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The Morning Brief: Valeant Pays Officers $130 Million
The troubled drug maker, a big holding of ValueAct Capital, gave hefty pay packages to top execs after a year when its stock tanked.
Current and former officers of Valeant Pharmaceuticals International made roughly $130 million last year, according to its latest proxy report filed with regulators. These fat compensation packages came in a year when shareholders saw the value of their stock plummet by 86 percent. The report did not seem to upset investors, who bid up the stock by 1.40 percent to $10.86 on Thursday.
Joseph Papa, who became chairman and CEO last May, earned a package valued at $62.7 million. This includes stock awards valued at about $42 million and options valued at $10 million. He also received a $9.125 million bonus. In the proxy, Valeant says the financial goals that were established at the beginning of the year “were not sufficiently achieved to result in a payout of annual cash incentives.”
However, its talent and compensation committee “recognized the significance and quality of the contributions” made by Papa, chief financial officer Paul Herendeen, and general counsel Christina Ackermann. So, it awarded Papa a cash bonus of 50 percent of his annual target incentive opportunity. Herendeen made more than $31 million in salary and various grants, while Ackermann made more than $4.7 million. Former chief executive officer J. Michael Pearson enjoyed a package valued at nearly $12 million. A vast majority of it was severance.
The proxy also provides some insight into the involvement of the hedge fund managers who have served on its board of directors in the past year. For example, Bill Ackman, whose Pershing Square Capital Management recently unloaded its entire huge stake in the drug company and is not standing for re-election at this year’s annual meeting, attended all 20 board meetings that took place while he was a director. He also attended all four meetings held by the finance and transactions committee, the only committee on which he sat. G. Mason Morfitt, a partner at ValueAct Capital, another major investor, attended 20 of the 25 board meetings held during his tenure. He did not sit on any committees.
Bank activist Lawrence Seidman has identified his newest target. The founder of Parsippany, New Jersey-based activist firm Seidman & Associates disclosed in a regulatory filing he owns 5.23 percent of HV Bancorp, a small Huntingdon Valley, Pennsylvania bank holding company with a $30 million market capitalization. In a filing, Seidman said the stock is undervalued and that he has had several phone conversations with senior management and a meeting has been scheduled for mid-April with senior management. The stock rose 0.50 percent to $14.02 on the news.
Philippe Laffont’s Coatue Management was one of several investors to participate in the $37 million Series E financing of HotelTonight, a hotel application for smart phones geared toward last-minute bookings. Coatue had previously led the $45 million Series D financing in 2013. Crunchbase says the company is valued at $463 million.
Credit Suisse raised its rating on Dollar Tree to neutral from underperform but retained its $73 target price. Despite poor industry fundamentals, the investment bank tells clients in a note that the discount retailer “may be one of the few large cap staples retailers to actually grow earnings in 2017. Given this and the drop in expectations, risk/reward appears balanced.” Stephen Mandel Jr.’s Lone Pine Capital is the fourth-largest shareholder. The stock is also the long-short manager’s eighth-largest U.S. long holding. It’s the fifth-largest long of Darsana Capital Management and the sixth-largest of Melvin Capital Management.