01—Abstract
Summary
Summary of the 10-K/A filed April 30, 2021. Cited figures are marked; the original filing is the authoritative source.
This Part III disclosure covers Viatris Inc.'s governance, executive pay and ownership following the November 16, 2020 closing of the combination of Mylan and Pfizer's Upjohn division.
The Board has 13 directors, nine of whom are independent. Robert J. Coury serves as Executive Chairman, Michael Goettler as Chief Executive Officer, Rajiv Malik as President and Sanjeev Narula as Chief Financial Officer.
The filing states that the Board plans to begin returning capital to shareholders with a dividend in the second quarter of 2021, that Viatris expects to repay approximately $6.5 billiona of debt by the end of 2023, and that it targets $1 billion in synergies within three years of the combination closing. The compensation section emphasizes performance-based pay. For 2021, the filing states that approximately 70% of executive target pay opportunity is in equity-based awards and almost 60% is tied to shareholder-aligned performance metrics.
The 2021 annual incentive uses adjusted EBITDA (40%), a cash flow metric (40%) and a global regulatory submissions metric (20%). Reported 2020 pay includes one-time transaction-related payments, such as a $10 millionb cash recognition award to Mr. Coury and a 1.6 million PRSU Value Creation Award tied to shareholder return goals through December 30, 2025. The filing also notes that Mr. Coury's Executive Chairman Agreement runs through December 31, 2025 and that the company eliminated NEO excise tax gross-ups.
Ownership and governance data as of April 26, 2021 show 1,208,643,411 common shares outstanding. The Vanguard Group reported 10.68%c, BlackRock 7.41% and Wellington Management 5.78%.
All directors and executive officers as a group held 2,739,662 shares. Deloitte replaced KPMG as independent auditor on November 19, 2020, and total fees to Deloitte were $14.52 milliond for 2020 compared with $11.11 million for 2019.
02—Key points
Key Highlights
- Viatris was formed by the November 16, 2020 combination of Mylan and Pfizer's Upjohn division, and the filing states that 2020 compensation reflects three distinct programs: Mylan, Upjohn and Viatris.
- Board of 13 directors, with 9 independent; Robert J. Coury serves as Executive Chairman and Mark W. Parrish as Lead Independent Director and Vice Chairman.
- The company plans to initiate a dividend in the second quarter of 2021 and expects to repay approximately $6.5 billion of debt by the end of 2023.
- Targets $1 billion in synergies within three years of the combination closing.
- 2021 NEO target total direct compensation for Mr. Coury is $15.3 million, with a base salary of $1.8 million and a 600% long-term incentive target.
- Approximately 70% of executive target pay is equity-based, and 60% of 2021 equity-based awards are PRSUs; stock options were excluded from 2021 awards.
- Largest reported holders are The Vanguard Group (10.68%), BlackRock (7.41%) and Wellington Management (5.78%) of 1,208,643,411 shares outstanding.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2020, Viatris lost $0.06.
- Revenue$11.82B100.0%
- Cost of revenue−$8.02B67.9%
- Gross profit$3.80B32.1%
- Operating costs−$4.01B33.9%
- Operating income−$210.8M1.8%
- Interest, other & tax−$459.1M3.9%
- Net income−$669.9M5.7%
04—Financials
Financial Highlights
Figures from 10-K/AFY2020filed April 30, 2021Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Revenue | $11.82B$11.37B | +4.0% |
| Cost of Revenue | $8.15B$7.60B | +7.2% |
| Gross Profit | $3.80B$3.90B | −2.6% |
| R&D Expenses | $555.10M$639.90M | −13.3% |
| SG&A Expenses | $3.34B$2.56B | +30.5% |
| Operating Expenses | $4.01B$3.18B | +25.9% |
| Operating Income | -$210.80M$715.50M | −129.5% |
| Interest Expense | $497.80M$517.30M | −3.8% |
| Net Income | -$669.90M$16.80M | −4087.5% |
| EPS (Basic) | $-1.11$0.03 | −3800.0% |
| EPS (Diluted) | $-1.11$0.03 | −3800.0% |
| Shares Outstanding (Basic) | 601.20M515.70M | +16.6% |
| Shares Outstanding (Diluted) | 601.20M516.50M | +16.4% |
05—Questions
Frequently Asked Questions
Who leads Viatris and how is the board structured?
Robert J. Coury is Executive Chairman, Michael Goettler is Chief Executive Officer, Rajiv Malik is President and Sanjeev Narula is Chief Financial Officer. The board has 13 directors, 9 of whom are independent, and is classified into three classes with staggered terms.
How is executive pay linked to performance for 2021?
The 2021 annual incentive is weighted 40% to adjusted EBITDA, 40% to a cash flow metric and 20% to a global regulatory submissions metric. Long-term incentives are 60% PRSUs and 40% RSUs, with PRSUs using leverage and cash flow metrics plus a relative TSR modifier over a three-year period.
What one-time payments were made in connection with the combination?
Mr. Coury received a one-time $10 million cash recognition award. Messrs. Goettler and Narula each received a $1 million transaction-related payment previously granted by Pfizer. Mr. Malik and Mr. Mauro received cash awards of $2.5 million and $1 million, respectively. The filing states these payments will not be part of the executive compensation program going forward.
What are the company's capital return and debt reduction plans?
The company expects to begin returning capital to shareholders with a dividend in the second quarter of 2021 and expects to repay approximately $6.5 billion of debt by the end of 2023, while realizing $1 billion in synergies within three years of the combination closing.
Who are the largest shareholders and who is the auditor?
As of April 26, 2021, The Vanguard Group held 10.68%, BlackRock held 7.41% and Wellington Management held 5.78% of the company's shares. Deloitte replaced KPMG as independent registered public accounting firm on November 19, 2020; total fees to Deloitte were $14.52 million for 2020 and $11.11 million for 2019.
06—Continue