Allergan ($AGN) Chairman and CEO David Pyott fought long and hard to keep Valeant Pharmaceuticals ($VRX) from taking over his company. He engineered a $66 billion sale to ambitious Actavis ($ACT) instead, and the Allergan name now lives on as the merged company's moniker. But Pyott won't be sticking around to enjoy the results.
Actavis announced two new directors Tuesday, both drawn from Allergan's board--and Pyott wasn't one of them. He "elected not to join" the combined company's board, Actavis said in a statement, but he will stay on as chairman of The Allergan Foundation, a charitable organization.
Actavis had promised two seats on its board for Allergan directors last November, and in January, rumor had it that the company was trying to recruit Pyott. The now-former CEO had spent 17 years at Allergan, and over the past several years, scored a series of acquisitions and partnerships. The company gave Pyott a big pay boost in 2012, citing Allergan's $20 billion market cap at the time, compared with $3 billion when he took the helm.
But as Reuters sources said in January, Actavis CEO Brent Saunders was "working through corporate governance issues" that might interfere with Pyott's joining the combined company's board. One problem might have been that Pyott would be considered a non-independent director--as would Saunders and Executive Chairman Paul Bisaro. Proxy advisory firms tend to prefer boards with fewer non-independent directors.
Then there's the matter of Pyott's change-in-control payout. According to SEC filings last month, Pyott was on deck for about $89 million in cash and shares, due for accelerated vesting because of the buyout. Among the shares that would vest as the deal closed were those awarded in 2012 as a one-time bonus. Worth more than $9 million at the time--when Allergan's market cap was $20 billion--they're considerably more valuable now. They were due to vest in 2017.
That kind of money could persuade anyone to retire. But in any case, it won't be Pyott's company anymore. Saunders and Bisaro, who started the Actavis acquisition spree a few years ago, have big plans for the new Allergan. It will soon earn a spot in the Big Pharma top 10, and along the way, Saunders aims to prove that his company really will be a "growth pharma" that can outclass its drug giant peers.
- read the Actavis release
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