MYLAN LABORATORIES INC.
1030 Century Building
130 Seventh Street
Pittsburgh, Pennsylvania 15222
Notice of Annual Meeting of Shareholders
Friday, July 23, 1999
10:00 a.m., Eastern Time
at
David L. Lawrence Convention Center,
West Hall
1001 Penn Avenue
Pittsburgh, Pennsylvania
DEAR SHAREHOLDER:
You are cordially invited to attend the 1999 Mylan Laboratories Inc. Annual
Meeting of Shareholders to:
o Elect seven directors.
o Approve the appointment of Deloitte & Touche LLP as independent auditors
for fiscal year 2000.
o Conduct other business properly brought before the meeting.
o Consider a shareholder proposal (which management opposes) involving
Mylan's Shareholder Rights Plan.
If you plan to attend, please complete and return the enclosed reservation
card. Shareholders of record at the close of business on April 30, 1999 may vote
at the meeting.
Your vote is important. Whether you plan to attend or not, please sign,
date and return the enclosed proxy card in the envelope provided.
I look forward to seeing you at the meeting.
Sincerely,
ROBERT W. SMILEY
Secretary
June 11, 1999
Pittsburgh, Pennsylvania
<PAGE>
MYLAN LABORATORIES INC.
-------------------------
Proxy Statement
For
Annual Meeting of Shareholders
To be held on July 23, 1999
-------------------------
TABLE OF CONTENTS
Notice of Annual Meeting........................................... Cover
Attendance and Voting Matters........................................ 1
The Mylan Board of Directors......................................... 2
Mylan Stock Owned by Officers and Directors.......................... 4
Persons Owning More than Five Percent of Mylan Stock................. 5
Performance Graph.................................................... 5
Report of the Compensation Committee on Executive Compensation....... 6
Executive Compensation............................................... 8
Appointment of Deloitte & Touche LLP................................. 10
Shareholder Proposal................................................. 11
Mylan's Response to Shareholder Proposal............................. 12
Other Matters........................................................ 13
Section 16(a) Beneficial Ownership Reporting Compliance......... 13
Shareholder Proposals for the 2000 Annual Meeting............... 13
Solicitation.................................................... 13
Shareholder List................................................ 13
Revocability of Proxy........................................... 14
Copies of Report................................................ 14
The approximate date of the mailing of this proxy statement is June 16, 1999.
<PAGE>
ATTENDANCE AND VOTING MATTERS
Reservations
If you plan to attend the meeting, we request that you complete and return
the enclosed reservation card by July 13, 1999.
Voting
Please sign and return the enclosed proxy card. If you do so, the
individuals named on the card will vote your shares in the manner you indicate.
Each share of Mylan stock you own entitles you to one vote. As of April 30,
1999, there were 129,118,713 shares of Mylan common
stock outstanding.
Giving your Proxy to Someone Other than Individuals Designated on the Card
If you want to give your proxy to someone other than individuals noted on
the proxy card, you may do so by crossing out the names of those individuals and
inserting the name of the individual you are authorizing to vote. Either you or
that authorized individual must present the proxy at the Annual Meeting.
The Quorum Requirement
A quorum of shareholders is necessary to hold a valid meeting. If at least
one-half of Mylan shareholders are present in person or by proxy, a quorum will
exist. Abstentions are counted as present for establishing a quorum.
Vote Necessary for Action
Directors are elected by a plurality vote of shares present at the meeting,
meaning that the director nominee with the most affirmative votes for a
particular slot is elected for that slot. In an uncontested election for
directors, the plurality requirement is not a factor. Other action is by an
affirmative vote of the majority of the shares present at the meeting.
Matters Raised at the Meeting Not Included in this Statement
We do not know of any matters to be acted upon at the meeting other than
those discussed in this statement. If any other matter is presented, proxy
holders will vote on the matter at their discretion if so indicated by the
proxy.
<PAGE>
<TABLE>
<CAPTION>
THE MYLAN BOARD OF DIRECTORS
Structure
We have a single class of directors who are elected to serve for one-year
terms. If 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 meeting.
