Extraordinary medical coverage for an extraordinary CEO?

July 1, 2011

Lots of CEOs of publicly traded companies like to think of themselves as celebrities, but we can’t think of many other than John F. Crowley that can actually say that their life story led to a movie starring Harrison Ford and Brendan Fraser. The movie, Extraordinary Measures, was based on a book about Crowley, The Cure, and tells the story of a father who learns that two of his children have a rare disease and goes out and raises $100 million in funding so that a biotech company can find a cure.

By day, Crowley serves as CEO of Amicus Therapeutics (FOLD). Crowley also serves as an intelligence officer in the US Navy Reserves, and recently returned from active service, according to this release that the company put out on Wednesday, announcing his return to Amicus next month. Back in April, Amicus put out this release announcing that Crowley was stepping down as Chairman and CEO to “devote more time to interests related to public policy, civic service, and philanthropic endeavors”, which prompted lots of speculation that Crowley was interested in running for the Senate from New Jeresey. (Crowley recently said that he was not interested). Crowley also clearly spends a lot of time on Facebook, judging by his regular posts and his following (often by other parents desperate to share stories of their own children’s rare and horrible diseases). There’s also the Crowley5 site that he and his wife, Aileen, maintain.

The release that Amicus put out the other day also included Crowley’s employment contract and it was something buried in there that immediately jumped out at us:

(c) Special Medical Expense Allowance. During the Employment Term, the Company will pay to Employee a special bonus of $150,000 per month. This amount is intended to help defray the substantial out-of-pocket medical expenses expected to be incurred by Employee, Employee’s spouse and Employee’s dependents from and after January 1, 2011 ( —Medical Expenses). This amount shall be paid to Employee on the first day of each calendar month with respect to that calendar month and will be subject to tax withholding when paid.

We can’t think of any other employment contracts where there’s a similar medical expense — one that far surpasses the executive’s salary. According to the contract, Crowley is paid $545K a year. That’s less than four months of medical expenses. The expense has apparently been a part of Crowley’s agreement since the beginning of the year — there was an amended agreement that was filed last Dec. 21 where the $150K a month in special medical expenses appeared for the first time. Prior agreements were reimbursing Crowley $55K a month in medical expenses.

Now clearly Crowley is not the typical CEO of a small biotech company. Being a celebrity CEO means he’s able to bring outsized attention to the company — far more attention than the typical company with a market cap of $200 million can attract. But $1.8 million a year for medical expenses is still a lot of money, especially for a company’s whose stock chart looks like this.

Image source: CBS Pictures

It’s a holiday weekend, but the SEC remains open until 5:30 tonight. Which companies will visit the Friday night dump? FootnotedPro subscribers will be kept in the know, even if they’re already at the beach. For more information or to inquire about a trial subscription, qualified institutional investors can contact todd.serpico@morningstar.com



 

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