Mylan investors not told of 2 land sales involving board member, partner
Mylan NV paid $2.9 million in March 2012 for vacant land in Southpointe II that Vice Chairman Rodney Piatt sold to a business partner for $1 a day before the company announced it was going to build its headquarters there.
The transaction was the first of two land deals in the Washington County business park that involved Mylan, Piatt and Illinois businessman Andrew Miller. In the second transaction, Mylan paid $9.2 million in May for a parcel of land Piatt had sold to Miller for $10 six months earlier.
Publicly traded companies such as Mylan are required by the Securities and Exchange Commission to tell their shareholders about transactions or other deals worth $120,000 or more between the company and any of its board members, executives and their family. The related-party transaction rules are meant to discourage companies from enriching insiders at the expense of investors.
But Mylan didn't disclose Piatt's involvement in the land sales. Nor did it tell investors that it hired a company formed by another Piatt partner to oversee some aspects of construction of the four-story headquarters, which it moved into in late 2013.
Mylan, the world's third-largest generic drugmaker, maintained Tuesday that the transactions were legal and did not need to be disclosed because Piatt, the CEO of Horizon Properties Group and Mylan's lead independent director, didn't profit from the deals. Horizon Properties is the lead developer of Southpointe II, a sprawling business park in Cecil that is home to many corporate headquarters, as well as shops and residences.
“Mr. Piatt was not a party to either transaction, had no direct or indirect material interest in the transactions, and did not profit from the sale of these properties to Mylan,” the company said in a written statement to the Tribune-Review.
Spokeswoman Nina Devlin said Mylan's board did not make the decisions to purchase the land, but was aware of them. She did not respond to a question about who decided to buy the properties.
The SEC declined to comment.
The transactions involving Piatt and Mylan were first reported Tuesday by the Wall Street Journal.
“The whole thing stinks,” said Douglas Branson, a University of Pittsburgh law professor and an expert in corporate governance.
Board members “have to serve the best interest of the corporation,” he said. “You can't be both a seller and buyer — that's the classic definition of conflict of interest.”
Piatt, 62, could not be reached for comment. He has been a director at Mylan since 2004 and was paid $336,449 to serve on the board in 2013, according to the company's proxy statement.
His Horizon Properties has partnered with Miller, CEO of Miller Capital Advisory, an Illinois company that invests in malls and other large commercial developments, for projects at Southpointe II. It was Miller Capital that purchased the two Southpointe parcels from Piatt and sold them to Mylan, according to Washington County records. Miller couldn't be reached for comment.
In another possible connection between Piatt's business interests and Mylan's, the drugmaker hired RIZ Consulting and Management of McMurray to oversee the general contractor building the headquarters. According to state business records, RIZ's president is Michael Swisher, who is a partner in Horizon Properties. Swisher could not be reached for comment.
“Mylan confirmed that Mr. Piatt has no ownership in RIZ Consulting, does not work at RIZ, received no payments from RIZ and did not profit from any relationship between RIZ and Mylan,” Devlin said.
Mylan has the lowest ranking possible for its corporate governance practices, according to ISS QuickScore, a publication by Institutional Shareholder Services, a company that advises large institutional investors on publicly traded firms.
In particular, ISS highlighted Mylan's board practices and frequency of related-party transactions as “red flags” for investors, according to the May report. ISS declined to comment on the land deals involving Piatt and Mylan.
Alex Nixon is a staff writer for Trib Total Media. He can be reached at 412-320-7928 or firstname.lastname@example.org. Staff writer Jason Cato contributed.