Directors up for Election
<S>> <C> <C> <C>
Director
Name Principal Occupation Age Since
- ---- -------------------- --- --------
Milan Puskar Chairman of the Board, C.E.O. and President of Mylan 64 1976
Dana G. Barnett Executive Vice President of Mylan 58 1982
Laurence S. DeLynn Retail Consultant 74 1975
John C. Gaisford, M.D. Director of Burn Research, West Penn Hospital 83 1992
Robert W. Smiley, Esq. Senior Counsel to the law firm of Doepken Keevican & Weiss 77 1972
Professional Corporation; Secretary of Mylan
Patricia A. Sunseri Vice President of Investor and Public Relations of Mylan 59 1997
C.B. Todd Former Senior Vice President of Mylan 65 1993
</TABLE>
Mr. Puskar was employed by the manufacturing subsidiary of Mylan 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
VivoRx, Inc., Santa Monica, California, West Virginia University Foundation,
Morgantown, West Virginia and Duquesne University, Pittsburgh, Pennsylvania. Mr.
Puskar has served as President of Mylan since 1976 and as Vice Chairman of the
Board since 1980. He was elected Chairman of the Board and C.E.O. in November
1993.
Mr. Barnett was employed by Mylan in 1966. Since that time he has held
various management positions with the manufacturing subsidiary of Mylan. His
responsibilities have covered production, quality control and product
development. Mr. Barnett became Vice President in 1974, Senior Vice President in
1978 and Executive Vice President in 1987. He was elected President and Chief
Executive Officer of Somerset Pharmaceuticals, Inc., a joint-venture subsidiary
of Mylan in June 1991, and in August of 1995 he was elevated to Chairman and
Chief Executive Officer of Somerset Pharmaceuticals, Inc.
Mrs. Sunseri has served as a Director of Mylan since April 1997, as the
Vice President of Investor and Public Relations of Mylan since 1989 and as the
Director of Investor Relations of Mylan from 1984 to 1989.
Mr. Todd was employed by Mylan from 1970 until his retirement in May 1999.
Prior to assuming the position of Senior Vice President in 1987, Mr. Todd served
as Vice President--Quality Control. He also served as President of Mylan
Pharmaceuticals Inc., a subsidiary of Mylan.
Mr. DeLynn and Dr. Gaisford 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 Professional Corporation in
October, 1992, which provided legal services to Mylan in fiscal 1999.
Previously, he was a partner of Smiley, McGinty & Steger for more than five
years. Mr. DeLynn serves as Director Emeritus of One Valley Bank, Morgantown,
West Virginia.
<PAGE>
Board Meetings and Committees
In fiscal 1999, our full Board met eight times. In addition to meetings of
the full Board, directors attended meetings of individual Board committees and
often considered issues separate from these meetings. All of the directors
attended at least 75% of the Board and committee meetings held in fiscal 1999.
The Board has various standing committees, including an Audit Committee, a
Compensation Committee and a Nominating Committee.
The Audit Committee reviews the preparations for and scope of the annual
audit of Mylan's financial statements, makes recommendations as to the retention
of independent auditors and as to their fees, and other duties relative to the
financial statements of Mylan. The Audit Committee met on two occasions in
fiscal 1999. The Audit Committee is composed of Mr. DeLynn, Dr.
Gaisford and Mr. Smiley.
The Compensation Committee (which also serves as the Stock Option
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
on two occasions in fiscal 1999, is composed of Mr. DeLynn and Dr. Gaisford.
The Nominating Committee is responsible for nominating candidates for
election to the Board at the annual shareholders' meeting or upon the occurrence
of any vacancy on the Board. Mr. Puskar, Dr. Gaisford, Mr. Smiley and Mr. DeLynn
were appointed to serve as members of the Nominating Committee. The Nominating
Committee met on two occasions during fiscal 1999.
Compensation of Directors
Mylan presently has seven directors, four of whom (Mr. Puskar, Mr. Barnett,
Mr. Todd and Mrs. Sunseri) were executive officers of Mylan throughout fiscal
1999 and did not receive any additional compensation for serving as directors of
Mylan. Each of Mylan's non-employee directors (Mr. DeLynn, Dr. Gaisford and Mr.
Smiley) earned director's fees of $24,000 in fiscal 1999 and Mr. Smiley received
an additional fee of $21,000 for serving on Mylan's Executive Committee.
