Pfizer Shareholders Will Get A ‘Say-On-Pay’ Vote
2 CommentsBy Ed Silverman // October 30th, 2009 // 6:32 am
The big drugmaker has decided shareholders should have input on compensation for execs starting with the next shareholder meeting in April. So they’ll get a non-binding advisory vote on executive compensation every two years. This means they can ratify or vote against the compensation package for the company’s CEO, chief financial officer and other top executives.
“The board’s action continues Pfizer’s long tradition of seeking and responding to shareholder input on compensation and other corporate governance topics,” Matt Lepore, Pfizer’s vice president and chief counsel for corporate governance, says in a statement. And Tim Smith, senior vp of the environment, social and governance Group for Walden Asset Management, and Stephen Viederman of The Christopher Reynolds Foundation, endorsed the move, although Pfizer actually was against the concept last April (see page 36).
The gesture, however, comes after Pfizer this week disclosed that two top execs - cfo Frank D’Amelia and Ian Read, senior vp and group president of the biopharma biz - were given $1.2 million and $1 million, respectively, in bonuses for their work on the recent Wyeth acquistion. How shareholders would have reacted is unknown, but our unscientific reader poll suggests the move isn’t universally popular (look here).
Skeptic
This is a joke! No matter what the shareholders say, the backpocket BOD will overpay their pals! It’s the way of big corporate America.
Eric Milgram
Interestingly, one of the “reforms” I have been proposing is to curb executive excesses is to allow shareholders to vote on executive compensation.
One of the key lessons I learned from Pfizer, besides the importance of metrics, was to set SMART (specific, measureable, actionable, realistic, and time-bounded) goals. Therefore, I propose that shareholder approval be required in any case where the total value of any Pfizer employee’s compensation will exceed an amount equal to the median value of all Pfizer employees.
As an example of how absurd pharma exec pay can be, check out Would you rather win the lottery or be fired for poor performance?, and you’ll have a better understanding of why 80% of survey respondents would rather be a pharma CEO fired for poor performance than to be a winner of the Florida Lotto, which pays out millions.