Valeant Offers Details on Incoming CFO's Compensation; Will Get $10 Million in 'Make-Up Cash'

August 24, 2016
By Alex Keown, BioSpace.com Breaking News Staff

LAVAL, Quebec – Valeant Pharmaceuticals ’ newest chief financial officer, Paul Herendeen, will receive $10 million in upfront payments for taking on the new role, according to the company’s regulatory filings, which were posted on Street Insider.

Herendeen left his role as chief financial officer at Zoetis , an animal healthcare company, to join Valeant, a company that is trying to right itself after a change in leadership, questions over drug pricing and an accounting scandal. Herendeen’s new role provides him with a base salary of $1 million, with possible bonuses of up to $2.4 million. The $10 million payment was part of a deal he struck with Valeant to make up for equity compensation he would have received at Zoetis, the Wall Street Journal noted.

In addition to the salary, Herendeen received 1,000,000 stock options and 150,000 restricted stock units.

Valeant’s tapping of Herendeen and paying a premium for executive leadership is not new. Earlier this year, the company tapped a new chief executive officer in Joseph Papa to take over from J. Michael Pearson, the formerly embattled CEO. When he was tapped, Valeant offered an impressive compensation package for Papa to raise his total annual compensation to more than $500 million if company stock returns to more than $270 per share. Shares of Valeant are trading at $32.34 as of 11:27 this morning.

Earlier this month, Valeant Pharmaceuticals is tacking a new course with a strategic reorganization. In a statement, Papa said the heart of the company’s new strategic course is the mission to improve the lives of patients. He said Valeant employees have been tirelessly working to rebuild the fractured relationship the company has with prescribers, patients and payors, as well as regaining the trust of debt holders and shareholders. In its statement, Valeant did not elaborate on what the new strategic vision will be, but the company plans to hold a conference call later this morning where details are likely to be laid out.

Part of that work is attempting to appease the company’s creditors for failing to meet several financial reporting deadlines, which triggered default notices. Valeant has an estimated debt of $30 billion, largely due to its aggressive M&A practices.

As part of its new strategic focus, Valeant said it has begun to streamline its portfolio with sales of the brodalumab EU rights, Synergetics USA OEM business and Ruconest for a total combined upfront payment of $181 million and additional consideration up to $329 million for achieving specific approval and sales milestones, the company said. Additionally, Valeant said all North American rights to Ruconest will be sold to Pharming Group N.V. for up to $125 million.