Jeff Kindler Unexpectedly Resigns As Pfizer CEO
16 CommentsBy Ed Silverman // December 5th, 2010 // 9:03 pm
In a surprise move, Jeff Kindler, 55, has resigned as ceo and is being replaced immediately by Ian Read, 57, who currently heads the global pharma business. Read, who joined Pfizer in 1978, will also become president and a board member. The Pfizer board, meanwhile, plans to appoint a non-executive chairman when it meets later this month.
In a statement, Kindler says that the time has come to “recharge his batteries” and spend some “rare time” with his family. “My nearly nine years at Pfizer and, particularly the last four and a half as ceo, have been extremely exciting and rewarding,” Kindler says in a statement. “I feel our team can proudly boast of some transformational accomplishments. However, the combination of meeting the requirements of our many stakeholders around the world and the 24/7 nature of my responsibilities, has made this period extremely demanding on me personally.
“Now that we are about to complete a full year of operating Pfizer and Wyeth together, with our world-class team fully in place, I have concluded the time is right to turn the leadership of the company over to Ian Read (in photo to the right). Ian is an outstanding and experienced pharmaceutical executive who I know will make the next phase of the company’s future a successful one,” he concludes.
A Harvard-trained lawyer, Kindler was McDonald’s general counsel and ran its Boston Market restaurant chain before joining Pfizer in 2002 as general counsel. He later lobbied Bill Steere, a former Pfizer ceo and current board member who continues to hold great influence over the drugmaker, to succeed the controversial Hank McKinnell as ceo. His tenure, though, has been far from smooth. Within months, Kindler was forced to announce that torcetrapib, which was supposed to have been a blockbuster cholesterol drug, had to be scrapped. Then, two highly touted product launches proved to be disappointments – the Exubera inhaled insulin (see here) and the Chantix anti-smoking pill.
Kindler eventually followed the same game plan as his predecessor – to appease Wall Street, he pursued a huge acquisition, which was the $68 billion purchase of Wyeth last year. This followed and extended a series of huge cuts across the company, including eliminating 14,000 jobs, several facilities and various R&D efforts (some background). Investors, however, have remained lukewarm, especially since Pfizer has endured several recent setbacks in the lab and as the patent expires next year on the best-selling Lipitor cholesterol pill. Pfizer stock, meanwhile, continues to languish.
His sudden retirement is, of course, going to prompt tremendous speculation about the possibility of myriad issues plaguing the drugmaker and, in particular, the executive suite. Last year, for instance, Pfizer reached a $2.3 billion settlement for off-label marketing of several drugs, including a $1.3 billion fine that was the largest criminal fine in US history. No Pfizer execs were implicated, but the episode marred Kindler’s reign, especially given his legal background and that this occurred after the drugmaker was already operating under an earlier Corporate Integrity Agreement.
On a related note, Pfizer just last week agreed to settle derivate shareholder litigation by creating a $75 million fund that will be overseen by a new compliance committee comprised of board members who will monitor corporate governance. The lawsuit charged Kindler, Read, cfo Frank D’Amelio and the board with breaching their fiduciary duties by failing to detect and stop the illegal marketing (see here).
Condor
So — is PFE gonna’ rise $0.75 at the NYSE opening bell, tomorrow? Or will it be a full buck? We’ll see. Great stuff Ed!
Namaste and Happy (Mid- ? Or, Belated?) Hanukkah, all!
Peter
Boston Market or McDonald’s before Pfizer?
Ed Silverman
Hi Peter,
To clarify Kindler’s background, he was chairman and chief executive officer of Boston Market Corporation, which was owned by McDonald’s, and was also executive vice president, corporate relations and general counsel of McDonald’s from 1997 to 2001. I’ve updated the post to reflect this. Thanks for the heads up.
