Valeant Pharmaceuticals International v. Jerney

As Valeant (plaintiff) planned to spin off a subsidiary via IPO, CEO Milan Panic proposed roughly $50 million in bonuses for the board, referred the matter to a compensation committee composed entirely of directors who would themselves receive the bonus (two with longstanding personal ties to Panic), and that committee hired the same consulting firm that had already endorsed the bonuses for the board previously, without seeking independent review. When the IPO price was cut nearly 25 percent shortly before completion, counsel advised revisiting the bonuses, but Panic ignored that advice and the board approved the new price without readdressing compensation; Panic ultimately received nearly $30 million and director Jerney (defendant) received $3 million, having voted in favor. Shareholders brought a derivative suit challenging the bonuses; all defendant-directors except Jerney settled.