Valeant under pressure to beef up management as new board meets

By Carl O'Donnell and Svea Herbst-Bayliss
NEW YORK, March 11 (Reuters) - Drug company Valeant
Pharmaceuticals Inc VRX.TO is under pressure from investors to
introduce more transparency into its operations and expand its
management ranks to regain credibility in the investment
community, people familiar with the situation said.
The company is on Friday holding its first board meeting
since appointing three new outside directors, the people said.
It was not immediately clear whether these specific issues would
be on the agenda.
The potential new measures advocated by investors include
providing more details of Chief Executive Michael Pearson 's
recent illness, which sidelined him for at least two months, as
well as adding managers with expertise in accounting and
financial controls to Pearson's inner circle, the people said.
Valeant shares have lost 73 percent of their value since
August as it faced growing scrutiny over its drug pricing and
its connection to a specialty pharmacy. The company in recent
weeks has delayed filing its quarterly earnings statements,
disclosed a U.S. Securities and Exchange Commission probe into
its business and reported the abrupt departure of several key
executives.
Pearson (LON:PSON) surprised Wall Street with a sudden return to work
on Feb. 29 after having been hospitalized for weeks, battling
pneumonia and related complications.
The company has taken steps to reassure investors by
splitting the chairman and CEO roles. This week, Valeant
appointed three new board members. They include veteran mergers
and acquisitions lawyer Stephen Fraidin, who is now vice
chairman at one of Valeant's biggest shareholders, Pershing
Square (NYSE:SQ) Capital Management.
Pharmaceutical industry executive Fred Eshelman and former
University of North Carolina president Thomas Ross have also
joined the board. On Friday afternoon, the newly enlarged group
of directors will hold a telephone meeting, the people familiar
with the matter said.
Pearson has lost a significant amount of weight and needed
physical therapy after weeks in a hospital bed, according to two
sources who have met with him.
Several shareholders told Reuters they were worried that
Pearson may have rushed his return and could fall ill again.
Some are pressing for adding more accounting expertise to Chief
Financial Officer Robert Rosiello's office, as well as enhancing
the company's legal team and filling a vacant comptroller post.
Valeant is due to release preliminary fourth quarter
earnings next week, but has not said when it will file its
annual report.
Pershing Square's William Ackman said publicly this week he
expects the clouds over the company will lift in the coming
weeks and called it a valuable asset. But he added that if
Valeant's management doesn't stabilize the situation there are
options, including bringing in new leadership or selling the
company.