Valeant Pharmaceuticals International Inc. (NYSE: VRX) CEO Michael Pearson needs to leave the company he leads, as its problems continue to grow rapidly and its stock price collapsed as quickly. After a long illness, Pearson has returned to work, and the company has added three board members: Dr. Fred Eshelman, Stephen Fraidin and Thomas W. Ross Sr.

Pearson made the 24/7 Wall St. CEOs Who Have to Go in 2016 list. Here is the case against him, with updates:

Valeant Pharmaceuticals
CEO: J. Michael Pearson
Year started: 2008
One-year stock price change: -51.6% (update -65.5%)
Annual compensation: $10.3 million

Long-time Valeant Pharmaceuticals International CEO Michael Pearson is credited for turning the company around via a massive shopping spree — but he has been under fire recently. The company makes a number of major drugs that target areas such as weight loss, vitamin deficiency, and depression. While revenue has soared from $1.2 billion in 2010 to $8.3 billion last year due to the many acquisitions, the deals have also left the company with a heavy debt load. More seriously, Valeant has been in the hot seat over rocketing drug prices and due to its relationship with specialty mail order pharmacy company Philidor. Philidor has been accused of charging customers for higher-priced drugs rather than cheaper generics among other questionable practices. Valeant management already appeared in front of a congressional hearing together with the so-called “pharma-dude” Martin Shkreli. The controversy around Philidor also triggered allegations of accounting fraud. In January, the company announced it may restate past financial results due to improper revenue recognition practices with Philidor. Valeant shares are down 70% from their 2015 peak. Although Pearson has been on a medical leave of absence since December, it is time for the Valeant board to fire the long-time CEO.

Methodology:

24/7 Wall St. considered two groups: S&P 500 companies and post-2010 high-tech IPOs with valuations of at least $1 billion. In the first category, a CEO had to hold office for at least three years to be considered. In the second, the CEO had to be in his or her job for two years.

Some groups of companies were completely excluded because the industries they are in have weakened significantly due to outside forces. The most obvious are energy sector companies. We also excluded companies that have completed major mergers, acquisitions or divestitures in the past year. Hewlett-Packard, which split into two companies last November, is among this group.

We examined stock performance over one, two and five years. CEO compensation was based on a three-year number as of the last proxy.

Finally, the editors used some judgement beyond raw data. CEOs who have repeatedly failed to successfully execute their own primary strategies made this list, even if shares in another S&P 500 or post-2010 IPO company dropped more.

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