executive Bonus Plan to
receive such bonus amount as the Committee shall establish for each $.01
by which earnings per share for the period shall exceed the benchmark. In
no event shall the Committee award any executive more than $100,000 per
$.01 by which earnings per share exceed the benchmarks, nor more than
$1,500,000 per annum under the Executive Bonus Plan, and the aggregate
amount of bonuses payable under the Executive Bonus Plan in any fiscal
year to all executives participating therein shall be $2,500,000. The
Committee shall certify in writing that such performance goals are
satisfied prior to the payment of any performance-based bonus.
Compensation of Executive Officers
The salaries of executive officers other than the Chairman and Chief
Executive Officer were determined by Milan Puskar. Mr. Puskar's determinations
were based upon various subjective factors such as the responsibilities,
<PAGE> 7
positions, qualifications, individual performances and years of service with
the Company of such executives. In making such determination, the Chairman and
Chief Executive Officer did not undertake a formal survey or analysis of the
compensation paid to executives in other companies. Such salaries are not tied
to the Company's performance. The bonuses of executive officers other than the
Chairman and Chief Executive Officer were awarded by the full Board of
Directors based upon the Board's perception of each officer's contribution to
the Company's success. The Board neither undertook to conduct a formal survey
or analysis of the bonuses awarded (or total compensation packages offered) by
other pharmaceutical companies nor established numerical goals or targets in
determining these bonuses.
The Board of Directors also approved an amended Salary Continuation Plan
which provides for the payment of death and retirement benefits to certain
directors, executive officers and other key employees of the Company,
including Milan Puskar. See ''Election of Directors-Compensation of
Directors'' and Note 2 to the ''Summary Compensation Table.'' In awarding
these benefits, the Board did not conduct a formal survey or analysis of
retirement benefits offered by other companies.
Compensation of Chief Executive Officer
In considering the compensation payable to Milan Puskar, the Chairman and
Chief Executive Officer of the Company, the Compensation Committee surveyed
the compensation paid to the principal executives of 13 public pharmaceutical
companies, including eight generic companies. Certain of these companies are
included in the Dow Jones Pharmaceutical Index used in the Performance Graph
set forth below. The Compensation Committee considered the average
compensation (including through stock and option grants) payable to the person
or persons who held the offices of chairman, chief executive officer and
president of the surveyed companies. The Compensation Committee also noted the
average net earnings of the surveyed companies as a percentage of net earnings
and the average executive compensation per employee. The Compensation
Committee further examined profiles of each of the surveyed companies showing,
inter alia, the number of employees, sales, net earnings and the ratio of
earnings to sales and equity.
In making its determination, the Compensation Committee further recognized
the exemplary earnings achieved by the Company during the current fiscal year,
the leadership Mr. Puskar has provided to the Company since assuming the
positions of Chairman and Chief Executive Officer in November 1993 under most
difficult circumstances, and the long-term commitment and contribution Mr.
Puskar has made to the Company since he assumed the office of President in
1976.
Based on the foregoing considerations, the Compensation Committee
authorized the payment to Mr. Puskar of a base salary of $700,000 for fiscal
1995. In recognition of the earnings per share achieved by the Company during
each of the first two quarters of fiscal 1995 of $.34 and approximately $.36
per share (as compared to earnings of $.21 and $.22 for each of the first two
quarters of fiscal 1994), the Compensation Committee further awarded to Mr.
Puskar a special bonus of $300,000, payable November 1, 1994.
Moreover, to create a performance-based reward which would be fully
deductible by the Company for Federal income tax purposes as well as serving
as an incentive to Mr. Puskar to seek to maximize earnings for the balance of
the third quarter and the fourth quarter, the Compensation Committee awarded
to him a bonus pursuant to the Executive Bonus Plan of $100,000 for each $.01
that earnings for the third and fourth quarter in the aggregate exceeded $.50
per share, not to exceed $500,000. The payment of this performance-based bonus
was, however, expressly made subject to the shareholders approval of the
Executive Bonus Plan.
The base compensation awarded to Mr. Puskar was unchanged from fiscal 1994.