Under service benefit agreements entered into with Mylan, Mr. DeLynn, Dr.
Gaisford and Mr. Smiley are entitled to receive $18,000 annually, payable in
monthly installments for a 10 year period from the date of their termination of
service to Mylan. 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>
<TABLE>
<CAPTION>
MYLAN STOCK OWNED BY OFFICERS AND DIRECTORS
(AS OF APRIL 30, 1999)
The following table sets forth information 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.
<S> <C> <C>
Percent of Class
Name Shares Beneficially Owned(1) if 1% or more
- ---- -------------------------- -------------
Milan Puskar (2) 2,550,000 2.0%
Dana G. Barnett (3) 305,972 --
Laurence S. DeLynn (4) 350,500 --
John C. Gaisford, M.D. (5) 72,877 --
Robert W. Smiley, Esq. (6) 143,500 --
Patricia A. Sunseri (7) 508,750 --
C.B. Todd (8) 595,339 --
Roderick P. Jackson (9) 250,500 --
Louis J. DeBone (10) 165,000 --
All directors and executive officers as a group (11) 5,042,238 3.9%
</TABLE>
(1) For purposes of this table, shares are considered "beneficially owned" if
the person directly or indirectly has the sole or shares power to vote or
direct the voting of the securities or has the sole or shares power to
dispose of or direct the disposition of the securities. A person is also
considered to beneficially own shares that such person has the right to
acquire within 60 days, and options exercisable within such period are
referred to herein as "currently exercisable."
(2) The shares beneficially owned by Mr. Puskar include (i) 2,450,000 shares
held of record by him, and (ii) 100,000 shares issuable to him upon
exercise of options at exercise prices ranging from $16.688 to $17.75 per
share.
(3) The shares beneficially owned by Mr. Barnett, include (i) 75,972 shares
held of record by him, and (ii) 230,000 shares issuable to him upon
exercise of options at an exercise price ranging from $12.00 to $17.75 per
share.
(4) The shares beneficially owned by Mr. DeLynn include (i) 265,500 shares held
of record by him, and (ii) 85,000 shares issuable to him upon exercise of
options at an exercise price ranging from $12.00 to $17.75 per share.
(5) The shares beneficially owned by Dr. Gaisford include (i) 8,877 shares held
of record by him or his wife, and (ii) 64,000 shares issuable to him upon
exercise of options at exercise prices ranging from $14.666 to $28.75 per
share.
(6) The shares beneficially owned by Mr. Smiley include (i) 118,500 shares held
of record by him, and (ii) 25,000 shares issuable to him upon exercise of
options at exercise prices ranging from $16.688 to $17.75 per share.
(7) The shares beneficially owned by Mrs. Sunseri include (i) 448,750 shares
held of record by her, and (ii) 60,000 shares issuable to her upon exercise
of options at exercise prices ranging from $16.688 to $17.75 per share.
(8) The shares beneficially owned by Mr. Todd include (i) 365,339 shares held
of record by him or his wife, and (ii) 230,000 shares issuable to him upon
exercise of options at an exercise price ranging from $12.00 to $17.75 per
share.
(9) The shares beneficially owned by Mr. Jackson include (i) 20,500 shares held
of record by him or his wife, and (ii) 230,000 shares issuable to him upon
exercise of options at exercise prices ranging from $12.00 to $17.75 per
share.
(10) The shares beneficially owned by Mr. DeBone include (i) 30,000 shares held
of record by him, and (ii) 135,000 shares issuable to him upon exercise of
options at exercise prices ranging from $12.00 to $17.75 per share.
(11) These include (i) 3,796,328 shares held of record by the directors and
executive officers or their spouses (ii) 1,246,000 shares issuable to them
upon the exercise prices at exercise prices ranging from $12.00 to $17.75
per share.
<PAGE>
PERSONS OWNING MORE THAN FIVE PERCENT OF MYLAN STOCK
(AS OF APRIL 30, 1999)
The following table sets forth information regarding the amount and nature
of Common Stock ownership by all persons known by management to beneficially own
5% or more of the Common Stock. Mylan has no other classes of capital stock
outstanding.
