Pfizer Shareholders Get Annual Say on Pay
Pfizer Shareholders Get Annual Say on Pay [the Day, New London, Conn.]
From Day, The (New London, CT) (April 28, 2011)
April 28--Nearly two-thirds of Pfizer Inc. shareholders meeting in Dallas today requested an annual advisory vote on executive compensation.
"We acknowledge that our shareholders voted strongly in favor of an annual vote, and the board has decided to follow that vote," said George A. Lorch, chairman of the pharmaceutical giant's board, following the preliminary tally.
The board had recommended that the say-on-pay provision be implemented every other year, but only about one in five shares voted at the annual meeting agreed with the previous policy, which had been approved only last year.
The executive-compensation package for the coming year was approved by shareholders in an advisory vote, but the tally was closer than usual: 57.6 percent in favor, and 42.4 percent against.
Executive compensation has been a major irritant for shareholders upset with the lack of movement in Pfizer's share price during the past dozen years. Many have suggested that executive pay more closely reflect the company's performance, which has seen the stock price drop from nearly $50 to a current price of about $20.
"This affects my retirement as well as the retirement of many people in this room," shareholder John Knapp, who lives near Palm Beach, Fla., said during an online webcast.
The 1.6 million-member American Federation of State, County and Municipal Employees had recommended voting against the pay package as a way of sending a "wake-up call" to Pfizer's executive compensation committee that top company officials shouldn't receive raises for "subpar performance."
Board chairman Lorch defended Pfizer's executive-compensation plan, pointing out that retired chief executive Jeffrey B. Kindler, who was widely reported to have received a $10 million raise in his last year with the company in 2010, got far less than he would have been entitled to had the firm's stock price been higher.
Had Kindler met all his goals, he would have received a $44 million incentive last year, rather than the $17 million to $18 million he would up getting, Lorch said.
What's more, he said, the severance agreement included an anti-competition clause, a stipulation that Kindler would help out with any future litigation and protections against the former CEO helping to woo executives to other companies.
"We felt it was in shareholders' best interest to enter into that agreement," he said.
While shareholders responded to executive-compensation grumbling, other initiatives at the annual meeting didn't fare as well. For instance, a proposal by the Sisters of Charity of St. Elizabeth to restrain drug-price increases gained favor from only 2.7 percent of shareholders, while calls for more humane drug testing from People for the Ethical Treatment of Animals earned a similarly unimpressive 4.6 percent of the vote.
But two other proposals came close to approval: one that would have required a vote of only 10 percent of Pfizer shares to call a special meeting, rather than the current 20 percent, and another that would have allowed shareholders to take certain actions by written consent without benefit of a meeting. Both opposed by Pfizer's board, the written-consent measure nonetheless garnered 47.3 percent of the vote, while the call for an easier process regarding special meetings fell by the wayside with only 41.3 percent of shares approving.
"Through dividends and share repurchases, we returned approximately $7.1 billion to our shareholders in 2010," said Ian Read, president and chief executive officer. "In 2011, we plan to continue to provide greater shareholder return through our previously announced dividend increase and increased share repurchase activity."
Preliminary results from the meeting indicate that the company's 13 continuing directors were re-elected to one-year terms and that shareholders ratified the selection of KPMG LLP as Pfizer's independent registered public accounting firm for the 2011 fiscal year. In addition, shareholders voted in support of a board-sponsored proposal to approve, on an advisory basis, the compensation of the company's named executive officers.
In other voting, preliminary results indicate that shareholders selected an annual vote on the frequency of future advisory votes on executive compensation. Six shareholder resolutions were not approved by the shareholders.
The final results are subject to verification by the independent election inspectors, which is not expected to significantly change the preliminary results. The final results will be reported in a Form 8-K to be filed by Pfizer with the Securities and Exchange Commission in the next few days.
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Posted: April 2011