- Valeant is set to announce the departure of five directors from its board, according to a report from The Wall Street Journal. Four new directors will be appointed, adding to the significant changes already underway at the top of the company.
- One of the departing directors is Mason Morfit, the head of ValueAct Capital, the Journal said. ValueAct is a large Valeant shareholder and originally helped to bring in outgoing CEO Michael Pearson.
- Over the past two months, four other directors have joined the board including the influential Bill Ackman and Stephen Fraidin from Pershing Square Capital.
As Valeant continues to face searing criticism from lawmakers over its pricing practices, the company's leadership is undergoing dramatic changes. If the expected changes go through, Valeant's board will look dramatically different than it did a year ago. More than half of the 14-member board would be new to Valeant.
Pearson is also on his way out, with former Perrigo chief Joseph Papa expected to begin work as Valeant's new CEO on Monday. Papa will also join the board as chairman.
The current chairman, Robert Ingram, is considering resigning and has been asked to make a decision by Thursday, the Journal reported. Ingram has spearheaded the investigation into Valeant's accounting practices which has delayed the filing of the company's annual report and brought on the risk of default.
That investigation wrapped up earlier this month and Valeant has promised to file the Form 10-K report by Friday.
Senators on the Special Committee on Aging sharply censured Valeant at a hearing on Wednesday, criticizing the company for price-gouging and shutting out patients from needed treatments. Pearson said the company had been too aggressive in its pricing and expressed regrets at pursuing a strategy founded on acquiring older drugs and hiking their prices.
Also at the hearing, Bill Ackman promised to recommend Valeant reduce the price of four drugs senators had singled out as examples. Ackman's firm, Pershing Square, owns nearly 10% of Valeant and he has had significant influence in reworking the company after a disastrous first quarter.
He appeared ready to move on from those problems. Responding to a series of questions on how to improve Valeant's leadership, he replied, "Watch - watch what we can do."
In an filing with the SEC in March, the investigation by Valeant's board pinned improper accounting on the "tone at the top." With the expected changes to the board and Papa's appointment as CEO, Valeant will have gone some ways towards changing that environment. Whether the changes will result in a turnaround remains to be seen.