Mylan Inc. To Pay Five Top Execs $32.5 Million Earlier Than Planned As Drugmaker Exits U.S.
Published: Dec 11, 2014
December 10, 2014
By Krystle Vermes, BioSpace.com Breaking News Staff
A new penalty that negatively impacts the managers of companies that change their legal addresses overseas has encouraged Mylan Inc. to pay out $32.5 million to five top executives. The payment will help Mylan, the generic drug maker, avoid the U.S. penalty, according to Bloomberg.
In a filing with the U.S. Securities and Exchange Commission, Mylan also noted that pick up the $20.5 million tax bill for the five executives. The penalties came as Mylan looked to buy European assets from Abbot Laboratories and adopt a Dutch legal address which lower its corporate tax rate.
A special excise tax created in 2004 was developed to dissuade companies from these type of changes. Mylan’s board of directors determined that the company should shoulder the burden of excise tax. They viewed the move as “critically important to Mylan’s past success.”
AbbVie Abandons Plans to Acquire Shire
AbbVie’s looming deal with Shire made headlines earlier this year, but everything came to a head on Oct. 20 when the companies announced that they would not be moving forward with their plans.
Initially, AbbVie was interested in acquiring the company, but the U.S. Department of Treasury quickly notified the company of tax principles that would eliminate the financial benefits of doing so. The government viewed the deal as a tax inversion, which would have recognized AbbVie as attempting to change its address to avoid heavy taxes. In turn, the company quickly dropped the potential deal.
“The unprecedented unilateral action by the U.S. Department of Treasury may have destroyed the value in this transaction, but it does not resolve a critical issue facing American businesses today,” said Richard Gonzalez, AbbVie chairman and chief executive officer, at the time. “The U.S. tax code is outdated and is putting global U.S.-based companies at a disadvantage to foreign competitors in an area of critical importance, specifically investing in the United States. Comprehensive tax reform is essential to create competitiveness and to stimulate investment in the economy.”