Former CEO Sues Valeant for Millions
Former Valeant CEO Michael Pearson has filed suit in a district court in the US state of New Jersey against his employer, the Canada-headquartered, US-managed drugmaker. The executive, who stepped down in May 2016, claims to be entitled to receive 580,676 regular shares and 2.5 million performance shares under the terms of his separation agreement. However, he said he has not received payment, and the company has ignored his attempts to settle out of court.
The equity settlement is worth nearly $33 million, according to the news agency Bloomberg. The suit also claims that Valeant owes Pearson $180,000 in consulting fees.
According to the complaint, Pearson should have received the equity awards in November 2016, six months, six months after his departure. But reports quote Valeant counsel as saying the board has reviewed the matter and determined that the shares will not be released due to the “circumstances that the company finds itself in.”
Valeant said it believes it would be “inappropriate or inequitable in the current environment” for Pearson to receive millions of dollars in additional compensation at a time when “countless other Valeant employees have been asked to sacrifice for the good of the company and its shareholders.” The lawsuit points out, however, that Valeant’s current CEO, Joseph Papa, received a payout of $62.7 million last year, despite missing financial targets.
Since last year, Valeant has been in danger of debt default, a situation many blame on Pearson's aggressive M&A strategy. Legacies of the former CEO’s tenure are seen as including multiple investigations into its pricing policies and pharmacy relationships, poor sales of key products and a series of debt restructurings, which have led its stock market value to collapse.
According to reports, Pearson received a pro-rated bonus last year, in addition to a $9 million severance payment. In a proxy filing quoted by news agencies, Valeant said it had agreed to provide the former executive insurance coverage, office space, administrative assistance and IT support, as well as nearly $500,000 in consulting fees.