Name and Address Shares Beneficially Owned(1) Percent of Class
---------------- ---------------------------- ----------------
Invesco Capital Management, Inc. 13,190,901 10.2%
11 Devonshire Square
London, EC2M 4YR England
(1) To the knowledge of Mylan, Invesco Capital Management, Inc. owns all of
these shares of record and holds the sole power to vote them.
PERFORMANCE GRAPH
Set forth below is a performance graph comparing the cumulative total
returns (assuming reinvestment of dividends) for the five years ended March 31,
1999 of $100 invested March 31, 1994 in each of the Company's Common Stock, the
Standard & Poor's 500 Composite Index and the Dow Jones Pharmaceutical Index.
Name 3/94 3/95 3/96 3/97 3/98 3/99
- ------- ---- ---- ---- ---- ---- ----
Mylan Laboratories Inc. 100 183 183 130 204 245
DJ Pharmaceuticals Index 100 146 226 290 498 659
S&P 500 100 116 153 183 271 321
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
Compensation Policies
For fiscal 1999, Mylan's compensation program consisted of base salary,
short-term incentive compensation, stock options and long-term incentive
compensation.
The Committee believes this compensation program was a significant factor
contributing to Mylan's success this past year, including net earnings of
$115,409,000 or $0.91 per diluted share.
The Compensation Committee
The Compensation Committee is charged with responsibility for:
o establishing the objectives and policies governing the compensation of
Mylan's employees generally,
o determining the amount of compensation payable annually to the Chairman
and Chief Executive Officer and any other executive officer of Mylan
whose annual compensation is subject to the limitations of Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code"),
o awarding stock options to employees of Mylan, and
o making such recommendations to the Board as it deems appropriate
concerning Mylan's compensation of employees and its award of stock
options.
Generally, the actions of the Compensation Committee do not require the
approval of the full Board to become effective.
Mylan's executive compensation policy is to:
o provide compensation to employees at such levels as will enable Mylan to
attract and retain employees of the highest caliber,
o compensate employees in a manner best calculated to recognize
individual, group and Company performances, and
o seek to align the interests of the employees with the interests of
Mylan's shareholders.
The Board and the Compensation Committee have taken actions designed to
increase Mylan's opportunity to deduct all compensation paid to highly
compensated officers for federal income tax purposes. However, neither the Board
nor the Compensation Committee believes that any executive's compensation should
be limited to the amount deductible if such executive deserves compensation in
excess of $1 million and the compensation is not deductible.
Executive Bonus Plan
In a prior fiscal year, the Committee reviewed and considered numerous
proposals for establishing objective performance-based criteria to award the
Chairman and Chief Executive Officer of Mylan and any other executive officers
who 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 were (1) earnings per share above fixed benchmarks, (2)
earnings per share above prior year's earnings per share, (3) stock price
reaching certain benchmarks, (4) percentage increases in stock price, (5)
approval by the Food and Drug Administration ("FDA") of a fixed number of
applications submitted by Mylan, (6) sales above fixed benchmarks and (7) sales
above prior year's sales.
<PAGE>
The Committee believes that using earnings per share above fixed benchmarks
provides the most meaningful objective measure of Mylan'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 price, the Compensation Committee was concerned that
stock price is subject to fluctuation based on general economic factors,
interest rates, the national and international political climate, trade 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 price alone would be an
appropriate way to create an incentive for its executives.
Third, measuring performance through FDA approvals appeared to the
Compensation Committee to be too imperfect a 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 Mylan'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,
subsequently approved by the shareholders of Mylan, which 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 thereunder in any fiscal year to all participating executives
cannot exceed $2,500,000.
Compensation of Executive Officers
The salaries of executive officers other than the Chairman and Chief
Executive Officer were determined by Milan Puskar. Mr. Puskar made his
determinations based upon various subjective factors such as the
responsibilities, positions, qualifications, individual performances and years
of service with Mylan of such executives. In making this determination, Mr.
Puskar did not undertake a formal survey or analysis of the compensation paid to
executives in other companies. These salaries are not tied to Mylan's
performance. The bonuses of executive officers other than the Chairman and Chief
Executive Officer were awarded by Mr. Puskar based upon his perception of each
officer's contribution to Mylan's success. Mr. Puskar 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.
