Valeant’s investors aren’t the only ones heading for the exit in droves. The company announced Monday that a trio of its top execs would be doing the same—just as they serve out the terms of their cash retention bonuses.
EVPs Anne Whitaker and Ari Kellen, along with former CFO Robert Rosiello, will make their way to the door in the coming weeks, with Kellen and Rosiello departing Dec. 31 and Whitaker following on Jan. 13. Kellen and Rosiello will continue to serve as consultants to the Canadian drugmaker, the company said, giving no reason for the changes.
Valeant has spent a pretty penny trying to keep the trio on. In May, the company shelled out equity grants to each of the three execs to vest over an 18-month period, with $3.8 million going to Kellen, $2.8 million to Rosiello and $1.25 million to Whitaker. Those grants—comprising restricted stock units—began vesting last month.
The timing of their exits doesn’t seem random in light of other retention bonuses bestowed in May, however. For staying in their posts till year's end, the three will collect the remaining one-third of $1 million cash bonuses that began vesting in June.
And with Valeant's shares an iffy proposition for outside investors, it's logical that insiders might not want to wait around for their own equity to vest. Since the company handed out the equity awards May 12, Valeant shares have dropped significantly, to $14.68 at yesterday's close from $24.93 that day.
The agreement also said if the execs left the company for good reason—or were fired for no good reason—within a year, they’d collect twice the severance pay they’d have received before. Valeant's announcement specified that Whitaker chose to leave, but simply said the other two are "departing."
It’s no surprise that new CEO Joseph Papa—who in a statement thanked the three execs for “their efforts to stabilize the company during a period of transition"—wanted to retain the leaders, at least at the get-go. Whitaker, Rosiello and Kellen stayed with the company through its downfall from Wall Street darling and M&A machine to underperforming, under-investigation price-jacking poster child.
Kellen and Rosiello have been instrumental at the top, taking the helm, along with now-replaced general counsel Robert Chai-Onn, when pneumonia-stricken former CEO J. Michael Pearson took a medical leave of absence.
Whitaker, meanwhile, has been working on market access at a time when angry payers have frozen out Valeant’s meds and a subpar Walgreens distribution deal has had the company bleeding money—though "she may have borne responsibility for coverage decisions which contributed to worsened product performance," Barclays analyst Doug Tsao wrote in a Tuesday note to clients.
The personnel changes aren't the first under Papa, who replaced Pearson in April. In August, he subbed ex-Novartis staffer Christina Ackermann for Chai-Onn as EVP and general counsel, and added Scott Hirsch as SVP of business strategy and communications, to name a couple of the moves.
And the way Tsao sees it, with the latest edits, "the company is refocusing and pulling in more traditional, 'pedigreed' talent, he wrote. Rosiello and Kellen are "both former McKinsey consultants like ... Pearson," he noted.
Valeant's board also got an update earlier this year, with the company in March adding longtime pharma vet Fred Eshelman, Pershing Square exec Stephen Fraidin and former University of North Carolina president Thomas Ross to its slate of directors.