Senate Democrats Oppose Bankruptcy Bonus for Purdue Pharma CEO
By Jonathan Randles
Senate Democrats are challenging OxyContin maker Purdue Pharma
LP's request to pay its chief executive a bonus that could total
millions of dollars while the company is in bankruptcy, saying such
an award would be offensive to the thousands of families harmed by
the opioid crisis.
Companies restructuring their affairs in chapter 11 commonly
seek to pay executive bonuses either right before or during a
bankruptcy to hold on to top management, though the practice has
been controversial. Purdue CEO Craig Landau could get between $2.6
million and $3.5 million under an executive incentive program the
company is proposing in the U.S. Bankruptcy Court in White Plains,
N.Y., dependent on the drugmaker hitting certain performance
Five Senate Democrats sent a letter Monday urging the judge
overseeing Purdue's bankruptcy, Robert Drain, to reject the
proposed bonus, saying Mr. Landau led Purdue during a period during
which the company was accused by state and federal authorities of
fueling the opioid crisis through misleading marketing of
In response to the letter, Purdue said that stable leadership is
critical to a successful reorganization and that Mr. Landau has
kept the company profitable "in order to maximize value for
claimants and the American public."
Judge Drain last year approved an earlier round of bonuses for
Purdue's executive team after the company agreed to reduce the size
of the awards.
The Justice Department is seeking billions of dollars in damages
from Purdue, alleging that from 2010 to 2018 the company paid
kickbacks to doctors and specialty pharmacies and marketed
OxyContin to prescribers who wrote medically unnecessary
prescriptions, according to papers filed in the bankruptcy
Purdue has denied the allegations and said it is committed to
alleviating opioid addiction.
The letter is signed by Democratic Sens. Tammy Baldwin of
Wisconsin, Maggie Hassan of New Hampshire, Tina Smith of Minnesota,
Joe Manchin of West Virginia and Richard Blumenthal of
"To provide Mr. Landau with this bonus is to endorse the very
behavior for which Mr. Landau has been sued by multiple states,"
the senators wrote, noting that during the bankruptcy process, more
than 122,000 people have filed personal injury claims related to
opioid products made by Purdue. Bonus payments outlined in Purdue's
incentive plan "should not be made while these families continue to
wait for justice," the letter said.
Mr. Landau joined Purdue in 1999 and has served as CEO since
2017. Purdue said in court papers when it filed for chapter 11
protection last year that under Mr. Landau's leadership, the
company "is taking meaningful actions to address the opioid
The CEO is one of eight Purdue executives who would be entitled
to bonuses under the proposed incentive program. Total awards
available under the program range between $7.4 million and $9.86
million, court papers said.
Purdue is arguing the bonuses are needed to keep its leadership
team together and motivated as they navigate the chapter 11 case
and the coronavirus pandemic, which has amplified the "extreme
strain" the workforce has been under. The company also said its
leadership team has made progress on a global settlement that would
help address the opioid crisis.
A hearing in bankruptcy court on Purdue's request to pay the
bonuses is scheduled for Sept. 30.
Purdue filed for chapter 11 bankruptcy protection last year,
seeking to implement a multibillion-dollar settlement plan with
states and local governments that had sued the company.
--Sara Randazzo contributed to this article.
Write to Jonathan Randles at Jonathan.Randles@wsj.com
(END) Dow Jones Newswires
September 21, 2020 18:06 ET (22:06 GMT)
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