Bankruptcy judge thinks about $1.3 M bonus offer for Purdue Pharma CEO

The judge supervising the insolvency case of OxyContin maker Purdue Pharma says many of the company’s workers should receive bonus offers next year

By

GEOFF MULVIHILL Associated Press

December 5, 2019, 12: 13 AM

4 min read

More time is required to figure out whether the CEO of OxyContin maker Purdue Pharma ought to receive a $1.3 million bonus offer next year, but the company must be enabled to pay about $35 million in bonuses to 682 other employees, the judge supervising the business’s insolvency case stated Wednesday.

There were objections at the hearing just to payments to CEO Craig Landau and a group of nine other upper-level “expert” staff members. State governments and a guard dog committee didn’t contest the company’s contention that rewards would be needed to keep workers working and the company running– particularly after the business accepted cut a lot of the bonuses.

Judge Robert Drain said he would sign an order for all the workers other than Landau to get rewards next year. He stated it would consist of an arrangement that it could be withheld from anyone discovered liable in suits over the toll of the opioid crisis linked to more than 400,000 deaths in the U.S. considering that 2000.

Purdue, based in Stamford, Connecticut, is in insolvency court as part of an effort to settle more than 2,700 suits it’s facing over the toll of opioids.

Drain said authorities with the company and other interested parties ought to continue to talk about whether it’s appropriate for Landau, who has run the company considering that 2017, to get a performance benefit on top of his $2.6 million base salary.

Drain said on the bench that he wasn’t especially moved by the contention from a group of 24 mentions that Landau should have his pay docked due to the fact that of a possibility that he might be held responsible in the future.

But he stated he was concerned when it was exposed at the hearing that the CEO’s base salary was doubled in 2018 shortly after the business employed a law practice to consult on filing for insolvency– and that the exact same year, he received $6 million of the $12 million in retention payments that he had been scheduled to get from 2020 through 2026.

Purdue attorney Marshall Huenber said those changes were not a difficult relocation to pay the CEO more with the possibility of personal bankruptcy looming but rather part of bigger modifications to his payment that consists of a lowered severance package if he leaves the Stamford, Connecticut-based drugmaker.

In the hearing, Landau’s legal representative, Linda Imes, said Landau, a medical physician who signed up with Purdue in 1999 and became CEO in 2017 after a stint running its Canadian sister business, lagged a decision in 2015 to stop marketing opioids to doctors.

” Dr. Landau is a star, and he is a star that Purdue should have working for it in this challenging time,” she stated.

In their suits, Colorado and Massachusetts allege that Landau blamed the threats of opioids on clients instead of the drugs which he purposefully put patients at risk by having his sales team motivate more prescribing of the drug without revealing the addiction risks.

They say he pushed opioids for elderly clients and those who had never ever taken them in the past without disclosing their risks, wrongly declared that a variation of OxyContin that was reformulated to make it harder for people to break down and abuse was safe, and pushed physicians to recommend opioids for a longer duration of time.

” Purdue needs to not award bonus offer payments to Landau prior to resolving the claims that Landau committed lethal, unlawful misbehavior,” those states and others said in a filing today.

Purdue and Landau deny the claims. In court filings, Landau said he had no role in managing sales or marketing for much of his profession at the business.

Whether troubled companies must be allowed to pay perks to executives and other critical workers is a typical topic debated throughout personal bankruptcy procedures. In 2009, a judge ruled that Lehman Brothers, the financial investment bank, could pay 230 traders rewards totaling $50 million to keep resolving that business’s personal bankruptcy. This year, a judge approved paying rank-and-file employees for Pacific Gas & Electric Corp. $235 million in rewards but nixed millions in extra pay for magnates.

In Purdue’s case, the business states two dozen employees have actually resigned considering that it submitted for insolvency in September which replacements are difficult to discover.

” Purdue continues to be a tough location to work, and maintaining and encouraging Workers continues to be a challenge,” chief monetary officer Jon Lowne stated in a court filing today. “In current weeks, Staff members have gotten an unprecedented barrage of calls from recruiters.”

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Follow Mulvihill at http://www.twitter.com/geoffmulvihill

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This post has been corrected to reveal that the name of the Purdue Chief Financial Officer is Jon Lowne, not Lon Lowne.

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