The special bonus awarded to Mr. Puskar for the Company's performance during
the first two quarters of fiscal 1995, together with the bonus earned by him
under the Executive Bonus Plan (which will be payable, however, only if
approved by the shareholders) is $400,000 in excess of the bonus awarded to
him for fiscal 1994. The Compensation Committee believes that this
compensation is appropriate in comparison to the compensation awarded to the
principal executives in the other pharmaceutical companies surveyed and in
light of Mr. Puskar's considerable contributions to the Company.
<PAGE> 8
Submission of Report
This Report on Executive Compensation is submitted by the members of the
Compensation Committee, Robert W. Smiley and Laurence S. DeLynn, except for
the matters described under ''Compensation of Other Executive Officers,''
which, as to the salaries of executive officers, is submitted by Milan Puskar
and, as to the bonuses of executive officers, is submitted by the full Board
of Directors of the Company, Milan Puskar, John C. Gaisford, M.D., C. B. Todd,
Dana G. Barnett, Richard A. Graciano, Laurence S. DeLynn and Robert W. Smiley.
Compensation Committee Interlocks and Insider Participation
Robert W. Smiley and Laurence S. DeLynn served as members of the
Compensation Committee during fiscal 1995. The Compensation Committee met once
in fiscal 1995. Milan Puskar, C. B. Todd and Robert Smiley served on the Stock
Option Committee in fiscal 1995 until it was dissolved and its functions were
assumed by the Compensation Committee. The Stock Option Committee did not meet
in fiscal 1995. All members of the Board of Directors of the Company
participated in the meeting at which bonuses were awarded for certain
executive officers of the Company, but Mr. Todd abstained from voting since he
was among those for whom a bonus was being considered. Messrs. Puskar, Barnett
and Todd are executive officers of the Company. Mr. Smiley is the Secretary of
the Company.
There are no interlocking relationships, as defined in the regulations of
the Securities and Exchange Commission, involving members of the Board of
Directors, or its Compensation Committee.
SHAREHOLDER PROPOSAL [Proposal No. 4]
The following proposal has been made by the Executive Council of the
Domestic and Foreign Missionary Society of the Protestant Episcopal Church in
the United States of America (the ''Missionary Society'') and is not supported
by Management. The Board recommends a vote AGAINST the Missionary Society's
proposal.
Resolutions of Missionary Society
WHEREAS, we believe that the Boards of many Publicly-held corporations have
benefitted from the perspective brought to their decision making process by
their well qualified board members who are women or who are members of racial
minorities;
WHEREAS, Mylan Laboratories currently has a distinguished Board of seven
persons, all of whom are white males;
WHEREAS, we are concerned about several aspects of the governing structure
of Mylan in addition to the lack of diversity on the Board, including the
facts that (i) the Board has no Nominating Committee and (ii) a majority of
the Board are either employees or legal counsel to the corporation, rather
than ''independent'' directors;
WHEREAS, we believe that the Board should establish a Nominating Committee
consisting of independent directors and that such Nominating Committee should
take every reasonable step to ensure that women and persons from minority
racial groups are in the pool from which Board nominees are chosen; therefore
be it
RESOLVED, that the shareholders request the Board, or its Nominating
Committee, in connection with its search for suitable Board candidates, to
make greater efforts to ensure that women and persons from minority racial
groups are among those it considers for nomination to the Board.
Supporting Statement of Missionary Society
The presence of women and minority members on a Board of Directors is,
fortunately, no longer a novelty. For example, annual surveys of its portfolio
companies by the sponsor of this proposal (a major religious institution with
an endowment of almost $150,000,000) have revealed that the overwhelming
majority of its portfolio companies have minorities and/or women on their
Boards, and many have more than one such Board member.
<PAGE> 9
We believe that the judgements and perspectives which such business people
bring to Board deliberations serve to improve the quality of decision making
by the Board. We therefore urge the corporation to enlarge its search for
qualified Board members by casting a wider net. Please note that America's
largest insurance company, with $52,000,000,000 invested in stocks, has
adopted guidelines for its portfolio companies calling for both nominating
committees and for boards which are diverse in terms of experience, sex, age
and race. Our Board lacks both a nominating committee and such diversity.
