It turns out that the new CEO, Joe Papa, who starts on Monday, will make $67.5 million for leaving Perrigo for Valeant.
Papa, who is to take over the drugmaker next month, will get a $1.5 million salary, a target bonus of $2.25 million, and a special $8 million cash payment to compensate him for lost shares of Perrigo Co., which he ran until it was announced this week that he was taking over Valeant. In addition, he'll get restricted stock and options worth $56 million. The value of the stock is based on Valeant's April 27 closing price.
So if you're wondering why someone would leave their CEO position at another firm to take one at a company that has seen its stock drop by almost 70% since October; that is being investigated by the House, the Senate, the SEC, and more; that has yet to file an annual report that was due in March - now you know.
The execs and Ackman were at the Senate to answer for Valeant's practice of purchasing drugs and jacking up their prices, rather than spending money on R&D. That issue, combined with accusations of malfeasance from a short seller, are what put Valeant in its current precarious position.
It appears that US Senators grilling company execs on Wednesday got the news of this pay package as the hearing was closing.
Senator Susan Collins' mic was still on and she said something about compensation, seemed shocked at the amount, and did not seem pleased.
"Did you see this last thing, the pay, $67 million? This is outrageous," she said.