ImClone's New CEO: Already Repeating The Past?
Recently I blogged about the hiring of a new CEO at ImClone Systems and the unique clause in his contract requiring him to buy half-a-million dollars worth of stock in the company. My suspicion was that ImClone Chairman and billionaire shareholder Carl Icahn had a hand in that. The contract states that John Johnson had to do the buy-in within three months of his start date which was August 27th. Well, he waited all of ten days.
ImClone's General Counsel, Daniel O'Connor, says Johnson came into some money from his former employer, Johnson & Johnson (presumably no relation), last week and that the very next day he wrote the big check to buy the shares straight from the company, not on the open market. An SEC filing says the trade was recorded last Friday, September 7th. He bought 13,609 shares for $36.74 apiece. Monday the stock closed at $37.93 and yesterday it shot up to nearly 45 bucks after the company's European partner on Erbitux, the German Merck (no connection to the American drug company) announced that the drug extended the lives of lung cancer patients. Today, the shares are up again.
But O'Connor says Johnson has to hold the stock for as long as he's CEO (he has a four-year contract) and then continue holding it for another year after he leaves the company. He also claims the timing of the trade and the clinical trial news is a coincidence. "This is simply a matter of John making the purchase when the money became available. No one at ImClone had prior knowledge as to whether the results would be favorable or unfavorable. Nor did we know when we'd receive the data. We were surprised to receive it on Monday," O'Connor told me over the phone.
ImClone's former CEO, Sam Waksal, is in prison for tipping off his family about bad news that sent the shares down. Martha Stewart, Waksal's friend (at least at the time), went to prison for lying to the feds about her sale of IMCL stock around the same time.
An SEC spokesman can't confirm or deny if the agency is or will be investigating the trade. But even though there may be nothing there, the timing of the trade and the company's history will likely raise some regulatory eyebrows and warrant a look-see. O'Connor says he hasn't heard from the SEC as of this morning.
I'll be blog-silent for a few days over the Jewish holiday and a weekend trip to Warren Buffett country to watch the USC Trojans beat the Nebraska Cornhuskers. A shout out to the CEO of Omaha-based TD Ameritrade, Joe Moglia, who hooked me up with two tickets that I'm buying for a reasonable price versus the top dollar they're going for on eBay and StubHub.
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