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Valeant strikes deal with discredited CEO

The discredited CEO, who was lambasted for opportunistic price hikes and questionable accounting practices, has reportedly negotiated a severance package worth almost US$12 million (AU$16.3 m).According to FiercePharma, in addition to the US$9 million (AU$12.2 m) in severance pay for which he’s eligible under contract, Mr Pearson stands to collect US$83,000 (AU$112,560) per month in consulting fees till the end of this year, and another US$15,000 (AU$20,346) monthly through 2017 – amounting to almost US$850,000 (AU$1.2 million).Entitled to pro-rated salary and bonus for 2016, Mr Pearson not only collects the pay owing for the four months he served as CEO this year, but a bonus at 150 per cent of target. With a target of two times his base salary – or US$4 million (AU$5.4 m) – according to the company’s 2016 proxy statent, that’s a bonus of US$1.3 million (AU$1.8 m).By comparison, former Novartis CEO Mr Daniel Vasella struck a deal for US$25,000 (AU$33,897) per day in consulting fees after his term as chairman ended, plus a US$250,000 (AU$338,911) annual retainer.According to Valeant’s severance agreent, Mr Pearson deserves his bonus payout because of his performance against transitional metrics , as well as the company’s Q1 financial results and Q2 progress.Combined, the severance pay, consulting fees, pro-rated salary and bonus total more than US$11.9 million (AU$16.1 m).In return, Mr Pearson signed a confidentiality, non-disparagent and non-compete agreent, and agreed to hold onto one million shares of stock. He also agreed to cooperate with the raft of federal and state investigations into Valeant’s pricing policies, as well as speciality pharmacy relationships, promising to not only work with Valeant and its lawyers, but to cooperate as a witness if necessary.Valeant will pay Mr Pearson’s legal fees and has indnified him for his actions at the company prior to his departure as well as his continuing work as a consultant.Valeant faces US Justice Department and Federal Trade Commission subpoenas and a variety of state investigations into its business practices.The company is trying to distance itself from its previous practices, and so far, Mr Pearson has cooperated with that as well. In a US Senate hearing in April, he apologised for an over-aggressive approach to price hikes, and for pursuing mergers and acquisitions designed to capitalise on sudden and substantial price increases. It was a mistake to pursue, and in hindsight I regret pursuing, transactions where a central prise was a planned increase in the prices of the medicines, Mr Pearson said during the hearing.