Emergent BioSolutions, the troubled manufacturer at the heart of Johnson & Johnson’s coronavirus vaccine production problems, gave its chief executive officer a 51% increase in total compensation in 2020, to $5.6 million, according to a public filing Friday.
The annual proxy disclosure by the publicly traded company said CEO Robert Kramer received $893,000 in salary, a $1.2 million bonus, $2.1 million in stock awards, and $1.4 million in stock options.
The company said in its filing for investors that Emergent’s response to the pandemic last year played a role in Kramer’s bonus, citing the expansion of its contract manufacturing business and other advances, including a successful bond offering. It had a 41% increase in revenue in 2020. Kramer rose to the top job at the company in 2019 after serving in a number of other high-level executive jobs there since 2012.
Emergent did not respond to a request for comment Saturday.
As a federal contractor specializing in biodefense and emergency response, Emergent’s 2020 financial success was fueled in large part by a burst of federal spending to fight the coronavirus pandemic.
It received $628 million in a federal contract to upgrade and reserve capacity. It also signed vaccine manufacturing agreements with Johnson & Johnson and AstraZeneca at its Baltimore manufacturing facility as those companies raced to develop and produce vaccines to fulfill government orders.
But manufacturing problems at Emergent became public on March 31 after Emergent ruined a large volume of Johnson & Johnson’s raw vaccine substance — representing up to 15 million doses. Federal officials said it was contaminated with ingredients from the AstraZeneca vaccine.
The problems prompted the federal government to remove all production of AstraZeneca’s product, which has not been authorized by the Food and Drug Administration, from the plant. Johnson & Johnson also took direct control of manufacturing of its vaccine there.
The mishaps have compounded delays in the FDA’s certification of the plant for Johnson & Johnson vaccine production. Until that certification is granted, raw vaccine substance made there cannot be released to the public, forcing Johnson & Johnson to rely on a trickle of imports from a production plant in the Netherlands.
The government has slashed the amount of vaccine allocated to states from Johnson & Johnson and the company has backed off its previous pledge to deliver 24 million doses of vaccines to the federal government in April. Emergent’s stock price reached a high this year of $125 in February; on Friday it closed at $77.40.
The cascade of negative events occurred after Kramer received his 2020 compensation. But government officials had documented some warning signs at Emergent as he was earning those benefits last year.
An April 2020 FDA inspection report at the plant documented concerns, The Washington Post reported this month. Some employees had not been properly trained, records were not adequately secured, and established testing procedures were not being followed. Additionally, a measure intended to “prevent contamination or mix-ups” was found to be deficient.
The New York Times reported Wednesday that a federal official had warned in June 2020 that Emergent would have to be closely monitored in its vaccine work because of concerns about operations there, including insufficient staffing levels and training gaps.
Emergent has not publicly discussed the nature of problems at its plant in any detail. It told The Post on April 1 that since the negative FDA findings in April 2020, it hosted two subsequent FDA visits that included “reviews of the progress on the items cited in past FDA visits.”
In response to the manufacturing problems, Emergent has received another $23 million from the U.S. Biomedical Advanced Research and Development Authority (BARDA) to purchase more vaccine manufacturing equipment that will allow for the potential expansion of Johnson & Johnson operations. Emergent has said it is working with the government and AstraZeneca to “on a mutually agreed ramp-down of manufacturing for AstraZeneca’s COVID-19 vaccine bulk drug substance.”
“Emergent’s top priority continues to be the strengthening of the supply chain for Johnson & Johnson’s vitally needed COVID-19 vaccine,” Kramer said in an April 4 company news release. “We have been working closely with Johnson & Johnson and welcome the additional oversight and support at our Bayview facility.”