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Pfizer CEO's Stock Sale Raises Questions About Timing


Let's turn now to the latest news about the race for a coronavirus vaccine. On Monday, Pfizer announced that its vaccine candidate is more than 90% effective. We've now learned that on the same day, the company's CEO sold $5.6 million worth of stock in the company. NPR investigative correspondent Tom Dreisbach has been digging into all of this and joins us now.

Hi, Tom.


SHAPIRO: Five-point-six million dollars sounds like a very large sum of money. Put it into context for us.

DREISBACH: Yeah, no matter how you look at it, Monday's stock sale was big. Pfizer's CEO - his name is Albert Bourla. He sold about 60% of his total stock ownership in the company. Of course, that stock was worth a lot more because of the good vaccine news they had released that day. And in and of itself, there is nothing wrong with selling stock after your company releases good news. It can just look bad.

SHAPIRO: You've been looking more deeply into the timing of this sale, and tell us what you've learned.

DREISBACH: So the sale of this stock was made through a plan which was set months in advance, and the idea behind this plan is to avoid allegations of insider trading. It's called a 10b5-1 plan. They're fairly common. You put your trades under these plans on autopilot. So for example, you trade X amount of stock if the share price hits a certain number or sell on a certain date in the future. And under this plan, you leave it alone. The key is - the key, though, to these plans is that you cannot have important inside information when you set up that plan.

SHAPIRO: In the case of Pfizer's CEO, do we know whether he had information when he set up this plan?

DREISBACH: So we know when he set up the plan, which was on August 19. The very next day, August 20, the company issued a press release with positive data about a Phase 1 vaccine trial, and the financial networks Bloomberg News, CNBC and Fox Business all treated it as big news.


UNIDENTIFIED REPORTER #1: Just want to bring some breaking news to you from Pfizer, the pharmaceutical giant.

UNIDENTIFIED REPORTER #2: BioNTech and Pfizer both moving sharply higher today on an optimistic vaccine timeline.

UNIDENTIFIED REPORTER #3: Saying its COVID-19 vaccine candidate could be ready for regulatory approval as early as October.

DREISBACH: So that was back in August. And it all just raises the question, was Pfizer's CEO aware of significant inside information that could move the stock price when he implemented his stock trading plan? Remember; he implemented it the day before that press release.

Now, I talked to Daniel Taylor. He's a professor at the Wharton Business School, and he is an expert on insider trading.

DANIEL TAYLOR: It's wholly inappropriate for executives of pharmaceutical companies to be implementing or modifying 10b5-1 plans the business day before they announce data or results from drug trials. It's very suspicious.

SHAPIRO: Very suspicious - well, what's Pfizer saying in response?

DREISBACH: Well, a Pfizer spokesperson told me that, yes, the timing was close but that they just do not consider that August 20 press release to be significant enough to contain material information. They say the stock price just didn't move that much on the basis of that press release. It featured trial data in an academic journal, and Pfizer did not have control of the timing of that. And they say a lot of the information was already public. For example, they had already confirmed that they were expecting to submit for regulatory approval from the government by October. But beyond all that, they say the CEO's plan was vetted by a legal team run by a stock plan administrator.

Still, just big picture, as we've watched the development of a coronavirus vaccine candidate, there's just a lot of concern out there that these companies and executives are making a lot of money for themselves. Meanwhile, the government and taxpayers have promised to spend almost $2 billion on Pfizer's vaccine if it works.

SHAPIRO: NPR investigative correspondent Tom Dreisbach, thanks a lot.

DREISBACH: Thanks, Ari. Transcript provided by NPR, Copyright NPR.

Tom Dreisbach is a correspondent on NPR's Investigations team focusing on breaking news stories.