Pharmaceutical executives are getting multimillion-dollar payouts — without even producing a vaccine


Category:  News & Politics

Via:  perrie-halpern  •  2 weeks ago  •  6 comments

By:   Ben Popken

Pharmaceutical executives are getting multimillion-dollar payouts — without even producing a vaccine
Moderna, Novavax and Vaxart compensation plans allow executives and investors to receive payouts even before developing any successful coronavirus treatment.

S E E D E D   C O N T E N T

Executives at pharmaceutical firms tasked with developing lifesaving drugs for the coronavirus — and receiving billions of dollars in federal funding — are taking home multimillion-dollar compensation packages even before their companies produce a working treatment.

The companies are part of President Donald Trump's "Operation Warp Speed" initiative, which aims to deploy 300 million doses of the COVID-19 vaccine by January 2021.

Trump pledged the government would purchase millions of doses, and some of the labs selected by the government for the development program have received billions of dollars in funding from the Food and Drug Administration.

Both President Donald Trump and Vice President Mike Pence toured vaccine development facilities Monday. With the president coming around to criticism that his handling of the pandemic has been weak and ineffective, the pressure is on for a cure both for the virus and for Trump's political ailments.

After a tour of a biotechnology innovation center near Wilmington, North Carolina, that is developing key ingredients for a vaccine for Novavax, Trump touted the significant federal investment in vaccine development, including $1.6 billion to Novavax and $483 million to Moderna.

Trump, who had previously deferred the responsibility for dealing with the coronavirus to the states, said Monday "a colossal industrial process" is being directed at the federal effort to find a vaccine. "Nothing like this has happened since the end of World War II."

Now, watchdogs are scrutinizing the timing and structure of the executive compensation plans at some of the companies touted by Trump.

Executives at Moderna, one of five firms selected by the White House to be part of the public-private partnership for vaccine development, sold stock in their company as news of promising developments in their clinical trials came out.

Watchdogs say the payouts are unusual in that they deliver compensation prior to actual performance — and raise questions about how taxpayer funds are being used.

Sales by CEO Stephane Bancel, his children's trust and companies he owns, amount to over $21 million between Jan. 1 and June 26, and another $3 million during July, according to filings from the Securities and Exchange Commission. Sales by its chief medical officer, Tal Zaks, in July alone amount to over $8 million. In early July, firm president Stephen Hoge sold over $1.2 million in stock, SEC filings show.

Speaking on CNBC on Monday morning, Bancel said his stock sales are preplanned and cannot be canceled due to company policy.

Maryland-based Novavax reconfigured its stock options so they would pay out even if vaccine efforts failed. According to SEC filings, its CEO and other top executives can start exercising options worth up to over $100 million if the company's drug enters phase 2 trials, even if the vaccine never makes it to market. Such equity awards were intended to incentivize the team in a competitive landscape,according to Novavax.

Vaxart, a small company in San Francisco, headlined a press release, "Vaxart's Covid-19 Vaccine Selected for the U.S. Government's Operation Warp Speed." Weeks before, company insiders had received stock options worth millions, the New York Times reported. The hedge fund that controls the company netted an immediate windfall of $200 million.

But while the company's vaccine candidate was included in a primate trial organized by a federal agency in conjunction with Operation Warp Speed, Vaxart wasn't one of the handful of companies selected to receive significant government support to create hundreds of millions of vaccine doses.

Moderna and Vaxart have yet to respond to an NBC News request for comment.

Watchdogs say that the payouts for the vaccine companies are unusual in that they deliver compensation prior to actual performance and raise questions about how taxpayer funds are being used.

"Drug companies are getting billions of dollars from taxpayers to develop a COVID-19 vaccine, so it's certainly concerning to see their executives cash out on their stock options before we know if the vaccine actually works," said Eli Zupnick, a spokesman for Accountable.US, a progressive watchdog group, in an email.

"These bonuses and stock sales should be investigated and this should be another reminder to Congress that Trump's secretive vaccine program needs a serious dose of accountability and transparency," Zupnick told NBC News.

