The former president of the $3 billion California stem cell agency 
received $443,500 in total compensation from the Bay Area stem cell 
company that appointed him to its board of directors only seven days 
after he left his state post.
The stock and cash were provided 
over a two-year period to 
Alan Trounson by Newark-based , a
 firm that was awarded more than $40 million in funding while Trounson 
headed the 
California Institute for Regenerative Medicine(CIRM), as the state 
stem cell agency is formally known.
|  | 
| Alan Trounson -- LATimes photo | 
StemCells Inc.
In 2014, when Trounson served 
less than six months on the StemCells, Inc.. board, his total compensation
 was more than double that of any other board member. 
The 
surprise appointment of Trounson almost immediately after he left CIRM 
in 2014 generated allegations of conflict of interest. The size of 
Trounson’s total compensation, however, was not available at that time. 
Conflict-of-interest
 allegations have dogged the agency since it was created in 2004 by 
California voters to use state bond proceeds to finance stem cell 
research. 
In 2008, the respected scientific journal 
Nature warned
 about “cronyism” at the agency. In 2012, the 
Institute of Medicine, a 
division of the 
National Academies of Sciences, recommended in a 
$700,000 study commissioned by CIRM that the stem cell agency 
make sweeping changes to reduce the possibility of such conflicts.
Speaking
 about the agency’s board, 
Harold Shapiro, chairman of the Institute of 
Medicine team, 
told the Los Angeles Times,
“They make proposals to 
themselves, essentially, regarding what should be funded.”
The agency made some changes to deal with conflict questions but resisted the institute’s far-reaching proposals.
The
 latest news prompted 
John Simpson, who has followed the stem cell 
agency for 
Consumer Watchdog of Santa Monica, Ca., to say in an email,
 “Trounson’s joining the StemCells Inc. board a mere seven days after 
quitting as CIRM’s president at the time smacked of being a payback for a
 job well done on behalf of the company when he should have been looking
 out for the taxpayers’ money and interests. It was a blatant conflict 
that undermined the agency’s credibility. Now we know his price tag.”
In 2014, the stem cell agency said 
its “limited” investigation showed that
 no violation of law occurred. At the time, CIRM Chairman 
Jonathan Thomas described the issue as a “perception” problem. 
The state’s 
Fair Political Practices Commission (FPPC) later investigated to
 determine whether Trounson “had made, participated in or influenced a 
governmental decision involving StemCells, Inc., after he began employment
 negotiations.” 
A Feb. 6, 2015, letter to Trounson from the FPPC said there was “insufficient evidence to demonstrate” a legal violation. 
Asked
 for comment, 
Robert Stern, the key author of the 
California Fair 
Political Practices Act and former president of the 
Center for 
Governmental Studies in Los Angeles, said in an email,
“It is an 
appearance problem when someone goes to work for a company that has 
benefited from huge contracts from the agency that he heads even if he 
had nothing to do with the decision to award the contract.”
The 
payments to Trounson were made in 2014 and 2015, according to 
Securities
 and Exchange Commission filings by StemCells, Inc. (See 
here and 
here.) The cash totaled 
$59,500 and the stock options totaled $384,000 for the two-year period. 
Trounson was appointed president of California’s stem cell agency in 
2008. He was named to the StemCells, Inc., board July 7, 2014. The stock 
price has dropped precipitously since the award of Trounson’s stock 
options.
Last month, Trounson resigned from the StemCells, Inc.,  board as part of a deal in which the financially troubled firm 
was acquired by 
Microbot Medical Ltd. of Israel. StemCells Inc. said in an 
Aug. 15 SEC filing that the resignations of Trounson and 
Stanford 
University researcher 
Irv Weissman were not “the result any disagreement
 with the company on any matter.” 
|  | 
| Irv Weissman, Stanford photo | 
Weissman was a co-founder of 
the company and also served on its scientific advisory board. Trounson 
served on the company’s strategic transactions committee.
Connections
 between Trounson and Weissman surfaced well before Trounson’s 
appointment to the StemCells, Inc., board. In 2013, a $40 million CIRM 
funding application round involving Weissman was postponed after it was 
disclosed that one of the application reviewers had a legal conflict of 
interest. The case involved 
Lee Hood of Washington state, who owns 
property in Montana with Weissman. Hood 
acknowledged the conflict of interest and resigned as a reviewer. Trounson helped to recruit Hood as a
 CIRM reviewer, the agency said.
In 2012, StemCells, Inc., was 
awarded $40 million in a single funding round, the only applicant ever 
to reach that level of success. One of the two $20 million awards was 
approved by the stem cell agency’s board despite being rejected twice by
 its grant reviewers. It is the only time that an application has been 
rejected twice by reviewers and then approved by the governing board. (See 
here.)
In
 2013, 
the company declined one of the awards, which required a matching
 amount. In December 2014, the second $20 million award was 
terminated early because of poor results. That left StemCells, Inc., receiving a net 
of $9 million from the agency.
Trounson, a pioneering researcher 
in the field of in vitro fertilization, returned to his home in 
Australia after leaving the agency. Contacted by email, he said,
 “I was 
cleared by independent legal advice by CIRM and no conflict was found by
 a Californian government investigation. ... The share values are 
unknown – perhaps worth nothing. I actually pay monthly fees to hold 
them.”
Weissman, 
who has received $30.5 million from the agency, did not respond to a request for comment. (Following the publication of this piece, Weissman said in an email that some time after Trounson "got settled into his position" at the agency, "he recused himself on all grants and CIRM-related activities that involved either my lab or StemCells, Inc.")
The
 Trounson controversy surfaced shortly after 
C. Randall Mills was named 
to replace Trounson as president of CIRM. Mills then signed a pledge 
that he would not accept employment with any award recipient for at 
least a year after he leaves the agency. However, the agency did not set
 restrictions on future employment by other agency employees.
Asked
 for comment, Thomas, chairman of the agency since 2011, said in an 
email,
“Dr. Trounson’s financial involvement with StemCells Inc. 
occurred after his separation from CIRM in June of 2014, and we have not
 been in contact with him since. Two years later, CIRM is a very 
different and vastly improved organization – we’ve reduced the time it 
takes to review applications by 80 percent, recaptured $75 million from 
programs not meeting performance standards, and reinvested that money, 
doubling the number of clinical trials in our portfolio.
“In 
addition we are doing all this with the good governance, transparency 
and accountability the citizens of California deserve.”
The agency
 has about $800 million in uncommitted funds. It expects to run out of 
cash for new awards in 2020 unless it finds fresh sources of funding.