Bankruptcy judge OKs Purdue Pharma’s $7M exec bonus plan
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(Reuters) – Purdue Pharma, the bankrupt maker of the OxyContin painkiller, on Monday obtained court approval to pay up to $7.1 million in incentive payments for five top executives if they meet certain goals, despite opposition from U.S. government lawyers.
U.S. Bankruptcy Judge Robert Drain in White Plains, New York, signed off on the executive incentive plan at the conclusion of a virtual hearing.
His ruling comes about two weeks after he said he will approve Purdue’s reorganization plan, which rests on a $10 billion settlement of opioid-related litigation.
The judge said repeatedly during Monday’s hearing that he does not consider the incentive payments “bonuses” because even if they are paid out in full, the executives would still only fall in the middle of the total compensation range for executives at major pharmaceutical companies. The incentive payments, he said, are essentially part of the executives’ salaries, he added.
“It’s easy — too easy in fact — to say that an incentive program is always a bonus,” Judge Drain said.
“No doubt my ruling will be construed by some as authorizing large bonuses to executives. I do not believe that is in fact the case here,” he added. “A bonus is something you get over and above median compensation.”
He rejected an argument from the U.S. Department of Justice’s bankruptcy watchdog, the U.S. Trustee, that Purdue failed to show that the 2021 incentive plan is truly incentivizing, rather than a bonus for executives who are simply showing up to work. The U.S. Trustee frequently objects to bonuses for executives of companies that are in bankruptcy.
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