This proposal does not require, or even request, that minority group
persons or women be appointed to the Board, but only that greater efforts be
made to ensure that such persons are included among those considered for
nomination to the Board.
In connection with aforementioned surveys of our portfolio companies, we
also inquire of each company whether it has a program to encourage the
purchase of goods and supplies from minority and women suppliers. The
overwhelming majority of responders stat e [sic] that they have such programs.
In contrast, Mylan has for two consecutive years, refused to respond to our
inquiries concerning minority or women vendors. It has similarly refused to
respond to inquiries about the composition of its Board.
If you believe that it would be advantageous for Mylan to make greater
efforts towards to [sic] goal of a more diverse Board, please vote YES.
Statement by the Board Opposing the Missionary Society's Proposal
In June 1994, the Company's Board adopted the following resolution:
''UNANIMOUSLY RESOLVED: That the Company take every reasonable step to
ensure that women and persons from minority racial groups continue to be
in the pool from which the Board member nominees are chosen.''
The Company believes that the differences between its own resolution and
that proposed by the Missionary Society are critical. The Company seeks to
identify the most highly qualified candidates for election to the Board,
irrespective of race or gender. The proposal of the Missionary Society
encourages the Company to seek to identify candidates on the basis of race or
gender. In such instances, the consideration of a prospective nominee's
experience and abilities are necessarily secondary. The Company supports race
and gender neutrality, and does not believe that the interests of the Company
are served by favoring persons for nomination to the Board other than on the
basis of their qualifications.
The Company further wishes to correct the assertion in the Missionary
Society's supporting statement that the Company has refused to respond to
inquiries concerning minority or women vendors or the composition of the
Board. When this proposal was submitted to the Company, the Missionary Society
had raised neither the issue of vendors nor the issue of the composition of
the Board. The Company has since responded to the Missionary Society's
questions concerning Board composition, but the Missionary Society has never
made inquiries of the Company concerning its vendors.
The Board recommends a vote AGAINST the Missionary Society's proposal.
Employment Contract and Termination of Employment
and Change-in-Control Arrangements
The Company entered into an employment contract with Mr. Puskar on April
28, 1983 which specifies his respective duties and provides for ordinary
insurance and health benefits as provided for the Company's salaried
<PAGE> 10
employees. This employment contract originally called for a term expiring on
March 31, 1988, and since this date has been continued on a year-to-year basis
subject to termination by either the Company or the executive at anytime.
Salary and bonuses under this employment contract are as determined by the
Company's Board of Directors. Mr. Puskar's employment contract provides for
continued payments of salary for a period of one year following any
termination of his employment contract by the Company. The Salary Continuation
Plan referred to in Note 2 to the ''Summary Compensation Table'' provides for
the payment of post-retirement compensation pursuant to agreements with key
employees, including executive officers, over a period not exceeding fifteen
years, as more fully described in such Note. The Company has no other
compensatory plan or arrangements resulting from the resignation, retirement
or other termination (including any termination or change in responsibility
following a change-in-control) of an executive officer's employment with the
Company or its subsidiaries.
Performance Graph
COMPARING FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG MYLAN LABORATORIES INC.,
S&P 500 COMPOSITE INDEX AND DOW JONES PHARMACEUTICAL INDEX
Set forth below is a performance graph comparing the cumulative total
returns (assuming reinvestment of dividends) for the five years ended March
31, 1995 of $100 invested March 31, 1990 in each of the Company's Common
Stock, the Standard & Poor's 500 Composite Index and the Dow Jones
Pharmaceutical Index.
