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Valeant CEO Pearson to exit, Ackman to join board
[OTTAWA] Canadian drugmaker Valeant announced Monday it would replace chief executive Michael Pearson as the firm weathers criticism over its pricing and accounting practices.
Valeant Pharmaceuticals International also announced that activist investor and major Valeant shareholder Bill Ackman would join the board and expressed confidence that it would meet a key deadline for submitting its annual report to US securities regulators.
But the drugmaker opened a new public spat with former chief financial officer Howard Schiller, accusing him of "improper conduct." Mr Schiller, fighting an effort to be ousted from the board, denied the accusations.
In midday trading, Valeant shares jumped 8.4 per cent to US$29.25 on the New York Stock Exchange. Shares had plunged more than 50 per cent on March 15 after Valeant slashed its earnings forecast and warned of a possible debt default due to potentially missing a deadline to file its annual report.
On Monday, Valeant said it intends to meet a April 29 deadline to file the report, but that it will seek a waiver from lenders "to be prudent." Valeant faces numerous government probes over accusations it gouged customers over the price of its prescription drugs.
The company has also been under fire over its accounting, disclosing that it should not have included US$58 million in revenue from the mail-order pharmacy Philidor in 2014 and that it would need to restate at least four quarters' worth of earnings and file its annual report for 2015 late.
Valeant said it had opened a search to replace Mr Pearson, who will stay on until his replacement is appointed.
Mr Pearson, 56, returned to the helm of the company last month following a lengthy absence on sick leave. He had been hospitalized in late December for "severe pneumonia and other complications." The company asked Mr Schiller, who had served as interim chief executive while Mr Pearson was on medical leave, to resign from the board.
Mr Schiller's actions in the accounting for Mr Philidor "resulted in the provision of incorrect information" to the board and "contributed to the misstatement of results," Valeant said.
Mr Schiller called Valeant's characterization of his role "an incorrect statement." "At no time did I engage in any improper conduct that relates to any restatement of revenue the company is considering. In addition, at no time did I ever provide any incorrect information" to the board, Mr Schiller said in a statement.
"As a result of the fact that I did not engage in any improper conduct regarding this proposed restatement, I have respectfully declined the request from the company's board to resign from the board." Mr Schiller said the Philidor accounting was based on the decision by the company's controller, who had based the view on "what she considered to be complete and accurate facts." "The accounting decision was not my decision, but I was advised of the decision and the rationale behind the decision by the corporate controller, and I agreed with the decision," Mr Schiller said.
"My hope at this point is to see the company recover from its challenges and for its employees and shareholders to once again prosper." Valeant said in response to Mr Schiller's statement that "the company stands by its statement in the company's press release," said senior vice president Laurie Little.
Mr Ackman, whose firm Pershing Square is Valeant's second-biggest shareholder, said he was looking forward "to working with the board to identify new leadership for Valeant." To make room for Mr Ackman on its 14-member board, Katharine Stevenson voluntarily resigned, the company said.