The Middletown Press (Middletown, CT)
Connecticut, other states oppose Purdue bonuses
Group files objection to $38 million in expenditures
STAMFORD — Connecticut and 23 other states confirmed in a court filing Thursday their opposition to bankrupt OxyContin maker Purdue Pharma and an affiliated firm’s plans to pay out tens of millions of dollars in employee bonuses to keep their business running.
The objection was jointly filed by Connecticut and the other states that have not agreed to settlement terms with Purdue in federal bankruptcy court in White Plains, N.Y., ahead of an Oct. 10 final hearing on the compensation plan. In an accompanying statement, Connecticut Attorney General William Tong asserted that Purdue has given “next to no information” about whom the bonuses would benefit and not explained why the payments should be allowed under bankruptcy code.
“This is not business as usual, and the idea that they would hand out over $38 million in bonuses — possibly to highpaid insiders and executives — after declaring bankruptcy is morally repugnant,” Tong said. “Every last cent of that money must be used to combat the opioid epidemic — on addiction science, treatment and recovery.”
In a statement, Purdue responded that the payouts would comply with bankruptcy code and continue longstanding compensation programs. It has also argued that the payments are needed to prevent mass departures at a company that has downsized its headcount by about 65 percent since 2017.
“These programs are essential to retaining employees who are critical to preserving the value of the company for the ultimate benefit of the American public,” the statement said. “Denying people who are doing important work under extremely challenging conditions their fair compensation would cause them to leave and destroy the value of the company, which will benefit no one.”
Purdue and Rhode Islandbased Rhodes Associates, which is also owned by the Sackler family members who control Purdue, proposed in a court filing last month paying “certain” unnamed employees next year a total of $26.5 million for “annual incentive plans.”
At the same time, the companies run “longterm results plans” for some employees. Next year, they intend to distribute through that program $7.9 million at Purdue and $1.4 million at Rhodes.
Purdue and Rhodes are also proposing several million dollars in retention awards to keep 120 employees who are not toplevel executives.
Those payments would be worth $1 million to Purdue employees and $900,000 to Rhodes workers this year, and about $6.7 million to Purdue workers and $1.7 million to Rhodes employees in 2020.
Purdue and Rhodes also outlined plans to pay “approximately 14” employees a total of $2.275 million in signon bonuses. It did not specify how many of them work at Purdue and how many are employed by Rhodes.
About 500 employees remain with Purdue, including slighter fewer than 250 based at its downtown Stamford headquarters, according to court filings and company statements. In comparison, about 1,100 worked for the firm at the start of 2018.
Several hundred employees were laid off last year as part of the disbanding of the company’s sales force. Widespread attrition has further reduced the ranks.
“I know many of these employees had nothing to do with the egregious actions of their employer,” Tong added in his statement. “But that is not who we are talking about. These bonuses appear to be targeted at retaining the highestlevel executives. Connecticut strongly objects and we will do all we can to hold Purdue and the Sacklers accountable through this bankruptcy process.”
Purdue’s settlement offer, through bankruptcy, calls for the company to be turned into a trust or similar entity that could distribute tens of millions of doses of opioid overdosereversal treatments and the Sacklers to make a payout of at least $3 billion and also transfer funds from the sale of their international pharmaceutical businesses.
Attorneys for about 2,000 cities and counties and another two dozen state attorneys general have expressed support for the settlement framework — which Purdue values at more than $10 billion.
But Tong and the other state attorneys general who submitted the filing objecting to the bonuses have said more funds are needed to tackle the opioid crisis.
In addition to Connecticut, the other states that have not agreed to settlement terms with Purdue are California, Colorado, Delaware, Hawaii, Idaho, Illinois, Iowa, Maine, Maryland, Massachusetts, Minnesota, Nevada, New Hampshire, New Jersey, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Washington and Wisconsin, as well as the District of Columbia.