Valeant Pharmaceuticals (VRX) on Monday disclosed the details of its separation agreement with former CEO Michael Pearson.
Pearson, whose last day at Valeant was May 2, will provide consulting services to the Laval, Québec-based drugmaker through December 2017, subject to one-month renewal periods, according to an 8-K filing on May 31.
Under the separation agreement, dated May 26, Valeant will pay Pearson $83,333 for each month that consulting services are rendered through the end of 2016, and $15,000 for each month that services are performed during the rest of the consulting period.
In addition, as part of the amended and restated employment pact between Pearson and Valeant as of Jan. 7, 2015, Pearson will be entitled to a severance payment of $9 million and a pro-rated annual bonus for the 2016 fiscal year.
Pearson will also be required to hold 1 million Valeant shares that he received in settlement of his equity awards for two years following the termination date.
Pearson led Valeant for eight years before the company announced in December of last year that he was taking a medical leave due to severe pneumonia. He returned in February.
In April, Valeant announced Joseph C. Papa, former CEO of Perrigo, as Pearson's successor at the helm of the company.
On Tuesday morning, shares of Valeant were trading at $28.56, up 0.5%. The stock, however, is still down around 89% from its high of about $262 a share in August.
In October, activist short-seller Andrew Left of Citron Research issued an eight-page note alleging that there was a secret relationship between Valeant, a mail-order pharmacy called Philidor Rx Services, and a Philidor customer, R&O Pharmacy LLC. Valeant at the time called Left's presentation "sensational" and "untrue" in a conference call with analysts. Valeant has since ended its relationship with the mail-order pharmacy.
In March, Valeant slashed its 2016 financial guidance significantly below its prior estimates and said it might default on its debt. In April, when Valeant made its delayed 10-K filing, the company said that the default under its senior note indentures arising from the failure to file its form 10-K in a timely manner was "cured" and the company "remains in full compliance with its credit agreement."
On May 19, Valeant said it received a notice of default from the trustee under one of its senior note indentures as a result of the delay in filing its 10-Q. Valeant said it expects to make the filing on or before June 10, which would be in advance of the 60-day cure date of July 18.
Meanwhile, Citron Research's Left seems to believe the worst, or at least most of it, may be over for Valeant. Left told Real Money on May 16 that he "wouldn't be surprised if there's a bounce" in the drugmaker's stock. The most important metric in gauging Valeant's recovery, according to Left, will be sales of its flagship Xifaxan, which was obtained as part of Valeant's $11 billion acquisition of Salix last April.