June 1, 2016
By Alex Keown, BioSpace.com Breaking News Staff
LAVAL, Quebec – Despite being replaced at the helm of embattled Valeant Pharmaceuticals , Michael Pearson, the former chief executive officer will remain with the company as a consultant, an agreement worth hundreds of thousands of dollars. That agreement is on top of a $9 million severance package provided to him when he exited his role on May 2.
Under terms of the consulting agreement, Pearson will earn $15,000 per month plus expenses beginning in 2017, Reuters reported this morning. However, that pales in comparison to what he stands to make per month for the remainder of 2016 —$83,333. If Pearson’s services as a consultant are no longer needed during the time he has provided, Reuters said he will still be eligible to receive payments that would have been due him, according to his separation agreement. Part of Pearson’s role as a consultant will be to provide any information to the government related to inquiries over its pricing practices or anything else required, Reuters said.
“For a period of two years following the Termination Date, subject to Mr. Pearson executing and not revoking a general release of claims, the Company will also provide Mr. Pearson with office space and nonexclusive access to an executive administrative assistant and IT support,” according to the form 8-K, which was filed with the U.S. Securities and Exchange Commission.
Pearson was not the only executive to receive a nice pay plan. Last month Forbes noted that Valeant paid some of its top executives bonuses of more than $1 million for sticking with the company through the difficult times of 2015 and early 2016.
After a tumultuous 2015 that saw the Canada-based Valeant deal with sharp criticism for its drug pricing programs and its relationship with the specialty pharmacy company Philidor RX Services and that company’s accounting practices, combined with a stock value that fell approximately 90 percent, lead Valeant and activist investor Bill Ackman to begin the search for a new chief executive.
Pearson’s departure from Valeant was announced only weeks after he returned from medical leave that sidetracked him for about two months. In March, Valeant’s board of directors initiated a search for a new CEO to replace the recently returned Pearson at the helm of the company. At the time, Robert Ingram, chairman of Valeant’s board of directors, said he believes the company “will be able to rebuild its reputation and thrive under new leadership.” That new leadership emerged in the form of Joseph Papa, the former CEO of the Ireland-based Perrigo Company PLC. Papa resigned his role from Perrigo in April and took over Valeant in May.
Since Pearson’s departure, Valeant, which had one of the most aggressive M&A strategies in the pharmaceutical industry, found itself fending off a possible buyout option from Takeda Pharmaceuticals and TPG Capital Management LP. The company said it spurned the offer in order to give Papa, who at the time had yet to take on his new role, time to “focus running on the company before thinking about a sale offer.”
Papa will lead Valeant’s efforts to restore its image, as well as possibly oversee divesting itself of some of its assets to control company debt. The company said it was interested in selling off non-core assets and has reportedly been approached by a number of perspective buyers. One asset that might be on the table is the irritable bowel syndrome treatment Xifaxan, which Valeant acquired last year when it snapped up Salix . That drug could hit $1 billion in revenue this year. Other assets that could be up for sale include the company’s aesthetics products, Obagi and Solta.
