Indivior faces the prospect of a shareholder revolt at its annual meeting this week after the London-listed drugmaker maintained bonuses for its former chief executive, despite being jailed for his role in the crisis opioids in the United States.
Shaun Thaxter, the former CEO, was sentenced to six months in federal prison last year and agreed to pay $ 600,000 in fines and forfeiture after pleading guilty to causing the company to share False and misleading information about the safety of Suboxone Film with a state regulator. The medicine is used to treat opioid use disorders.
Shareholders and major proxy advisers have criticized the company’s decision to keep the rewards granted to Thaxter as part of its long-term incentive plan, despite the blow to Indivior’s reputation through the legal process.
Institutional Shareholder Services and Glass Lewis, the influential advisory groups, have recommended that investors vote against the company’s compensation report, questioning why Indivior has not enforced the penalty and clawback provisions, which allow companies to reduce or cancel bonuses or force executives to reimburse them in some cases. conditions.
According to ISS, Thaxter left the company with more than one million shares outstanding, worth more than $ 1.5 million, which will only vest in 2022 and 2023.
ISS said, “As the chief executive of the company since 2009, Shaun Thaxter is ultimately responsible for the financial and reputational damage suffered by the company in connection with the mis-sale of Suboxone.”
One of the top 20 shareholders also criticized the compensation committee’s decision to treat Thaxter as a “good leaver” and to maintain the rewards despite the jail term.
The opioid epidemic in the United States has claimed about half a million lives over the past 20 years, according to the United States Centers for Disease Control and Prevention, as many Americans have become addicted to them first. prescription opioids and then to illegal versions of the drugs. The US Department of Justice, state and local attorneys general have taken opioid manufacturers to court, hoping to obtain restitution for the huge health and law enforcement costs associated with the drugs. spin off.
Indivior said the Compensation Committee decided to allow him to retain his outstanding LTIP awards “based on Mr. Thaxter’s leadership which has produced years of positive operational performance and the absence of any findings of wrongdoing or of personal harm ”.
Suboxone film, which contains buprenorphine and naloxone, is designed to treat opioid addiction. The Justice Department accused Thaxter of asking employees to devise a strategy to achieve preferred drug status with MassHealth, the Massachusetts regulator. Some employees then shared false and misleading safety information about the risk of accidental exposure to children.
MassHealth later announced it would provide access to the drug to patients with children under six, who have received Medicaid, the U.S. government-backed health insurance program for low-income people.
Thaxter has not been charged with intentionally cheating on MassHealth. Wick Sollers, counsel for Thaxter, said: “We believe that the determination that Mr. Thaxter should be treated as a ‘good leaver’ was entirely appropriate in the circumstances of his case, which established that he was not aware of any wrongdoing when it occurred and authorized corrective action after learning of the problem.
Thaxter is one of the few pharmaceutical executives to have been jailed on charges related to the opioid crisis. He ran the company from 2009 until last year, shortly before pleading guilty to the charge, including when she was with Reckitt Benckiser.
Reckitt paid $ 1.4 billion in 2019 to resolve its liability to the United States regarding the commercialization of Suboxone. Indivior and its subsidiary Indivior Solutions also previously agreed to pay $ 600 million to resolve related debts.
Thaxter received a total of $ 2.1M for fiscal 2019, as well as $ 557,300 in 2020. After his departure in June 2020, he received a lump sum of over $ 1M in lieu of salary and benefits to cover his 12- right to one month’s notice.
ISS also advised shareholders to vote against the re-election of the chairman of the compensation committee, arguing the “company’s decision to treat Thaxter as a good starter. . . raises serious questions about its independence and judgment ”.