These Mass. Companies Paid CEOs Millions Before Taking Small Business Loans

The steady drumbeat of construction activity is relief to the ears of Marquita and Glen Kelley.

When the coronavirus pandemic paused construction work in Boston, the couple worried they'd have to shutter their third-generation electrical business for good.

"I think we would've had to go out of business, if we were not able to get that loan," Marquita Kelley said.

The loan she's talking about came through the federal government's Paycheck Protection Program, which aims to help small businesses retain their workers during the public health emergency. It provides loans of up to $10 million, which are forgiven if businesses keep employees on the payroll for eight weeks.

The loan gave the Dorchester couple the financial voltage they needed to keep their five full-time employees.

"That was super vital, because we were basically hanging on," Marquita Kelley said.

But not every business that received loans through the federal program is a mom and pop.

The NBC10 Boston Investigators found at least two dozen publicly traded companies in Massachusetts received the government cash, including some that previously paid company leaders multi-million dollar salaries.

Agenus Inc., a biotech headquartered in Lexington that develops new cancer drugs, took out a $6.2 million PPP loan last month, according to records it filed with the U.S. Securities and Exchange Commission.

SEC records also show Agenus paid its CEO a compensation package of nearly $10 million last year, including cash, stock and options to buy more shares in the company in the future, though he later forfeited about $1.9 million of stock awards, according to the company's filings.

ConforMIS, Inc., a medical equipment company based in Billerica that makes joint replacement parts, received a $4.7 million loan through the Paycheck Protection Program.

Last year, it gave its president and CEO, Mark A. Augusti, a total compensation package of $2.8 million, including a base salary of $535,600, a bonus of about $200,000 and stock awards valued at $1.8 million, according to the company's records.

And EyePoint Pharmaceuticals in Watertown took out a $2 million loan, roughly equivalent to the pay it gave its CEO, Nancy Lurker, in 2019.

U.S. Sen. Elizabeth Warren, who has criticized flaws in the design and implementation of the Paycheck Protection Program, said the small business loans were never intended for large corporations.

"For those folks to be coming over and sucking money out of the help that was made available for small businesses is fundamentally wrong," the Massachusetts Democrat said.

Agenus recently told investors that in response to the COVID-19 pandemic, it has cut costs by an estimated $50 million, and it has scaled back some research and development programs, reduced manufacturing runs and slowed or paused some early trials, according to its SEC filings.

CEO Garo Armen has also agreed to receive his salary in the form of stock in the company in lieu of cash for the remainder of 2020.

Conformis, which makes knee and hip replacements, furloughed about 80 employees in March. It accelerated plans to bring them back after qualifying for its PPP loan, according to Augusti, the CEO.

"It would have been, I think, irresponsible not to look at the program," he said.

In a statement, EyePoint Pharmaceuticals CEO Nancy Lurker said the loan it received also helped avoid layoffs.

"We have followed all appropriate steps to ensure that we meet the criteria and believe we do," the statement reads.

Companies that got sizable loans will get some scrutiny from the federal government. The SBA has said it will audit all loans over $2 million, checking if recipients were really eligible, and how they spent the money. Under the terms of the program, loans must be used for payroll, rent, mortgage interest or utilities.

Some large corporations have returned PPP loans after drawing scrutiny from the public.

Kelley, the contractor in Dorchester, said small businesses have fewer options, making the program a lifeblood for her and others.

"Big businesses can get loans from banks and other resources," she said. "It's much harder for a smaller business."