GRAPHIC NO. 1
<TABLE>
<CAPTION>
DATE MYLAN LABS INC. S & P 500 DJ PHARMACEUTICALS
<S> <C> <C> <C>
3/90 $100.00 $100.00 $100.00
3/91 $137.00 $114.00 $148.00
3/92 $195.00 $127.00 $169.00
3/93 $300.00 $146.00 $139.00
3/94 $182.00 $149.00 $128.00
3/95 $334.00 $172.00 $186.00
</TABLE>
<PAGE> 11
SUMMARY COMPENSATION TABLE
The following table sets forth information regarding the compensation paid
by the Company and its subsidiary in the past three fiscal years to the Chief
Executive Officer and its four most highly compensated executive officers
other than the Chief Executive Officer who were serving as executive officers
at the end of such years:
<TABLE>
<CAPTION>
Long-Term Compensation
-------------------------
Annual Compensation Options/ All Other
------------------------
Name and Fiscal Year Salary Bonus SARs(1) Compensation(2)
Principal Position Ended March 31 ($) ($) (#) ($)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Milan Puskar, 1995 700,000 800,000(4) -0- 709,200
Chairman of the Board, 1994 700,000 400,000 -0- 172,100
C.E.O., President and 1993 700,000 1,400,000 200,000 481,200
Director
Dana G. Barnett, 1995 150,000(3) -0-(3) -0- 848,600
Executive Vice President 1994 150,000(3) -0-(3) -0- 93,200
and Director 1993 150,000(3) -0-(3) 100,000 179,100
C. B. Todd, 1995 150,000 300,000 -0- 260,300
Senior Vice President 1994 150,000 250,000 -0- 318,700
and Director 1993 150,000 200,000 100,000 310,700
Roderick P. Jackson, 1995 150,200 300,000 -0- 153,000
Senior Vice President 1994 150,000 250,000 -0- 65,100
1993 124,600 200,000 100,000 37,800
Louis J. DeBone, 1995 100,000 225,000 -0- 229,700
Vice President 1994 100,000 200,000 -0- 38,000
1993 100,000 150,000 50,000 35,000
</TABLE>
- --------------
(1) The Company does not have an SAR program.
(2) This column includes (i) the Company's contributions to the Employees
Profit Sharing Plan and (ii) the amounts accrued by the Company under the
Salary Continuation Plan described below. During fiscal 1995: contributions
to the Employees Profit Sharing Plan were made in the amount of $19,600 for
each of Messrs. Puskar, Barnett, Todd, Jackson and DeBone; amounts were
accrued under the Salary Continuation Plan of $689,600, $829,000, $240,700,
$133,400 and $210,100 for Messrs. Puskar, Barnett, Todd, Jackson and
DeBone, respectively.
Pursuant to a Salary Continuation Plan approved by the Board of
Directors in January 1995, the Company entered into Retirement Benefit
Agreements with various key employees, including each of the executive
officers included in the Summary Compensation Table. These agreements
provide for fixed annual payments to these executives over a 15-year
period, in the case of Messrs. Puskar, Barnett and Todd, and over a 10-year
period, in the case of Messrs. Jackson and DeBone, commencing upon their
termination of employment with the Company. Upon the death following
retirement or at the election of the executive, the aggregate amount of the
unpaid benefit is payable in a lump sum, discounted to present value at the
per annum rate of 7%.
The annual benefits awarded to the executive officers included in the
Summary Compensation Table are as follows:
<TABLE>
<CAPTION>
Retirement Before Retirement After Retirement Due to
March 31, 1996 March 31, 1996 Disability
----------------- ---------------- ------------------
<S> <C> <C> <C>
Milan Puskar $250,000 $300,000 $500,000
Dana G. Barnett $150,000 $180,000 $300,000
C. B. Todd $150,000 $180,000 $300,000
Roderick P. Jackson $ 36,000 $70,000 to $100,000 $100,000*
Louis J. DeBone $ 36,000 $70,000 to $100,000 $100,000*
</TABLE>
- --------------
* Or retirement following a change of control of the Company.
If any of these executives dies prior to retirement, his beneficiaries
will receive (under life insurance policies purchased by the Company) lump
sum payments of $1,645,000, in the case of Mr. Puskar, $1,500,000, in the
case of Messrs. Barnett and Todd, and $1,250,000, in the case of Messrs.
