Investor fury at Pfizer pay packages

Pfizer came in for some flak at its annual meeting from dissident shareholders unhappy at the firm's pay packages awarded to top executives, and in particular a so-called `super-pension' for the chief executive, Hank McKinnell.

The world's largest pharma company recently disclosed that McKinnell could receive a lump-sum retirement payment of $83m for 35 years' service, valued at $6.5m in retirement benefits. He is expected to retire in February 2008.

As disgruntled investors protested outside the Cornhusker Marriot in Lincoln, Nebraska, a single-engine plane circled overhead pulling a huge banner reading ìGive it back Hankî.

During the meeting, shareholders registered their concern by withholding more than a fifth of their votes for the re-election of two Pfizer directors on the compensation committee. Dana Mead, chairman of the committee, was re-elected to the board with 78.3 per cent of votes cast, while another member, George Lorch, received 78.7 per cent.

Patrick McGurn, executive vice president of Institutional Shareholder Services, an advisory service that recommended investors withhold support for the two directors, told the Wall Street Journal that withholding anything more than 20 per cent of votes ìhas always been the benchmark for significanceî.

In his opening remarks at the meeting, McKinnell acknowledged Pfizer's difficulties. When first elected chairman five years ago, he said that he knew ìin the middle of this decade, Pfizer would lose patent protection on more medicines in a shorter period of time than any other company in business historyî.

He added that he shared the frustration over Pfizer's share price, which has fallen 43 per cent since he became CEO in 2001, but asked for shareholder support and patience while the firm rebuilds its drug pipeline.

The US' largest labour union, the AFL-CIO (which was behind the plane protest), said McKinnell's pension did not reflect performance. However, a resolution put forward by the union, seeking to establish shareholder votes on pensions worth more than senior management's annual compensation, has been rebuffed by the US Securities and Exchange Commission.

Pfizer argued that it has taken internal measures to reflect investors' concerns about the size of corporate pay packages and that its management remuneration is in line with those of the firm's rivals.

At the meeting, Mead said McKinnell's pay had been reduced 22 per cent last year while Pfizer's share price fell 11 per cent.

ìWe try to do the best we can to peg it to what we think is a reasonable level of compensation for this level of responsibility,î he said.