Purdue Pharma CEO Landau to receive another seven-figure bonus
Judge overseeing drugmaker’s bankruptcy approves payout
STAMFORD — Purdue Pharma CEO Craig Landau will receive a performance bonus of approximately $2.93 million within the next few months — $593,000 less than originally proposed — after approval was secured last week from the judge overseeing the OxyContin maker’s bankruptcy.
Stamford-based Purdue originally wanted to pay Landau about $3.5 million, as it argued that the additional compensation was essential to keeping him at the embattled company. But after the proposal faced opposition from a number of parties, Purdue agreed to the reduction. Half of
Landau’s bonus will be made before the end of the year, with the other half distributed by the end of March.
Landau’s base salary is $2.6 million, according to court filings made earlier this year. He has served as chief executive since June 2017.
At the same, Judge Robert Drain also approved a performance bonus of approximately $1 million for Purdue’s chief financial officer, Jon Lowne, that will be paid out in the same timeframe as Landau’s bonus.
“I conclude that the debtor (Purdue) has carried this burden to show that, in fact, under the standard enunciated by the courts for motions like this ... this (bonus plan) as modified is, in fact, appropriate,” Judge Robert Drain said at a Nov. 17 hearing.
Purdue executives are performing “critical functions,” including management, operations, finance and legal services, the company said in a statement.
“They are making extraordinary efforts to shepherd the business, maximize the value of the estate and steer the company through its restructuring,” the statement said.
Connecticut Attorney General William Tong declined to comment on the bonuses.
Opponents to the new payments included U.S. Sen. Richard Blumenthal, DConn., and several other Democratic senators, who objected because of concerns that Landau might have presided over “criminal activity” during his time with the company.
Landau is not named as a defendant in Connecticut’s lawsuit against Purdue, although others such as Massachusetts have personally accused him of wrongdoing.
Purdue denied that Landau had been involved in any wrongdoing and has generally rejected the allegations in the thousands of pending lawsuits that it fueled the opioid crisis with deceptive opioid marketing.
Landau’s new bonus will supplement a 2019 performance bonus of $1.3 million for the chief executive that was approved by Drain in January. When Drain signed off on the 2019 payout, Purdue and Landau agreed to defer until Dec. 31 the “vesting” or delivery of the final $3 million of a $6 million retention bonus awarded to Landau in March 2018.
The latest bonuses for Landau and Lowne follow Drain’s approval last month of a new round of bonuses for lower-level employees that could total up to nearly $36 million. Those payments will be distributed among more than 600 workers.
Citing an annualized “voluntary” turnover rate of 13 percent from the start of its bankruptcy in September 2019 through Aug. 31, Purdue has said in court filings that it needs the bonuses to address a “real and serious attrition problem.”
That argument has not swayed critics of the bonuses.
“Because the case commenced over a year ago, no plan has been filed, no payments have been distributed to creditors, it is unclear when creditors will receive a distribution, and it is also unclear if such distribution will even be meaningful,” U.S. trustee William Harrington, who represents the Department of Justice, said in a recent court filing. “The facts and circumstances of this case do not justify requested bonus payments to (executive) insiders or the retention payments to noninsiders.”
Similar disputes arose last year over another package of bonuses, totaling about $35 million, that was also approved by Drain.
The predominant goal of the bankruptcy — to reach a comprehensive settlement of the lawsuits — has not yet been reached. Purdue has offered a proposal it values at more than $10 billion, but Connecticut and 23 other “non-consenting states” have turned down the plan because they see it as insufficient.
“It is vital that we maintain a strong, stable leadership team with the experience and expertise to lead Purdue through this period of significant change as we continue to advance towards a comprehensive settlement framework, which would deliver more than $10 billion in value, including 100 percent of Purdue’s assets, to claimants and communities,” Purdue added in its statement.
Connecticut and other plaintiffs have promised to use any settlement funds solely for efforts to tackle the opioid epidemic.
Also last week, Drain approved an approximately $8 billion settlement between Purdue and the U.S. Department of Justice, which also requires the company to plead guilty to three criminal charges of defrauding the government and violating anti-kickback laws.