Jackson and DeBone. In addition, if Mr. Puskar dies prior to his
retirement, the Company will pay his beneficiaries the additional sum of
$1,600,000.
(3) The amounts for Mr. Barnett exclude payments made by Somerset
Pharmaceuticals, Inc., a non-consolidated subsidiary.
(4) This $800,000 bonus consists of $300,000 paid to Mr. Puskar in November
1994 and $500,000 earned by him (but not yet paid) pursuant to the
Executive Bonus Plan adopted by the Compensation Committee. The Executive
Bonus Plan is subject to shareholder approval as described under
''Executive Compensation-Report on Executive Compensation-Executive Bonus
Plan'' and this $500,000 portion of the bonus will not be paid unless the
shareholders approve the Executive Bonus Plan.
<PAGE> 13
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR OPTIONS (1)
The following table sets forth information in respect of exercises by the
named executive officers of stock options granted to, and unexercised options
held by, such officers at March 31, 1995. All such options were granted under
the Company's 1986 Incentive Stock Option Plan, as amended.
<TABLE>
<CAPTION>
(#)Value of
Number of Unexercised
Unnexercised In-the-Money
Options at Options at
Shares Value Fiscal Year Ended Fiscal Year Ended
Acquired Realized March 31, 1995 March 31, 1995 (2)
Name (#) ($) (#) ($)
- -------- ------ ----- --------- ---------------------
<S> <C> <C> <C>
Dana G. Barnett -0- -0- 100,000 1,375,000
C. B. Todd -0- -0- 100,000 1,375,000
Roderick P. Jackson -0- -0- 100,000 1,375,000
Louis DeBone -0- -0- 50,000 687,500
</TABLE>
- ----------
(1) The Company does not have an SAR program.
(2) All options were exercisable at $18.00 per share. The closing price on
March 31, 1995 on the New York Stock Exchange was $31.75 per share.
SECURITY OWNERSHIP
The following table sets forth information as of April 30, 1995
regarding the amount and nature of Common Stock ownership by all directors and
named executive officers and all directors and executive officers as a group:
<TABLE>
<CAPTION>
Shares
Beneficially
Owned (1) Percent
Name (#) of Class
- ----- -------------- --------------
<S> <C> <C>
Milan Puskar 1,600,000 2.00
Dana G. Barnett 41,714 .18
Laurence S. DeLynn 240,000 .35
John C. Gaisford, M.D. 4,400 .03
Richard A. Graciano 107,985 .14
Robert W. Smiley, Esq. 79,000 .10
C. B. Todd 178,444 .35
Roderick P. Jackson 25,000 .16
Louis J. DeBone 20,000 .09
All directors and executive
officers as a group (2) 3,191,843(2) 4.00%
</TABLE>
- ---------
(1) In each case, the director or officer has sole or shared direct
beneficial ownership of the shares.
(2) Includes 510,000 unissued shares under option. Excludes 70,390 shares
held by the wives of certain directors of which shares the director
disclaims beneficial ownership.
<PAGE> 14
As of April 30, 1995, to the best of the Company's knowledge, no one
person or group beneficially owned more than 5% of the outstanding Common
Stock.
INDEPENDENT AUDITORS [Proposal No. 5]
The Board of Directors has recommended that Deloitte & Touche LLP be
elected by the shareholders to act as auditors of the Company for the current
fiscal year. Proxies received in the accompanying form will be so voted unless
other specification is made. The affirmative votes of a majority of the shares
of Common Stock present and voting (in person or by proxy) are required to
adopt the proposal.
The Company's financial statements for fiscal 1995 were examined by
Deloitte & Touche LLP. In connection with the examination of the financial
statements, Deloitte & Touche LLP also reviewed the Company's annual report to
shareholders and its filings with the Securities and Exchange Commission.
It is expected that a representative of Deloitte & Touche LLP will be
present at the annual meeting with the opportunity to make a statement if he
desires to do so, and will be available to respond to appropriate questions.
1996 SHAREHOLDER PROPOSALS
To be considered for inclusion in the Company's proxy statement for the
1996 annual meeting, shareholder proposals must be received by the Company at
its principal executive offices not later than January 20, 1996.
