On March 9, the former UNC-system president was appointed to the board of directors of Valeant Pharmaceuticals International alongside Stephen Fraidin and Dr. Fred Eshelman.
“While Valeant has great opportunity before it, it still faces significant headwinds,” said Tom Ross in a statement.
Ross’ appointment comes during a contentious time for the Canadian-based pharmaceutical company — with Chief Executive Officer Mike Pearson stepping down Monday and Chief Financial Officer Howard Schiller asked to resign.
Atul Nerkar, a professor in the UNC Kenan-Flagler Business School, said boards of directors are appointed by shareholders to oversee the company and ensure it’s run effectively.
“The whole point is the board is nothing but a representation of the shareholders of the company, and their goal is to look out for the interests of the shareholders,” he said.
Nerkar said shareholders look for board members who both understand the company’s industry and know what’s practical from a leadership perspective. Ideal boards will have members who are experts in their field, he said.
Chairperson Robert Ingram said Valeant is looking to capitalize on Ross’ public policy experience to move the company forward after a troublesome fiscal year, according to a press release.
Preliminary unaudited 2015 fourth quarter results were released March 15, indicating expected shortfalls in the company’s total revenue, lowering it to an unaudited value of $2.8 billion for the quarter.
Since the March 15 announcement, Valeant stock has dropped from $69.04 a share to $28.98.
Moving forward, Valeant has adjusted estimates for 2016. The company predicts total revenue for the first quarter will be lower than previous projections, but the drop in revenue is expected to level off by the fourth quarter.
Valeant leadership has undergone several changes since the beginning of 2016.
In addition to Pearson’s exit, Dr. Anders Lonner stepped down from his board position March 8, citing other commitments and personal priorities.
But, despite challenges, Ross is optimistic.
“I look forward to working with the board and management, addressing open issues and restoring investor and public confidence in Valeant,” Ross said.
Ross’ fellow board member, Eshelman, also shares ties to UNC.
Eshelman — who has donated approximately $33 million since graduating from UNC in 1972 — is the namesake of the UNC Eshelman School of Pharmacy, renamed in 2008.
Valeant is hopeful Eshelman’s extensive experience in the pharmaceutical industry will strengthen its corporate practices.
Nerkar said appointing board members is complicated.
“We do have a world where boards, while they are officially elected by the shareholders, all shareholders are not equal,” he said.
For most companies, hedge funds and institutions own shares and can influence the selection of the board or opt for members of the organization to serve directly on the board.
Valeant’s Nominating and Corporate Governance Committee uses a selection criteria approved by the board and considers knowledge, experience, skills, expertise and diversity.
With the appointment of Ross, Fraidin and Eshelman, the Valeant Board of Directors expands from 12 seats to 14.