Emergent BioSolutions, the biotech company whose Baltimore plant ruined millions of coronavirus vaccine doses, awarded hundreds of thousands of dollars in bonuses to its top executives last year, and the company’s board praised its founder and chairman for “leveraging his critical relationships with key customers, Congress, and other stakeholders,” according to documents released Wednesday by a House subcommittee.
The government, which awarded the firm a $628 million contract last year, has so far paid Emergent $271 million, even though U.S. regulators have yet to clear a single dose of vaccine produced at its manufacturing plant in Baltimore, according to the documents released by the House Select Subcommittee on the Coronavirus Crisis in advance of a hearing on Wednesday.
Production at the plant was halted a month ago after workers accidentally contaminated a batch of vaccine, forcing Emergent to discard the equivalent of up to 15 million doses of Johnson & Johnson’s coronavirus vaccine.
Records from an Emergent board of directors compensation meeting offer a rare glimpse inside a politically connected federal contractor whose business is built largely around a single customer: the United States government.
The documents reflect earlier reporting by The New York Times, including a series of confidential audits that highlighted repeated violations of manufacturing standards at the Baltimore plant, including failure to properly disinfect the plant and protect against contamination of vaccine batches. Another report in June 2020, by a top manufacturing expert for the federal government, warned that Emergent lacked trained staff and adequate systems for quality control.
Emergent’s board gave top performance ratings to those in its leadership ranks, including the company’s founder and chairman, Fuad El-Hibri, and its chief executive, Robert G. Kramer, who testified before the House panel. At the hearing, the chief executive of Emergent disclosed for the first time on Wednesday that more than 100 million doses of Johnson & Johnson’s vaccine are now on hold as regulators check them for potential contamination, and apologized to members of Congress.
An Emergent spokesman, Matt Hartwig, said in a statement Wednesday morning that the company executives “look forward to clarifying misconceptions and addressing concerns” of members of Congress. “We recognize that our role in helping the nation respond to, and hopefully end, the Covid-19 pandemic is a profound and unique responsibility, unlike any we have confronted before,” he added.
The board lauded executives for their “exemplary overall 2020 corporate performance including significantly outperforming revenue and earnings targets.”
Since 2018, Mr. El-Hibri and his wife, Nancy, have donated at least $150,000 to groups affiliated with the top Republican on the panel, Representative Steve Scalise of Louisiana, as well as Mr. Scalise’s campaigns. At least two other members of the subcommittee received donations during the 2020 election cycle from the company’s political action committee, which has given about $1.4 million over the past 10 years to members of both parties.
Mr. Kramer received a $1.2 million cash bonus, the records show; the board found that he had “significantly exceeded expectations.” Three of the company’s executive vice presidents received bonuses ranging from $445,000 to $462,000 each.
Sean Kirk, the executive responsible for overseeing development and manufacturing operations at all of Emergent’s manufacturing sites, received a special bonus of $100,000 last year, over and above his regular bonus of $320,611, in recognition of his “exceptional performance in 2020,” and for significantly expanding the company’s contract manufacturing capability to address Covid-19, the documents show. After the discovery that workers had accidentally contaminated a batch of Johnson & Johnson’s vaccine with the virus used to produced another vaccine at the same plant, the company said Mr. Kirk had taken personal leave from his job.
Mr. El-Hibri, who was praised for leveraging his connections, cashed in stock worth $42 million last year, according to an investigation by The Times.
Over the past two decades, Emergent has grown from a fledgling biotech company into a firm with annual revenues that last year topped $1.5 billion. Much of its success has come from selling products aimed at thwarting a bioterrorist attack, including its anthrax vaccine, to the Strategic National Stockpile, the nation’s emergency medical reserve.
The $628 million contract, awarded by the Trump administration nearly a year ago, was mostly to reserve space at Emergent’s Baltimore plant for vaccine manufacturing. The contract was approved by a former Trump administration official, Dr. Robert Kadlec, who previously consulted for Emergent.
The documents show that Emergent retained Dr. Kadlec to serve as a consultant from 2012 through 2015, agreeing to pay him $120,000 annually over that three-year period. In return, Dr. Kadlec agreed to provide advice on “international biosecurity and biodefense related issues to Emergent BioSolutions,” including outreach to senior government officials in Saudi Arabia and other countries.
Dr. Kadlec has said that while he did not negotiate the contract, he did sign off on it. The documents also show that last August he recommended that Emergent be given a “priority rating” so that suppliers would give preference to its requests.
Rebecca R. Ruiz contributed reporting.
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