<PAGE>
Compensation of Chief Executive Officer
The Compensation Committee did not consider any adjustments to the salary
of Milan Puskar, Mylan's Chairman and Chief Executive Officer, in fiscal 1999,
which was continued at the fiscal 1998 level. In order to create a
performance-based reward intended to be fully deductible by Mylan 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 fiscal year, in July 1998 the
Compensation Committee awarded a bonus to Mr. Puskar under the Executive Bonus
Plan of $50,000 for each $.005 that earnings for the second, third and fourth
quarters of fiscal 1999 in the aggregate exceeded $.53 per share, not to exceed
$500,000. Mylan's earnings exceeded these benchmarks, and Mr. Puskar was granted
a bonus of $500,000 for his services.
Submission of Report
This report on executive compensation is submitted by the members of the
Compensation Committee, Laurence S. DeLynn and John C. Gaisford.
EXECUTIVE COMPENSATION
<TABLE>
<CAPTION>
Summary Compensation Table
The following table sets forth information regarding the compensation paid
by Mylan in the past three fiscal years to the Chief Executive Officer and its
five most highly compensated executive officers other than the Chief Executive
Officer (collectively, the "Named Executive Officers"):
<S> <C> <C> <C> <C> <C>
Annual Compensation Long-Term Compensation
Options/ All Other
Fiscal Year Salary Bonus SARs (1) Compensation (2)
Name and Principal Position Ended March 31, ($) ($) # ($)
- --------------------------- --------------- ----- ----- -- ---
Milan Puskar, 1999 1,000,000 500,000 -0- 686,000
Chairman of the Board, C.E.O., 1998 1,000,000 500,000 100,000 681,500
President and Director 1997 1,000,000 -0- -0- 65,000
Dana G. Barnett, 1999 200,000 -0- -0- 403,400
Executive Vice President and 1998 200,000 -0- 80,000 402,400
Director (3) 1997 200,000 -0- -0- 23,100
C.B. Todd, 1999 225,000 250,000 -0- 759,400
Former Senior Vice President 1998 200,000 250,000 80,000 394,600
and Director (4) 1997 200,000 250,000 -0- 23,100
Roderick P. Jackson, 1999 225,000 250,000 -0- 85,600
Senior Vice President 1998 200,000 250,000 80,000 86,300
1997 200,000 250,000 -0- 86,700
Louis J. DeBone, 1999 175,000 175,000 -0- 85,600
Senior Vice President 1998 144,500 175,000 60,000 86,300
1997 144,500 175,000 -0- 86,700
Patricia A. Sunseri, 1999 175,000 175,000 -0- 85,600
Vice President and Director 1998 144,500 175,000 60,000 86,300
1997 144,500 175,000 -0- 86,700
</TABLE>
(1) Mylan does not currently offer stock appreciation rights ("SARs") to its
employees.
(2) This column includes (i) Mylan's contributions to the Employees Profit
Sharing Plan and (ii) the amounts accrued by Mylan under the Salary
Continuation Plan described below. During fiscal 1999, contributions to the
Employees Profit Sharing Plan were made in the amount of $15,400 for each
of Mr. Puskar, Mr. Barnett, Mr. Todd, Mr. Jackson and Mr. DeBone and Mrs.
Sunseri, and amounts were accrued under the Salary Continuation Plan of
$607,200, $364,300, $728,600, $70,200, $70,200, $70,200 for Mr. Puskar, Mr.
Barnett, Mr. Todd, Mr. Jackson and Mr. DeBone and Mrs. Sunseri,
respectively. Additionally, $63,400, $23,700, $15,400 of life insurance
premiums were paid by Mylan for Mr. Puskar, Mr. Barnett and Mr. Todd,
respectively, pursuant to split-dollar life insurance agreements with
respective trusts. Neither the executive officers nor their respective
trusts have any interest in the cash surrender value of the insurance
policies subject to that agreement.
Under the Salary Continuation Plan approved by the Board of Directors,
Mylan entered into Retirement Benefit Agreements with various key
employees, including each of the Named Executive Officers. These agreements
provide for fixed annual payments to these executives over a 15-year period
in the case of Mr. Puskar, Mr. Barnett, Mr. Todd and, subject to limited
exceptions, Mr. Jackson, and over a 10-year period in the case of Mr.
DeBone and Mrs. Sunseri, commencing upon their termination of employment
with Mylan. 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 Named Executive Officers following
retirement are as follows:
Milan Puskar............ $500,000
Dana G. Barnett......... $300,000
C.B. Todd............... $300,000
Roderick P. Jackson..... $250,000*
Louis J. DeBone......... $100,000
Patricia A. Sunseri..... $100,000
*$100,000 payable over 10 years if he retires before April 1, 2002 in
certain circumstances.
If any of these executives dies prior to retirement, his or her beneficiaries
will receive (under life insurance policies purchased by Mylan) lump sum
payments of $1,645,000, in the case of Mr. Puskar, $1,500,000, in the case of
Mr. Barnett and Mr. Todd, and $1,250,000, in the case of Mr. Jackson and Mr.
DeBone and Mrs. Sunseri. In addition, if Mr. Puskar dies prior to his
retirement, Mylan will pay his beneficiaries the additional sum of $1,600,000.
(3) The amounts for Mr. Barnett exclude payments made by Somerset
Pharmaceuticals, Inc., a non-consolidated subsidiary.
(4) On May 1, 1999, Mr. Todd resigned as Mylan's Senior Vice President and
retired as an employee of Mylan. He continues to serve as a director of
Mylan and is standing for re-election.
Option/SAR Grants in Fiscal 1999
Mylan did not award any options or SARs to any of the Named Executive
Officers in fiscal 1999.
<PAGE>
Aggregated Option/SAR Exercises in Fiscal 1999 and Fiscal Year-End
Option/SAR Values
The following table sets forth information concerning the aggregate number
and values of options held by Named Executive Officers as of March 31, 1999.
Mylan does not currently offer SARs to its employees.
<TABLE>
<S> <C> <C> <C> <C>
Number of Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Shares Options/SARs at Options/SARs at
Acquired Fiscal Year End(#) Fiscal Year End($)
Name on Value Exercisable/ Exercisable/
Exercise(#) Realized($) Unexercisable(1) Unexercisable(1)
--------- --------- ----------------- ------------------
Milan Puskar 0 0 100,000/0 $ 1,021,850/0
Dana G. Barnett 0 0 230,000/0 $ 3,133,105/0
C.B. Todd 0 0 230,000/0 $ 3,133,105/0
Roderick P. Jackson 0 0 230,000/0 $ 3,133,105/0
Louis J. DeBone 0 0 135,000/0 $ 1,770,922/0
Patricia A. Sunseri 0 0 60,000/0 $ 613,110/0
</TABLE>
(1) This information is presented as of March 31, 1999. See the notes to the
"Summary Compensation Table" for a description of these options. The value
shown is net of the option exercise prices.
Compensation Committee Interlocks and Insider Participation
Laurence S. DeLynn and John C. Gaisford served as members of the
Compensation Committee during fiscal 1999. 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.
Employment Contract and Termination of Employment and Change-in-Control
Arrangements
Mylan 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 Mylan's salaried 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
Mylan or the executive at any time. Mr. Puskar's compensation under this
employment contract is determined by Mylan'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 Mylan. The
Salary Continuation Plan referred to in the notes 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 15 years, as more fully described in such Note. Mylan 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 Mylan
or its subsidiaries.
APPOINTMENT OF DELOITTE & TOUCHE LLP
The Board of Directors seeks from the shareholders an indication of their
approval or disapproval of the Board's appointment of Deloitte & Touche LLP as
independent auditors for fiscal 2000.
Deloitte & Touche LLP served as the independent auditors of Mylan during
fiscal 1999, and no relationship exists other than the usual relationship
between an independent public accountant and client.
<PAGE>
If the appointment of Deloitte & Touche LLP as independent auditors for
fiscal 2000 is not approved by the shareholders, the adverse vote will be
considered a direction to the Board of Directors to consider other auditors for
next fiscal year. However, because of the difficulty in making any substitution
of auditors so long after the beginning of the current year, the appointment for
fiscal 2000 will stand unless the Board finds other good reason for making a
change.
