Goldman Sachs sold 1.3 million shares from Valeant on Thursday, which the pharmaceuticals company was holding as collateral for its CEO, Michael Pearson.

Goldman Sachs Group Inc. won't let Pearson's preserve his holdings in the pharmaceutical company by adding more collateral, according to Bloomberg Business. The share was held by Valeant to back Pearson's $100 million loan. Pearson wanted to put more assets to serve as collateral, but he said Goldman didn't give him that opportunity.

The Business Insider reported that Pearson pledged 2 million shares in April 2014 to Goldman to get a $100 million loan. Valeant said Pearson used the money he loaned for financial charitable contributions, like putting it on Duke University and funding a community swimming pool. He also used it to buy more Valeant shares. The loan was also used to meet his tax obligations associated to the vesting and payment of the compensatory equity awards of Valeant pharmaceutical. During that time, Valeant share price was at $206. The stock was down to $78.75 during the closing on Thursday's trading session. This was when Goldman sold the $1.3 million share.

Reuters writes that the major reason for the plunge were the attacks on its business model and its relationship with Philidor RX services pharmacy, which is allegedly a shady specialty pharmacy. Pearson has been criticized for how he handles Valeant's business practices. With the issue he has to face on his $100 million loan, he would definitely get more pressure from his critics. According to corporate governance experts, CEOs with loan arrangements like Pearson's have less to lose compared to other shareholders.

Pearson gets performance-based bonuses in forms of stocks and cash. He does not get cash salary. The loan he got is one way for executives to sustain their lifestyles while still holding a huge amount of shares of their companies.