It’s not considered good manners to speak ill of the sickly. Nor, for that matter, the other way around.
So all concerned would wish nothing but a complete and speedy recovery for Michael Pearson – the CEO of Valeant Pharmaceuticals until a sudden and severe attack of pneumonia forced him to take medical leave in late December.
Events at Valeant through the autumn would have been breath-taking for its leader at the best of times – not least, the 60 % fall in its share price since August, its need to rationalize revenue accounting policies for its frequently-adjusted relationship with specialty pharmacy Philidor, and the looming deadline to file its 2015 annual report.
While observers might question the potentially sinister implications of the New York Times report of January 6 that Pearson’s “whereabouts and details of his condition have not been disclosed by the company,” prudence for Pearson himself might counsel the desirability of a prolonged and low-profile convalescence.
That’s for three reasons:
First, governance at Valeant is, to put it kindly, unsettled. The company’s initial strategy, announced December 28, was to fill Pearson’s role with a three-person “office of the chief executive” – with that ménage abetted by another three-some made up of members of its board. Whereupon, the company’s stock price promptly tanked a further 10%. Thus was aptly fulfilled the axiom, that “You can take my job, but not my place.”
Instead, as any high school football coach knows, if you claim to have three starting quarterbacks, you really have none. That realization took a week to sink in at Valeant, until January 5 when the labor of slaying the Hydra-headed monster was given to Howard Schiller – board member, former CFO and now named interim CEO.
Second, then -- next in Schiller’s Herculean tasks is the effort to hose out the stables -- not easy, but made less complicated in retreat from Pearson’s strategy of massive price hikes for the binge of old drug acquisitions that had exposed the company in the first place. In other words, the more distance Schiller can keep from the publicly-vilified Pearson the better, especially in the cosmetically important area of dialog with the agencies of law enforcement and securities regulation circling the company.
As to Pearson himself, thirdly – it’s safe to assume that the pockets in his hospital pajamas are deep enough that he is funded for all the costly medications his recovery may require – a state of fiscal well-being perhaps less true for the angry Valeant customers forced to swallow his cost increases along with their re-priced pills.
Further, tactically timed medical events have a way of going poorly among the white-collar class who become ensnared in the legal system. Among a brief sample:
- Suspended FIFA autocrat Sepp Blatter’s hospitalization in November for a “small emotional breakdown” – although pumped up in Blatter’s unrepentant grandiosity to a claim that he was “close to dying” – failed to prevent his original temporary 90-day leadership suspension being extended by the soccer association to eight years – and likely into the far distant future.
- Ponzi schemer Allen Stanford resisted his prosecution with serial excuses -- a racing heart, injuries from a prison fight with a fellow inmate, impaired judgment from addiction to an anti-anxiety drug, and injury-related amnesia – all of which earned him no relief from a post-conviction sentence of 110 years.
- Following his guilty plea but before the sentencing scheduled for this February, former Speaker of the US House of Representatives Dennis Hastert was hospitalized with a stroke and complications – the impact of which by way of delay or mitigation remaining unknown.
- Notably more consequential, the heart attack suffered by Enron CEO Kenneth Lay in July 2006, following his conviction but before sentencing on multiple fraud counts, proved to be fatal – his demise thus voiding his conviction on the federal charges and, in effect, changing to a non-terrestrial venue whatever fire-and-brimstone punishment he is now bearing for his earthly transgressions.
As Samuel Johnson observed in the 18th century, “when a man knows he is to be hanged … it concentrates the mind wonderfully.” More to the point for Pearson, as for the others noted, the looming presence of the law seems to impinge on the body as well, and not in a way conducive to good health.
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