OTHER MATTERS [Proposal No. 6]
The Board of Directors does not know of any matters to be presented at
the annual meeting other than those discussed above. If other matters should
properly come before the meeting, shares in respect of which properly executed
proxies are received will be voted on such matters in accordance with the
judgment of the persons named in such proxies. The cost of the solicitation of
proxies on behalf of the Board of Directors will be borne by the Company. In
addition to solicitation by mail, regular employees of the Company may solicit
proxies in person or by telephone.
Upon written request to the undersigned Secretary (at the address
specified on page 1) by any shareholder whose proxy is solicited hereby, the
Company will furnish a copy of its Annual Report on Form 10-K for the fiscal
year ended March 31, 1995 as filed with the Securities and Exchange
Commission, together with financial statements and schedules thereto, without
charge to the shareholder requesting same.
By Order of the Board of Directors,
Robert W. Smiley, Secretary
<PAGE>
Graphics Appendix List
Page Where
Graphic
Appears Description of Graphic or Cross Reference
- ------------------------------------------------------------------------------
Page 10
Graphic No. 1 is a performance graph showing
a comparison of cumulative total return among Mylan Laboratories Inc.,
The S & P 500, and the Dow Jones Pharmaceuticals for the period beginning
1990 and ending 1994, pursuant to Regulation S-K 402(l).
The underlying data is setforth on page 10.
<PAGE>
PROXY-Mylan Laboratories Inc.-Annual Meeting of Shareholders June 28, 1995
The undersigned hereby appoints MILAN PUSKAR and ROBERT W. SMILEY, and
each with full power to act without the other, as proxies, with full power of
substitution, for and in the name of the undersigned to vote and act with
respect to all shares of common stock of MYLAN LABORATORIES INC. (the
''Company'') standing in the name of the undersigned on April 30, 1995 or with
respect to which the undersigned is entitled to vote and act, at the Annual
Meeting of Shareholders of the Company to be held June 28, 1995 and at any and
all adjournments thereof, with all the powers the undersigned would possess if
personally present, and particularly, but without limiting the generality of
the foregoing:
1. Election of FOR WITHHELD Nominees: M. Puskar, D. Barnett,
Directors / / / / R. Smiley, L. DeLynn, R. Graciano,
J. Gaisford, C. Todd
For, except vote withheld from the following nominee(s):
- -------------------------------------------------------
2. Ratify acceleration FOR AGAINST ABSTAIN
amendments to 1986 Incentive / / / / / /
Stock Option Plan.
3. Approve the Executive Bonus Plan. FOR AGAINST ABSTAIN
/ / / / / /
THE BOARD RECOMMENDS A VOTE ''AGAINST'' THE FOLLOWING PROPOSAL (4) FOR THE
REASONS SET FORTH IN THE PROXY STATEMENT.
4. Adopt the proposal of the FOR AGAINST ABSTAIN
Foreign Missionary Society / / / / / /
encouraging inclusiveness.
5. The election of Deloitte & Touche FOR AGAINST ABSTAIN
LLP as independent auditors. / / / / / /
6. To vote in their discretion FOR AGAINST ABSTAIN
upon such other matters as may / / / / / /
properly come before the meeting
or any adjournment thereof.
THIS PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
This proxy will be voted FOR items 1, 2, 3, 5 and 6 and AGAINST item 4 if no
choice is specified.
The undersigned hereby revokes all proxies heretofore given by the undersigned
to vote or act at said meeting, and hereby ratifies and confirms all that said
proxies, or their substitutes, or any of them, may lawfully do by virtue
hereof. Receipt is hereby acknowledged of the notice of annual meeting and
proxy statement of the Company, dated May 18, 1995.
PLEASE DATE, EXECUTE AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE.
Date....................., 1995
...............................
...............................
Signature(s)
Please sign exactly as your name
appears hereon. When signing as
Attorney, Executor, Administrator,
Trustee, etc., or as Officer of a
Corporation, please give your full
title as such. For joint accounts,
each joint owner should sign.
