Pfizer Protests Fall Short

April 28, 2006 ( - With a union leading the charge, dissatisfied Pfizer Inc. shareholders came up short Thursday in trying to institute corporate governance reforms including holding down ballooning executive compensation packages.

However, the AFL-CIO and other unhappy investors in the giant drugmaker at the company’s annual meeting in Lincoln, Nebraska did manage to lodge a sharp rebuke over the pay packages including one being granted to departing chairman and CEO Hank McKinnell, the Wall Street Journal reported. McKinnell, who is expected to step down in February 2008, could get as much as an $83 million retirement payout, the Journal said.

As company shareholders entered the meeting at the Cornhusker Marriott, a single-engine plane circled overhead pulling a banner reading in bright red letters: “Give it back Hank.” The AFL-CIO also arranged for a picket line of about a dozen people to draw attention to McKinnell’s retirement package and compensation.

Shareholders targeted two directors on Pfizer’s compensation committee, withholding more than a fifth of their votes for the directors’ re-election. However, both still walked away with a majority of votes, avoiding a recently adopted company bylaw that would have required them to resign. Dana Mead, chairman of the committee, was re-elected to the board with 78.3% of the votes cast, while George Lorch, another member, received 78.7%, according to preliminary tallies announced at the meeting.

In the first statement from the floor, Daniel Pedrotty, an analyst in the AFL-CIO’s Office of Investment, challenged McKinnell’s expected pension award as “pay for failure.”

Also, a shareholder proposal to separate the jobs of chairman and chief executive drew 38.7% of the votes, down from 41% last year.

Merrill Lynch & Co Meeting

On Friday, Merrill Lynch & Co. shareholders rejected two proposals aimed at helping to rein in executive and director compensation at the company, Reuters reported.

The No. 1 US brokerage last month said it awarded Chief Executive Stan O’Neal $37 million in compensation for 2005, up 15% from a year earlier and nearly 1,000 times the average wage for US workers.

The Catholic Equity Fund, which owns 3,300 Merrill shares, had proposed that Merrill allow shareholders to approve or reject directors’ pay packages every year, and to disclose details about directors’ packages fully.

Directors who enjoy high compensation for their services “are more likely to pay excessive CEO compensation,” the fund said.Merrill opposed that proposal, and said the current director compensation package had been determined to be fair and had been approved at the previous year’s annual meeting.

A Merrill spokesman said the brokerage’s shareholders rejected the proposal, co-sponsored by CHRISTUS Health and the Unitarian Universalist Association.

A separate proposal from the American Federation of State, County and Municipal Employees would have allowed shareholders annually to approve or reject the report from Merrill’s compensation committee in the company’s proxy statement.Merrill also opposed that proposal, and it was rejected, a spokesman said.


Three resolutions to limit executive and director pay were soundly defeated Friday at the shareholders meeting of AT&T Inc., whose chief executive has become a target for critics of excessive compensation.The failed resolutions would have forced the nation’s largest phone company to study capping executive pay, get shareholder approval for directors’ compensation, and limit executive severance packages, the Associated Press reported.

Of the three compensation-related resolutions on Friday’s agenda, one was dropped because the sponsor, the California Public Employees Retirement System (CalPERS), failed to show. The other two received only 11% and 12% backing from shareholders, according to the company’s preliminary vote count.

Corporate governance observers predicted that executive pay issues would be hot topics at this season’s annual meetings (See  Running the Fund: Majority Rules? ).