Bob highlights my posts regarding Questcor's 1410% increase in the price of H.P. Acthar Gel and the Senate Joint Economic Committee hearing which I attended on July 24, 2008.
In a related note, on July 31, 2008 (only 7 days following the JEC hearing and the release of 2nd quarter earnings, and 4 quarters of reported earnings since the "new strategy" was implemented), CFO George Stuart enters into a transition agreement with Questcor. Basically, he is leaving.
A reason given for his desire to seek other employment is that Stuart has been commuting from Southern California (San Diego) to Northern California (Union City which is 20 miles north of San Jose Airport) for the past three years. American has 32 and Southwest has 65 non-stop flights from San Jose to San Diego. Both airlines offer round-trip fares of $120 (including taxes), even with the recent increased cost of flying, for the 85-minute flight.
As a reminder, George Stuart was the first Questcor insider to sell a substantial amount of stock after the run-up last fall. He was also the luckiest one in that he managed to sell at the high of $6.00, the highest stock price of any insider selling before or since.
Pursuant to the transition agreement, Stuart has agreed to continue working in his current capacity until Questcor hires a new Chief Financial Officer (or until December 31, 2008) and for six months thereafter as a part-time employee (working from home) to assist with the transition. During the six month transition period, Stuart will receive continued compensation of $17,333.33 per month, continuation of benefits and continued stock option vesting. The agreement also provides for severance payout at the end of Stuart's part-time employment in the amount of $26,000 plus $20,000 for each month remaining on his six (6) month term of part-time employment at the end of such employment.
So that's a $104,000 part-time salary plus benefits for working from home for six months, or if he's not needed to work part-time during those six months, it's $120,000 plus benefits. Both scenarios end with an extra $26,000. But Stuart will not receive a cash bonus for 2008 which would have been 45% of his $260,000 salary (=$117,000). Thus the possibility of $120,000 while not working seems pretty close to that forfeited bonus.
As a final note, I should mention that George Stuart is/was the final employee remaining (I believe) who was brought to Questcor by the previous CEO James Fares in 2005. I find it interesting that last year Fares announced his departure one week after Questcor announced they had received a "non-approval" letter from the FDA for the addition of Infantile Spasm to the label for H.P. Acthar Gel. And now a transition plan has been arranged between George Stuart and Questcor only one week after their financial case was discussed at a Senate JEC hearing.
QUESTCOR ANNOUNCES CFO TRANSITION PLAN
Union City, CA – August 5, 2008 — Questcor Pharmaceuticals, Inc. (NASDAQ: QCOR), announced today that George Stuart will be transitioning from his position as Questcor’s Senior Vice President of Finance and Chief Financial Officer once a successor joins the Company. For the past three years, Mr. Stuart has been commuting from Southern California to the Company’s headquarters in Northern California, and it is his desire to remain closer to home. Mr. Stuart, 45, joined Questcor in 2005.“I deeply appreciate George’s willingness to remain with our company until his successor comes on board, as well as to continue on a part-time basis for six months thereafter to ensure a smooth transition,” said Don M. Bailey, President and Chief Executive Officer of Questcor.“George has made many contributions to Questcor and played a key role in supporting the rapid turnaround and growth of the Company. We appreciate George’s efforts in the transition process, and wish him the best as he pursues other interests.”“The entire Questcor team has been extremely supportive of my decision to seek new career opportunities closer to my home and family in San Diego,” said Mr. Stuart. “I look forward to working with Don and my successor during the transition process and remain very excited about the future and potential of Questcor.”
Strange coincidence indeed.