February 24, 2015
By Mark Terry, BioSpace.com Breaking News Staff
Irvine, Calif.-based Allergan Inc. legal filings on Feb. 19 indicate that if current CEO David Pyott is terminated after the Actavis plc sale, he could receive approximately $100 million.
This is yet one more spin in the Allergan sale drama. In August 2014 the U.S. Security and Exchange Commission (SEC) investigated a takeover bid of Allergan by Canadian pharmaceutical company Valeant Pharmaceuticals International, Inc. and New York hedge fund, Pershing Square Capital Management. The investigation was for insider trading.
In an attempt to fend off a hostile acquisition by Valeant, Allergan considered buying Salix Pharmaceuticals, Ltd. . The Salix deal fell apart when due diligence found irregularities in Salix’s inventory levels. It was also looking at San Francisco-based Actelion Ltd., headquartered in Allschwil/Basel, Switzerland.
Finally, in November Actavis made an offered for Allergan for about $65 billion. Actavis indicated in a Dec. 16 statement that it had plans to replace most of Allergan’s executives with its own people. Actavis’s CEO Brent Saunders will be running the combined company once the deal is closed.
The new filings indicate that if Pyott is ousted, he will receive about $89 million in cash and stock. He may also receive $9.91 million in cash, $2 million for accrued pension and health benefits for a three-year period.
“It might seem like an outlandish sum to the public eye, but in CEO-land, it’s a fairly standard arrangement,” said Erik Gordon, a professor at the University of Michigan’s Ross School of Business in a statement. “Given the stakes in these takeovers, cashing the guy out from what he’s already earned, that’s an easy pill for the board to swallow.”
Under the company’s change-in-control policy, unless Pyott is fired for cause, he will qualify for the payments. He can also collect them if he leaves because of a “material reduction” in his pay or his job responsibilities are reduced, which given that he will no longer be chief executive officer, seems likely. In addition, the filings indicate that he’s eligible for the payments if his place of employment is moved by more than 50 miles.
Pyott headed Allergan for 17 years. Before joining Allergan, he served as the head of the Novartis AG Nutrition Division and as a member of the Executive Committee of Novartis AG in Switzerland. In addition to his position at Allergan, he is Lead Director and a member of the board of directors of Avery Dennison Corporation, vice chair of the Board of Trustees of Chapman University, a member of the governing board of the London Business School and active with many other boards and organizations.
BioSpace Temperature Poll
Analyst Mark Schoenebaum, a biotech and pharmaceuticals analyst and medical doctor for ISI Group Evercore, has been running a Best Hair in Biopharma contest for several months now. So far, the candidates are Bristol-Myers Squibb Company‘s John Elicker, Receptos’ Chief Executive Officer Faheem Hasnain, Celgene‘s Vice President of Investor Relations Patrick Flanigan and Acorda Therapeutics’ Ron Cohen.
We want to know what our BioSpace community thinks: Who do you believe actually has the Best Hair in BioPharma?
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