Saturday, April 29, 2006

Pfizer :Corporate Governance and Executive Pay

Pfizer's shareholders who attended the company meeting this week expressed their disapproval of the company's executive compensation practices. This article from the WSJ says that
disgruntled investors are turning up in force at company annual meetings this year to demand better corporate governance and, in particular, some restraint in executive pay... Chairman and Chief Executive Henry "Hank" McKinnell could receive a lump-sum retirement payout valued at $83 million as of last Dec. 31. Mr. McKinnell is scheduled to step down in February 2008. As company shareholders entered the meeting at the Cornhusker Marriott here, a single-engine plane circled overhead pulling a banner reading in bright red letters: "Give it back Hank."

The surprising thing is that Pfizer has a good past record on corporate governance.
In June 2005, for example, Pfizer received two awards:
BusinessWeek Magazine cited Pfizer as a company on the vanguard of boardroom best practices, going out of its way to ensure that Directors are kept in the loop of what's really going on at the Company.
Also, the Vail Leadership Institute commended Pfizer for "Long Term Excellence in Corporate Governance".
Further back in 2004, Governance Metrics International (GMI) issued its highest overall rating of 10 to Pfizer for the third consecutive time. GMI gave special recognition to this achievement, noting that Pfizer's governance practices are "a clear recognition of the company's commitment to shareholder rights and progressive governance."

Here's the 'Corporate Governance Fact Sheet' from the company web page. One of the points mentioned is the lack of separation of the roles of CEO and Chairman of the Board. Shareholders recently voted on a proposal to separate these two jobs as well(this proposal drew 38.7% of the votes).

No comments: