CNBC’s Joe Kernen gave Moderna’s CEO Stephane Bancel a tough interview, asking how he could justify taking an income of nearly $400 million. The CEO’s huge raise comes following his company reaping in billions in profit from producing the COVID-19 vaccine that was funded by the federal government, which also protected the pharmaceutical company protections against lawsuits related to potential side effects.
The Washington Postreported, “The Cambridge, Mass.-based biotech, known for its lifesaving coronavirus vaccine, raised his salary last year by 50 percent to $1.5 million and increased his target cash bonus, according to a March securities filing. Bancel, 50, says he is donating the proceeds of stock sales to charity. He owns stock worth at least $2.8 billion and, as of the end of last year, had additional stock-based compensation valued at $1.7 billion.
Moderna emerged from the pandemic as a standout corporate winner, as its vaccine supercharged its stock price and made billionaires of Bancel and two co-founding board members. The firm’s windfall profits have drawn criticism, particularly because it used $1.7 billion in taxpayer funding and assistance from the National Institutes of Health to develop its vaccine. Now, analysts are finding fault with its executive pay and governance, with one influential firm advising shareholders to vote against the company’s compensation plan at its annual meeting on May 3.
Even by the roller coaster standards of the biotechnology world, Moderna’s rise has few parallels in the annals of modern American business. The company brought in revenue of $18.5 billion in 2021, 300 times more than it generated just two years earlier. Moderna’s board is one of just five in the S&P 500 with three directors owning more than $1 billion in company stock, along with household names like Google-parent Alphabet, Berkshire Hathaway and Estée Lauder, according to Equilar, a research firm specializing in executive pay.
Moderna’s prominence has come with certain costs, and it has spent up to $1 million a year on security for Bancel due to what it calls the “heightened threat environment in connection with production of our COVID-19 vaccine.” Financial success has also made Moderna a target of lawmakers like Sen. Bernie Sanders (I-Vt.), who blasted the company at a hearing last month for its plans to raise vaccine prices when it shifts to commercial distribution.”
Kernen let him have it: “I have to ask you about your pay last year. We were talking earlier about … Alphabet CEO compared to you. I think you made about half of what, of what you made last year, but Stephane, you enter into an employment agreement with Moderna based on performance and if it comes out to $400 million, I’m not – for a year, on paper, that looks ridiculous. But it is what it is, I mean, what is your viewpoint on – how do you explain that to, you know, in a rising inequality world, how do you explain something like that? Can you defend it?”
Bancel said, “Let’s talk about the data, Joe. I think some of the media have not been reporting the data correctly. I was not paid $400 million last year. What I did last year, is I sold my first stock option that I got granted by the company in 2013. Why did I sell it? Because it is expiring this year, it is a 10-year grant and so it is a grant, I got 10 years ago, when we were starting the company.”
“And it’s so much value because at the time, remember, Moderna valuation was maybe a couple hundred million dollars, not the company it is today. The other thing I have done is I have actually committed on the blog last May and gave an update essentially, after paying taxes, 100% of a gain of that grant has been granted- given to charity. I have no idea why the media is portraying my pay last year as more than $3-4 million. It is not accurate, it is my option, I use it, if not, it goes to zero value and we give everything to charity, 100%. So I don’t know what the topic is,” the CEO continued.
In January, Moderna recently announced that it would quadruple the price of the COVID-19 vaccine.
The announcement received the ire of Vermont Senator Bernie Sanders, the current chairman of the Senate Committee on Health, Education, Labor and Pensions. The former presidential candidate and avowed socialist wrote:
“The huge increase in price that you have proposed will have a significantly negative impact on the budgets of Medicaid, Medicare and other government programs that will continue covering the vaccine without cost-sharing for patients. Your decision will cost taxpayers billions of dollars. Your outrageous price boost will also increase private health insurance premiums. Perhaps most significantly, the quadrupling of prices will make the vaccine unavailable for many millions of uninsured and underinsured Americans who will not be able to afford it. How many of these Americans will die from COVID-19 as a result of limited access to these lifesaving vaccines? While nobody can predict the exact figure, the number could well be in the thousands. In the midst of a deadly pandemic, restricting access to this much needed vaccine is unconscionable.”
While the price hike planned by the company would make the lifesaving vaccine unaffordable for millions of Americans, estimates show that the cost of producing the vaccine is now as low as $2.85 per dose – 2.2% of what Moderna plans to charge. Meanwhile, over the last two years, Moderna made over $19 billion in profits off of the COVID-19 vaccine which they developed in partnership with scientists from the National Institutes of Health (NIH), a U.S. government agency that is funded by U.S. taxpayers. The federal government directly provided $1.7 billion to Moderna’s COVID-19 vaccine research and development, and guaranteed the company billions more in sales.
While nearly 1.1 million Americans died from COVID-19 in the last three years and over 100 million more have become ill, Moderna has used those profits to provide incredibly extravagant compensation packages to top officials at the company. In addition to CEO Bancel becoming a multi-billionaire as a direct result of Moderna’s COVID-19 vaccine, with Forbes currently estimating his wealth at $6.1 billion, Noubar Afeyan, Moderna’s chairman and co-founder, is currently worth $2.1 billion; Robert Langer, another co-founder of Moderna, is now worth $2.2 billion; and Timothy Springer, a founding investor in Moderna is now worth $2.6 billion.
“The purpose of the recent taxpayer investment in Moderna was to protect the health and lives of the American people, not to turn a handful of corporate executives and investors into multi-billionaires,” Sanders wrote to CEO Bancel. “As you know, the federal government, over the years, has supported Moderna every step of the way going back to 2013 when your company reportedly only had three employees. Now, in the midst of a continuing public health crisis and a growing federal deficit, is not the time for Moderna to be quadrupling the price of this vaccine. Now is not the time for unacceptable corporate greed.”