Executive pay has been a hot-button issue as compensation for companies' top-ranks rises while average wages have stagnated and households costs increase. In 2019, the average CEO compensation at one of the top 350 U.S. firms was $21.3 million, according to new research by the Economic Policy Institute. That's a 14 percent increase from 2018, due to vested stock awards and exercised stock options tied to stock market growth.

The ratio of CEO to typical worker compensation for 2019 was 320-to-1, compared to 293-to-1 in 2018, 65-to-1 in 1989 and 21-to-1 in 1965, according to the research by the left-leaning think tank.

Experts say that good corporate governance, from both an ethical and legal standpoint, isn't simply about following the letter of the law, it's also about avoiding even the whiff of impropriety.

When asked on CNBC about news of the Moderna executive stock sales, Jay Clayton, chairman of the SEC, replied, "Why would you want to even raise the question that you were doing something that was inappropriate?" he said.

popkenheadshot_649f62aa61ba1fc6858e04b3d2e8227d.focal-100x100.jpg Ben Popken

Ben Popken is a senior business reporter for NBC News.


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1  devangelical    2 weeks ago

behind every great fortune is a great crime - sicilian proverb

1.1  Adam_Selene  replied to  devangelical @1    2 weeks ago

You know - you could turn that around and it would frequently be true.

Behind every great crime is a great fortune.

Perrie Halpern R.A.
1.1.1  seeder  Perrie Halpern R.A.  replied to  Adam_Selene @1.1    2 weeks ago

Good one!

3  Kavika     2 weeks ago
"Operation Warp Speed" 

More like ''Operation Warp Payback''

Sister Mary Agnes Ample Bottom
4  Sister Mary Agnes Ample Bottom    2 weeks ago

Let's talk Novavax for a moment.

They were awarded $1.6 billion by Donald Trump.  After a few scant moments of research, I found that BlackRock, the worlds largest asset manager, owned the most shares of Novavax...2.75 million shares.   The CEO of BlackRock, Larry Fink, was invited to the White House to help advise Trump regarding the impending financial crisis.  Details below.

Tidbits from a Bloomberg article published in April of this year:

As President Donald Trump grappled with the coronavirus outbreak last month, he boasted at a press conference of tapping a secret weapon for advice: Larry Fink.

The chief executive of BlackRock Inc. provided insight to Trump on coping with the fallout from the pandemic -- and once again put his firm at center of a white-hot economic emergency.

BlackRock is no stranger to stepping in during a financial crisis cleanup. It played a similar role in 2008. But back then, it was a smaller firm with a focus on fixed income, closer to Pacific Investment Management Co., which had renowned money managers Mohamed El-Erian and Bill Gross at the helm.
More than a decade later, the investing landscape has shifted. BlackRock has a premiere role in helping the Federal Reserve stabilize markets. The central bank has hired the firm to help manage its economic relief efforts. Beyond U.S. borders, the Bank of Canada has called on the asset manager as it shapes its response to the meltdown.
BlackRock’s government connections reflect the dominance it has achieved in the asset management arena since the last financial crisis. It became the world’s largest asset manager with $6.5 trillion in assets -- a size and breadth that make the firm an essential player on Wall Street, in Washington, and beyond.
BlackRock’s government advisory business also cemented some crucial relationships in the fallout from 2008. BlackRock scored mandates to manage portfolios of toxic assets from Bear Stearns Cos. and American International Group Inc., playing to Fink’s roots in structuring mortgage-backed securities.

Today, BlackRock’s role is even more expansive. The Fed enlisted the New York-based firm to shepherd three debt buying programs. Canada’s central bank is bringing in BlackRock as an adviser in purchases of commercial paper, a form of short-term debt companies use to fund day-to-day expenses like payroll.

Being a doof from the word go, I don't know what any of this means, but it has several different kinds of shitty shenanigans written all over it. 

4.1  zuksam  replied to  Sister Mary Agnes Ample Bottom @4    2 weeks ago

If it's too big to fail then it's too big period.


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