Valeant Pharmaceuticals International, the corporate poster child for price-gouging, tax-inversion and hedge-fund manager wealth destruction quietly severed all ties with J. Michael Pearson, its former chief executive officer and longtime guiding light, in January, according to its annual proxy statement filed this morning.
While Pearson stepped down from Valeant in May 2016, and struck a wide-ranging separation agreement that paid him $83,333 per month for consulting — especially the much-touted and at least temporarily disastrous Walgreens contract — his primary job was to cooperate with the seemingly eternally expanding roster of civil and criminal investigations.
The deal with Pearson was supposed to last through this December and the use of the word “initial” in the contract’s wording was a suggestion it might be renewed. Valeant, in the proxy, says it last paid him in October, and in December its board of directors determined no more payments would be made: “In December 2016, the Board determined that we are not in a position to make any further payments to Mr. Pearson, including in connection with his then-outstanding equity awards with respect to 3,053,014 shares.”
Pearson’s agreement was terminated in January for unspecified reasons.
Assuming that Valeant’s language is not implying that the company simply doesn’t have the cash available to pay Pearson, then a legitimate question becomes whether he did anything to violate the terms of his agreement through noncooperation. Given that it paid him $1 million annually with full benefits, allowing him to have an office, an assistant and legal fees paid for, this does not seem to be in his best interests.
Also of note is the timing of the cessation of payments to Pearson in October given that charges against Philidor Rx Services were filed on Nov. 17. While it is highly unlikely that Valeant’s board would have a sense of when — or even if — additional charges might be brought, their own counsel was assuredly aware that federal prosecutors have a long-standing practice of refusing to negotiate settlements with companies where they are actively pursuing indictments against current leadership.
(Southern Investigative Reporting Foundation readers will recall its investigative work from October 2015 that began an ongoing reexamination of the company’s ethics and business practices that has forced its share price to $10.86 in recent trading, down from over $257 in July 2015.)
A call to Scott Hirsch, Valeant’s communications chief, seeking comment was not returned.