The Eastman Kodak Company gave its CEO 1.75 million stock options just one day before the company’s stock soared amid news that it would receive a $765 million federal loan to manufacture critical drug components, the New York Times reported Friday.
When news of the White House deal went live earlier this week, Kodak’s shares ballooned by more than 1,000%, topping out at around $60 (they’ve since fallen to about $21, still a hefty jump from their average $2-3 cost). As a result of this incredibly fortuitous timing (wink), Kodak CEO Jim Continenza saw the value of his stock options soar to $50 million in less than 48 hours after receiving them, per the outlet.
Look, it’s no secret that some of the fattest cats in the industry have been leveraging this pandemic to grow even more grotesquely obese. But can they at least try not to be so obvious about it while people are literally dying?
A Kodak spokeswoman declined to comment on this profitable coincidence and instead reminded the outlet that the value of Continenza’s stock options could very well change before he decides to cash them in for Kodak shares.
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While Kodak may have been a titan in the film industry at one time, it’s been floundering for years in an attempt to reinvent itself after coming out from bankruptcy protection in 2013. Recently, the company’s found a new foothold by pivoting into the pharmaceutical industry, leveraging its more than hundred-year history of chemical know-how to begin manufacturing drug components that can then be refined and sold by pharmacies.
In May, the Trump administration began talks with several companies, Kodak among them, about financing America’s healthcare industry with federal loans both in response to the coronavirus outbreak and to curb reliance on foreign marketplaces in case of future health crises, according to a Washington Post report. Trump authorized the move via an executive order that invoked the Defense Production Act, which allows the federal government to mandate how domestic companies produce and distribute essential goods.
“We are truly doing this to help tighten and fix the supply chain of pharmaceuticals in America,” Continenza told the Post after the federal loan’s announcement.
It should be noted that around that same time the White House entered talks with Kodak, the company gave an additional 240,000 stock options to its board members, now worth an estimated $4 million, per the Times. Gee, I guess lightning does strike twice.
As the Times points out, Kodak isn’t the only company turning federal support into profit with some dubiously well-timed stock wagers. Shortly after corporate insiders at the California biotech firm Vaxart were granted stock options, the company announced that a federal agency would be testing its potential coronavirus vaccine among others. The news caused share prices to skyrocket, and one hedge fund partially operated by Vaxart pocketed more than $200 million in profits.[The New York Times]