Representatives of Deloitte & Touche LLP will be available at the annual
meeting of shareholders to respond to questions.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
SHAREHOLDER PROPOSAL
Mylan receives many suggestions from shareholders, some as formal
shareholder proposals. All of the suggestions that Mylan receives are given
careful attention, and Mylan has adopted a number of suggestions made by
shareholders.
The Board of Directors and management of Mylan disagree strongly with the
adoption of the resolution proposed below (the "Shareholder Proposal") and ask
shareholders to read carefully Mylan's response to the proposal.
The author and proponent of the following shareholder resolution, the
College Retirement Equities Fund ("CREF"), 730 Third Avenue, New York, New York,
10017-3206, the owner of 1,929,633 Common Shares, has requested Mylan to present
the following proposal at the Annual Meeting of Shareholders. The proposal, as
contained in CREF's letter to Mylan, is quoted verbatim below:
Proponent's Proposal
WHEREAS, the Company's Board of Directors, without shareholder approval,
has adopted a plan, commonly known as a "poison pill", with a "dead hand"
provision which permits only the board members that adopted the poison pill to
redeem the pill;
WHEREAS, this type of poison pill, unlike most poison pills, not only
allows the current Board to effectively thwart acquisition offers which may be
favored by a majority of shareholders, but also denies shareholders the right to
replace this Board with new directors empowered to redeem the poison pill,
permitting such offers to go forward;
WHEREAS, a "dead hand" poison pill has a coercive effect on the
shareholders' basic right to freely elect a new Board and also takes away normal
decision-making authority in this important area from a newly elected Board;
WHEREAS, such a "dead hand" poison pill interferes with good corporate
governance and can reduce the value of the company's shares to the detriment of
shareholders.
RESOLVED, that the shareholders request that the Board of Directors;
Redeem the "dead hand" poison pill, unless approved by the affirmative vote
of a majority of shares of the Company entitled to vote at a meeting of
shareholders held as soon as practicable.
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Proponent's Supporting Statement
By adopting the poison pill without shareholder approval, the current Board
unilaterally deprived shareholders of the traditional right to sell their shares
to potential bidders. By adding the "dead hand" feature, this Board also denies
appropriate decision making authority to a new Board, elected by shareholders,
to decide what is in the best interests of shareholders on this important
subject.
Traditional poison pills have been defended with the argument that
directors can generally be trusted to act in the shareholders' interest, and if
they do not, they can be replaced by the shareholders with other directors.
Adoption of "dead hand" poison pills, however, is different. The purpose is
"entrenchment," by coercing shareholders into voting for incumbent directors to
preserve the possibility of redemption of the pill. Their intended effect is to
preclude proxy contests for corporate control, which are an appropriate means to
challenge incumbent management.
We believe that the right of shareholders freely to elect a board of
directors with full power to represent the shareholders' interests is the
foundation-stone of good corporate governance. Yet this Board has unilaterally
deprived shareholders of their only real protection against a board that acts
against their interests--the ability to freely elect a board of their choosing
with full powers to represent them in all respects. In our view, this Board by
its actions has violated its fiduciary responsibility to shareholders.
By supporting this resolution, shareholders can protect the value of their
investment by sending a message to the Company that we value our right to elect
a Board that is prepared and able to represent shareholder interests on all
proper matters; and that we will not support unilateral actions by the Board
that restrict our ability to meaningfully exercise our voting rights.
MYLAN'S RESPONSE TO SHAREHOLDER PROPOSAL
The proponent requests that the Board of Directors redeem the shareholders'
rights previously issued pursuant to the Mylan Shareholder Rights Plan (which
proponent calls a "poison pill") unless such issuance is ratified by Mylan's
shareholders. For the reasons set forth below, the Board of Directors believes
that such action would not serve the best interests of Mylan and its
shareholders.
