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Valeant Pharmaceuticals Intl : CEO Joseph Papa Was Paid $62.7 Million in 2016 -- 3rd Update

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03/23/2017 | 07:30pm CET
By Anne Steele 

Valeant Pharmaceuticals International Inc. Chief Executive Joseph Papa took in $62.7 million in pay last year as he navigated the fallout from accounting problems, a near debt default and investigations by Congress.

The drug-industry vet was tapped to take over the embattled Canadian company in May and sought to rebuild investor confidence and remake the business after a series of missteps.

The bulk of Mr. Papa's pay -- $42 million -- came from stock awards, while $9.1 million came from bonuses. His salary was $980,769.

Mr. Papa received an $8 million signing bonus, and a $1.1 million "individual performance" bonus.

Valeant said the financial goals it had established at the beginning of the year -- before Mr. Papa took the reins -- weren't "sufficiently achieved" in 2016, but the company paid the new CEO half of the additional cash bonus to recognize "the significance and quality of the contributions" he made. Under the compensation package Valeant offered, the board could have paid Mr. Papa as much as $2.25 million for his performance last year.

"The board is very supportive of Mr. Papa's efforts to date and is confident in his abilities and those of his team to lead us through our transformation," the company said in a filing.

Mr. Papa's pay was more than five times higher than what he had earned in 2015 at the helm of Perrigo Co., but less than half of the $141.6 million Valeant's former CEO Michael Pearson was paid at Valeant in 2015.

Mr. Pearson, who was ousted and left the company last May, was paid $72.5 million last year. Most of the pay came from a stock award of Valeant shares valued at $60.5 million. Also included was a $10.4 million severance payment, $669,231 in consulting fees and other benefits, according to company filings.

As CEO, Mr. Pearson had been paid through an unusually generous compensation plan that awarded him stock grants when Valeant's stock rose above target prices.

Valeant said a two-year consulting agreement that it struck with Mr. Pearson last year was terminated in January. It said its board decided the company was "not in a position to make any further payments to Mr. Pearson," including an outstanding stock award of 3.1 million shares.

Spokeswomen for Valeant and Mr. Pearson weren't immediately available to comment on the changes.

Valeant's stock, battered 68% over the past 12 months through Wednesday's close, has dropped 96% from its August 2015 peak of $262.52.

Investors have been watching for signs on how Valeant can boost profitability outside of big acquisitions and large price increases for its drugs. Analysts remain concerned about the company's debt burden and have questioned the strength of its drug pipeline.

During 2016, Valeant lost $2.41 billion, compared with $292 million the year before. The company has said it is no longer providing earnings guidance, but offered an adjusted earnings before interest, tax, depreciation and amortization outlook in the range of $3.55 billion to $3.7 billion for 2017.

Under Mr. Papa, Valeant has been working to sell off assets to sharpen the company's focus on its key franchises in skin drugs, stomach treatments, eye care and consumer health while paring down roughly $30 billion in debt.

Valeant came close but ultimately failed to seal a deal to sell stomach-drug maker Salix Pharmaceuticals Ltd. to Japan's Takeda Pharmaceutical Co. for $10 billion.

In January, it reached deals to sell $2.1 billion in assets -- three skin-care brands, including its CeraVe line, to French cosmetics giant L'Oréal SA for $1.3 billion and its Dendreon cancer business to Chinese conglomerate Sanpower for $820 million.

In a February investor presentation, Valeant said all of its announced transactions will generate asset-sale proceeds of about $2.35 billion up front and $350 million in future milestones.

--Jacquie McNish contributed to this article.

Write to Anne Steele at Anne.Steele@wsj.com

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