It’s always good to take over at the bottom. At least that seems to be the lesson of the employment contract of Valeant Pharmaceuticals’ new CEO, Joseph Papa.
Valeant (VRX) said on Monday that Papa, the former head of generic drugmaker Perrigo, would replace Michael Pearson as its CEO. The company had said in March that Pearson was leaving the company, just three weeks after returning from a two-month medical leave.
Valeant is in the doghouse with Congress and drowning in billions in debt, so it’s little surprise that the company had to pay Papa handsomely to entice the former Perrigo CEO to help right its ship.
In an 8K filed with the SEC on Wednesday, Valeant said Papa will receive a base salary of $1.5 million, which could be increased by a target bonus of 150% of his salary, or $2.25 million. He’ll also receive a cash payment of $8 million to make up for the equity-based compensation he gave up by terminating his employment with Perrigo.
By comparison, Pearson’s base salary for full-year 2014 was $2 million and his total compensation amounted to $10.3 million, according to a regulatory filing.
But it’s the equity-based compensation that could make Papa really, really rich. He’ll receive about $10 million worth of stock options plus a grant of 933,416 performance-based restricted shares. Those vest as Valeant shares pass certain price thresholds.
And if the shares ever reach $270, which is around where they were in July 2015?
Papa will take home a cool $500 million.
Reuters contributed to this report.