Valeant Pharmaceuticals International Inc. (NYSE: VRX) CEO Michael Pearson needs to leave the company for it to have any chance to recover. He was included on 24/7 Wall St.’s recent CEOs Who Have to Go in 2016 list. Since the list was compiled, Pearson has returned from a long medical leave, and Valeant has posted terrible quarterly and annual figures and offered a poor forecast. These took shares down by half, after they already had plunged for months. Over the past year, the stock has fallen 83% to under $34.

According to a Wall Street Journal article on March 11, Valeant’s board considered firing Pearson. The board decided against the action for two reasons:

Mr. Pearson, who is 56 years old, insisted at that Friday meeting that he was the company’s best bet for its future, people familiar with the matter said. No one, he told the board, could match his close ties to benefit managers, insurers and doctors, and few shared his grasp of what drug discounts Valeant could afford, these people said. ​

Also working in his favor: If he were fired, he would be owed​ some $200 million in deferred stock compensation, an unusually rich exit package that could spark investor outrage, some of the people said.

Ties with a pharma company that may have led to inflated drug prices and accounting problems have hurt Pearson. Taken together with recent earnings announcements, Valeant cannot afford to keep him.

Here is the 24/7 Wall St. case against him, as posted on February 26. Some of the data have changed, including the share price and the status of his medical leave:

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

Long-time Valeant Pharmaceuticals International Inc. (NYSE: VRX) 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.

Nothing about or core opinion has changed.

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.

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

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

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