Regards
Ed
Condor
More on the substance, then:
I’d say Ed was the first to identify (in what appears to have been a woldwide exclusive story on Saturday!) how significant that $75 million settlement would turn out to be — even though it is a pittance to the world’s largest pharma concern. It is likely the straw that broke the camel’s back — as to Kindler’s run as Pfizer’s CEO. Why? Because the settlement also contained one novel provision: starting today, Pfizer board members will have to personally oversee compliance committee efforts (read: personal liability for the board, in the event of even simply negligent omissions, or failures to act).
Well-done, Ed!
That is, Ed is spot on here — and Kindler was almost certainly pushed.
No board member wants to accept a new form of personal liability — due to prior (alleged) compliance lapses — especially where (as is true with both Merck and Pfizer), lawyers have advised the companies to plead guilty to crimes. So it goes.
Namaste
Searching2000
Ed:
“Just when I thought it was safe” to only check Pharmalot twice on SUN – with the on-line “morning paper” and once in the afternoon, you post this late in the night.
I suppose we have to remember to “Think Pharmalot” when selecting ‘bedtime reading.’
You are a truly dedicated scribe – I think that term still applies?
ol cranky
I’m not so sure Kindler’s resignation should be so “unexpected” I think it shows he knows that middle management has taken a bad situation and made it exponentially worse. He must expect the nastiest consent decree ever in 3. . . 2 . . .1 . .
Michael
Searching2000,
If you would like more timely access to pharmalot, you should follow Ed’s feeds on Twitter (@pharmalot) with links to the articles when they are posted.
industry insider
Cry not for Jeff Kindler. As we blog, his parachute is getting a nice new coating of 24K gold. Any takers on the final number? I bet that Jeff walks away with at least $50,000,000, or, to paraphrase Morgan Freeman from “The Shawshank Redemption: severance pay for 4.5 years of work”
Always There
If Pfizer can terminate Kindler’s employment, there is HOPE That Amgen will wake up and the board will remove Mr. Sharer. Ten years of his so-called guidance is more than enough to make an informed decision.
If he goes, we are good for 3 to 4 points up on the shares. Trouble is, from what low price?
Oink
wow, lots of bacon in the news.
Interesting speculations about how Kindler’s resignation will allow pharma to realign re: health care reform, but I suspect internal matters had more to do with it.
The Old Sport
This is what happens when Pfizer is managed at the top like a bank with a huge legal dept instead of like a pharmaceutical co.
When the Industry started to care more about managing their cash and massaging the legal aspects of business and not producing the next generation of medications like their predecessors- u hit the cliff.
We’ll see how Ian Reed fares- he has asked the Pfizer old guard for “transformational” change for years and they keep sending him back incremental change. Battleship in a bathtub. Pfe may not be capable of genuine change. Wonder how they would have fared under feminine leadership for the last 5 years- it was very close back then.
Nice work Ed. You ARE good.
Batman
Shareholders wish he left years ago before he did that “merger”. Nice way to hide a disaster by mashing the books. Just saying….
industry insider
On the fifth night of Hanukkah 2010 Jeff Kindler walks away with a lot more than the foil wrapped chocolate money he probably got as a kid.
Esther
That’s why we eat greasy food.
Searching2000
Michael:
Thanks for the advice but while I have been called a “A TWIT” for years (and probably rightfully so) – I don’t do TWITTER (or Facebook, for that matter).
Perhaps that explains why I’m still “searching after all these years?” I do however use a BBerry to check-in when I am off-line in the traditional/ ETHERNET sense of the term, which is mercifully a good portion of the time.
JaT
Jami Rubin, Goldman Sachs: We are delighted to see the board taking action as PFE’s share price continues to underperform amid a flurry of questions about strategic direction, including capital allocation, pipeline, emerging markets, M&A, and the branded-generics strategy.
http://www.bnet.com/blog/drug-business/who-killed-kindler-wall-street-and-pfizer-8217s-board-emerge-as-suspects/6677?tag=drawer-container;load-section-river
I wonder if this is the beginning of the end of the Branded Generics conversation.