Mylan has maintained its Shareholder Rights Plan for almost three years
now. The Shareholder Rights Plan is designed to encourage prospective acquirors
to negotiate with the Board of Directors of Mylan rather than attempt a hostile
takeover. The Board of Directors in its fiduciary role carefully considered the
adoption of the Shareholder Rights Plan and determined it to be the best
available means of protecting the full value of the investment of Mylan's
shareholders, while not preventing an acquisition that is fair to all
shareholders. The Shareholder Rights Plan neither reduces management
accountability nor adversely affects shareholder value. In adopting a
Shareholder Rights Plan, Mylan joins approximately 2,400 other public companies
that have adopted similar plans. The Board did not adopt Mylan's plan in
response to any specific takeover threat, and the Board is currently not aware
of any efforts to acquire Mylan. The Shareholder Rights Plan will not interfere
with any merger or business combination that is approved by the Board of
Directors.
As proponent states, the Shareholder Rights Plan includes a continuing
director provision (which proponent calls a "dead hand" provision). Under that
provision, following a change in a majority of the directors resulting from a
proxy solicitation by a person or entity that has announced an intention (or
whom the Board in good faith has determined intends) to acquire 15% or more of
Mylan's Common Stock, then redemption of the rights can be effected only by a
majority of continuing directors (generally those who were in office at the time
of the distribution of the rights or whose nominations were approved by the
continuing directors from time to time in office). Without the continuing
director provision, a potential acquiror, through the solicitation of proxies,
could, without triggering the rights issued under the plan, gain control of
sufficient voting power to replace the Board
<PAGE>
with "interested" directors who would be in a position to approve the acquiror's
proposal to acquire Mylan. While this may be in the best interest of the
acquiror, it may not be in the best interests of other Mylan shareholders. The
continuing director provision does not limit the right of shareholders,
including any potential acquiror, to elect directors. Rather, it requires that
any transaction between a potential acquiror and Mylan be approved by directors
who are not affiliated with the acquiror or otherwise interested in the
transaction. The Board believes this procedure advances the purpose of the
Shareholder Rights Plan, which is to protect the interests of shareholders other
than a potential acquiror.
The continuing director provision is neither unusual nor an unlawful
affront to traditional concepts of good corporate governance. To the contrary,
Pennsylvania corporate law contemplates reliance on continuing directors to deal
with conflict of interest transactions with interested shareholders. The Board
firmly believes that the Shareholder Rights Plan, including its continuing
director provision, is an important tool that will enhance the Board's ability
to protect shareholder interests.
The Shareholder Rights Plan does not weaken the financial strength of Mylan
and enhances its ability to execute on its business plans. The issuance of
rights under the plan had no dilutive effect, did not affect reported earnings
per share, was not taxable to Mylan or its shareholders, and did not change the
way in which Mylan's shares are traded. The Board of Directors believes that the
Shareholder Rights Plan represents a sound and reasonable means of addressing
the complex issues of corporate policy created by the current takeover
environment.
For all of the above reasons, the Board of Directors and management
strongly believe that this proposal is neither in the best interests of Mylan
and its shareholders nor a reflection of current shareholder concerns.
YOUR DIRECTORS RECOMMEND A VOTE AGAINST THE SHAREHOLDER PROPOSAL.
OTHER MATTERS
Section 16(a) Beneficial Ownership Reporting Compliance
Based upon a review of our records, all reports required to be filed
pursuant to Section 16(a) of the Exchange Act were filed on a timely basis.
Shareholder Proposals for the 2000 Annual Meeting
If you want to submit proposals for possible inclusion in Mylan's 2000
Proxy Statement, you must do so on or before February 10, 2000.
Solicitation
Mylan is soliciting this proxy on behalf of its Board of Directors. This
solicitation is being made by mail but also may be made by telephone or in
person.
Shareholder List
A shareholder list will be available for your examination at the Annual
Meeting.
<PAGE>
Revocability of Proxy
You may revoke the enclosed proxy by filing a written notice of revocation
with Mylan by providing a later executed proxy or by attending Annual Meeting
and voting in person. If you vote in person, you will need to bring appropriate
evidence of your authority to vote. If your shares are held in street name you
will need a letter of authorization to vote from the brokerage firm holding your
shares in street name.
Copies of Report
Upon written request to the undersigned Secretary (at the address specified
on the cover page) by any shareholder whose proxy is solicited hereby, Mylan
will furnish a copy of its Annual Report on Form 10-K for the fiscal year ended
March 31, 1999 as filed with the Securities and Exchange Commission, without
charge to the shareholder requesting same.
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