Posted on 12/21/2006 8:36:07 PM PST by MeneMeneTekelUpharsin
NEW YORK (AP) -- Pfizer Inc.'s former chief executive, Henry A. McKinnell, who was forced into an early retirement in part because of investor anger about his rich retirement benefits, will get every penny of it and more, a new regulatory filing shows. McKinnell's package, which the company disclosed in a filing with the Securities and Exchange Commission Thursday, totals more than $180 million. It includes an estimated $82.3 million in pension benefits, $77.9 million in deferred compensation, and cash and stock totaling more than $20.7 million.
The total value could grow to almost $200 million if McKinnell gets a $18.3 million stock award, but that is contingent on the future performance of the stock of the world's largest drugmaker. The company said McKinnell's departure "contractually obligated" it under his employment agreement to provide McKinnell with certain severance payments and benefits.
The deferred pension sum includes $67 million of his own money from prior compensation he chose to set aside, the company said in the filing. Beyond that, Pfizer will pay a lump sum severance of $11.9 million and will fully vest stock grants worth $5.8 million, according to the filing. He also will receive $2.2 million for 2005 bonus payments, $305,644 for unused vacation time and $576,573 for benefits he would have received had he stayed at the drugmaker. The package also provides him with an annual pension of $6.6 million until he dies. Pfizer estimated the pension's lump-sum value to be $82.3 million. McKinnell vacated the CEO spot in July, 19 months before he was scheduled to step down, under pressure from investors angered about his retirement package and a drop of as much as 40 percent in the company's stock price during his five years in charge.
For some investors, already angry over the stock's slide, McKinnell's retirement package was a flash point. At Pfizer's April annual meeting in Lincoln, Neb., a plane flew overhead trailing a banner that said, "Give it back, Hank!" Two proxy advisory companies had called for removal of board members and the AFL-CIO led a protest against the retirement package. The board members were re-elected, however. McKinnell earned $5.97 million in salary and bonus in 2005. When the company's proxy was filed with the Securities and Exchange Commission in March, his total compensation for the year was valued at $15.88 million, including salary, bonus, stock options, stock grants and benefits. The value of options and stock varies with the share price.
McKinnell's perquisites in 2005 included $8,500 in financial counseling, $65,120 for use of a car and driver and $43,855 for personal use of company aircraft, according to the proxy. New Chief Executive Jeffrey B. Kindler also became chairman Tuesday, replacing McKinnell, who was not slated to leave until February. Pfizer declined to make McKinnell available Thursday, and a spokesman emphasized the differences between McKinnell's pay package and Kindler's. Kindler has no contract, has a much lower annual salary than McKinnell and has more pay tied to the stock's performance, according to spokesman Paul Fitzhenry.
Those differences may not be enough to quench shareholder's anger. "It's a very big package and I'm sure it's going to raise investor concerns, however, it's contractual," said Charles Elson, chair of the Weinberg Center for Corporate Governance at the University of Delaware. "The question is not that they've paid it, but why, initially, such a contract was entered into." The company, which has pledged to cut $4 billion in costs by 2008, is expected to undergo a radical shake up. Pfizer said in late November that it would look for even deeper cuts. Then it suddenly halted development of cholesterol drug torcetrapib because of safety concerns. The company had spent $800 million developing torcetrapib and hoped it would be a blockbuster. Pfizer shares fell 14 cents to $26.07 Thursday on the New York Stock Exchange.
No wonder drug prices are soooooooo $$$$$$.
I am not proposing any government intervention, but can't SOMEONE at the company prevent this type of distortion of reality from occurring?
If corporate boards were actually governing bodies of any sort, then this sort of thing wouldn't happen. Instead they've turned into an old boys' network where backs are reciprocally rubbed and everyone looks the other way. If the investor's best interests aren't being looked out for, why would one presume that the interests of consumers or workers would?
Capitalism is good. This is not capitalism but cronyism. In effect the cronies on the board of directors are looting the profits of the company and in effect screwing the shareholders. Unfortunately in many of the major companies this is common and not the exception. These actions will eventually disgust the public and shareholders and will be replaced with something even worse,GOVERNMENT CONTROL>
If we start limiting what someone can make, it will trickle down and whatever any of you are making now will go down as well.....we can do without socialism...
Whatever any of you are making is probably much more than the clerk at Wal-Mart or the janitor in my building....
So, you should cut your pay to be in line with those who make less than you....
It's all relative....why not get a better education or work for a multinational company, and move up the ladder a be a wonderful manager?
Puts him on par with pro athletes (salaries.) Granted, it's a retirement vs wages for the athletes. The overall payout figures are comparable.
I assume that Ellen, the author, is an anti-capitalist.
If (big If) the facts are as stated and one deducts the detailed sums noted, it appears that the retiring Exec only got about 12 million as a retirement pkg. Most of the rest was earned from his time serving (pension) or deferred from prior years.
Now, if one hates capitalism, one will try and agglommerate all possible sums to make a really, really big number, in an effort to incite a riot. Pretty juvenile way to present an argument, IMHO.
What a bunch of class-envy freepers here!! They should just go back and reread Capitalism.
bttt
Nobody has talked about having the government limiting what an executive can make. The question is whether cronyism in upper management is diverting returns that should rightly be going to elsewhere into executive compensation packages.
this is why its politically impossible to be against a minimum wage increase. people like this aren't "building" great american companies - they are looting them.
The part I don't get is why so many people think that whatever this tool makes has anything to do with what the janitor gets paid or what the minimum wage should be. Its not like anybody else in the entire country would make a dime more if they guy got $1M instead of $180M.
I thought this was a country where people wanted to become rich instead of just hating others for getting there? If anybody else became the CEO of one of the countries larger pharma companies and created and rolled out a $15B drug, I'm pretty sure you wouldn't turn down the $180M they offered you since you drove the stock price up by somewhere around ten to twenty billion in market cap.
Too much envy going around.
Personally, I'm not sure why the institutional shareholders like CALPERS and other bigboys aren't putting their own people on the boards so they can improve their returns by limiting excessive compensation like this.
Damn! No wonder the stock sucks.
No, the stock sucks because Zoloft and Z-Pak lost patent, Lipitor's is not far behind (not to mention the generic competition from Merck's molecule) and torcetrapib got axed before it got out of the gate.
Many people are FAR more well-educated than that chap. And, wonderful managers seldom MAKE IT TO THE TOP! Arrrgh!!! We are all entitled to our opinions. The poster who indicated that this is cronyism pretty well nailed it. This has nothing to do with rightful earnings for services rendered, education or other worthy reasons -- this can NOT be justified on the basis of those arguments. I'm telling you and everyone else and you can read and understand or reject (you have that right): If much more of this occurs, we're going to see major sociopolitical turmoil result. Now, right that down and see if it does or doesn't come true.
Yes sir.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.