Executives at pharmaceutical companies tasked with developing life-saving medications for coronavirus, and receiving billions of dollars in federal funds, take home multi-million dollar compensation packages even before their companies produce a work treatment.
The companies are part of President Donald Trump’s “Operation Warp Speed” initiative, which aims to implement 300 million doses of the COVID-19 vaccine by January 2021.
Trump promised that the government would buy millions of doses, and some of the labs selected by the government for the development program have received billions of dollars in funds from the Food and Drug Administration.
Both President Donald Trump and Vice President Mike Pence toured the vaccine development facilities on Monday. With the president criticizing that his handling of the pandemic has been weak and ineffective, pressure is seeking a cure for both the virus and Trump’s political ailments.
After a tour of a biotech innovation center near Wilmington, North Carolina, which is developing key ingredients for a vaccine for Novavax, Trump promoted significant federal investment in vaccine development, including $ 1.6 billion for Novavax and $ 483 million for Moderna.
Trump, who had previously deferred responsibility for dealing with the coronavirus to the states, said Monday that “a colossal industrial process” is heading for the federal effort to find a vaccine. “None of this has happened since the end of World War II.”
Watchdogs are now analyzing the timing and structure of executive compensation plans at some of the companies promoted by Trump.
Executives of Moderna, one of five companies selected by the White House to join the public-private partnership for vaccine development, sold shares in their company as news of promising advances appeared in their clinical trials.
Watchdogs say the payments are unusual in that they offer compensation before actual performance, and raise questions about how taxpayer funds are used.
Sales of CEO Stéphane Bancel, his children’s trust, and the companies he owns total more than $ 21 million between January 1 and June 26, and another $ 3 million during July, according to Commission documents from the Stock Market and Values. Sales for its medical director, Tal Zaks, in July only topped $ 8 million. In early July, the firm’s president, Stephen Hoge, sold more than $ 1.2 million in shares, according to documents filed by the SEC.
Speaking on CNBC Monday morning, Bancel said his share sales are planned in advance and cannot be canceled due to company policy.
Novavax, based in Maryland, reconfigured its stock options to pay even if vaccination efforts failed. According to SEC filings, its CEO and other top executives may begin exercising options worth more than $ 100 million if the company’s drug enters phase 2 trials, even if the vaccine never reaches the market. . These equity awards were intended to incentivize the team in a competitive landscape, according to Novavax.
Vaxart, a small company in San Francisco, headed a press release, “Vaxart Covid-19 Vaccine Selected for United States Government Operation Warp Speed.” Weeks earlier, company experts had received stock options worth millions, the New York Times reported. The hedge fund that controls the company made an immediate profit of $ 200 million.
But although the company’s vaccine candidate was included in a primate trial organized by a federal agency in conjunction with Operation Warp Speed, Vaxart was not one of the few companies selected to receive significant government support to create hundreds of millions. of vaccine doses.
Moderna and Vaxart have yet to respond to a request for comment from NBC News.
Watchdogs say the payments for the vaccine companies are unusual in that they provide compensation before actual performance and raise questions about how taxpayer funds are used.
“Pharmaceutical companies get billions of dollars from taxpayers to develop a COVID-19 vaccine, so it is troubling to see their executives cash in on their stock options before they know if the vaccine really works,” said Eli Zupnick, spokesman. from Accountable. .US, a progressive watchdog group, in an email.
“These bonds and stock sales need to be investigated and this should be another reminder to Congress that Trump’s secret vaccine program needs a serious dose of accountability and transparency,” Zupnick told NBC News.
Executive pay has been a hot topic as compensation for high-ranking companies increases, while average salaries have stagnated and household costs rise. In 2019, the median CEO compensation at one of the top 350 U.S. companies was $ 21.3 million, according to new research from the Institute for Economic Policy. It is a 14 percent increase from 2018, due to the awards of acquired shares and the options of exercised shares linked to the growth of the stock market.
The ratio of CEO to typical workers’ 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 research from the left – release of the group of experts.
Experts say that good corporate governance, both ethically and legally, is not simply about following the letter of the law, but also about avoiding even the smell of impropriety.
When asked on CNBC about the news of Moderna’s executive stock sales, SEC president Jay Clayton replied, “Why would they even want to ask the question that they were doing something that wasn’t appropriate?” he said.
