Posted on 12/26/2006 8:35:03 PM PST by B-Chan
The latest staggering atrocity from the cloaca of business-and-finance as reported by AP at the end of last week:
Pfizer Inc.'s former chief executive, Henry A. McKinnell, who was forced into early retirement in part because of investor anger about his rich retirement benefits, will get a retirement package totaling more than $180 million, a new regulatory filing shows.
McKinnell's package, which the company disclosed in a filing with the Securities and Exchange Commission on Thursday, included an estimated $82.3 million in pension benefits, $77.9 million in deferred compensation and cash and stock totaling more than $20.7 million.
In other words, McKinnell was forced into early retirement with the very groaning cargo of swag that irate "investors" (i.e. shareholders) fired him for lining up for himself. His punishment is that he gets to enjoy the booty 19 months earlier than if he'd worked to the end of his contract.
During McKinnell's tenure, 1999 to 2006, Pfizer's per share price went from roughly $50 to $30 (adjusted for stock splits). With about seven billion shares in existence, this reflects a loss in value for Pfizer of $140 billion under McKinnell's leadership.
A board of directors exists to look after the interests of these shareholders. But gosh, what do you know -- a glance at the Pfizer board shows that the chairman was. . . Henry A. McKinnell!
The Pfizer board of directors is made up of 15 members. It includes such luminaries as Ruth Simmons, president of Brown University; Stanley Ikenberry, former president of the University of Illinois; Nobel Prize winner (medicine) Michael S. Brown; Dennis A. Ausiello, former head of Massachusetts General Hospital; Constance Horner, former head of the US Civil Rights commission; Dana G. Mead, chairman of the board of directors of the company that runs the Massachusetts Institute of Technology. -- plus seven venal corporate hacks from the nation's business sector (not including McKinnell himself): M. Anthony Burns (Ryder Trucks); Robert Burt (FMC Chemicals); W. Don Cornwell (Granite Broadcasting and Avon Products); Jeffrey Kindler (Pfizer); George A. Lorch (Armstrong Floors); William C. Steere (Pfizer), and William Howell (JC Penny).
Now, at some point, the Executive Compensation Committee of this board (composed of four directors) recommended McKinnell's pay package, including terms of severance, in case things didn't work out. Presumably, the committee then presented their recommendations to the full board for a vote. Aside from the massive clumps of deferred compensation ($77.9 million) and pension benefits ($82.3 million), the package included $12 million in pure severance pay, vested stock grants ($5.8 million), and a plain vanilla annual bonus of $2.15 million.
It is amusing that a CEO who made $140 billion worth of stock value evaporate during his tenure would be regarded as worthy of a performance bonus. But the sweetest little sugar plums in the stocking are the $576,573 worth of medical and dental coverage (so Hank doesn't have to wait in some emergency room with a bunch of illegal Mexican sheet-rockers), and finally the $305,644 that McKinnell will get for paid vacation days he didn't take.
What I'd like to know is how come Pfizer's directors are not sitting down right now with investigators from the Securities and Exchange commission, or the US Attorney's office, or the New York state Attorney General's office and answering some questions as to how they acquiesced in the looting of this corporation. Surely, there are only two ways that the directors' behavior can be explained: as either the wildest sort of fiduciary failure or flat out venality -- which would naturally lead to either civil trials or criminal prosecutions.
The case of Ruth Simmons is especially interesting. The President of Brown University has been campaigning tirelessly for reparations for the descendants of American slaves. Perhaps before long she will meet up with somebody campaigning for reparations for Pfizer shareholders, and for American citizens who are charged unconscionable prices for pharmaceutical products.
Somewhere in this nation, perhaps on a midwestern university campus, or toiling on the receiving dock of a Best Buy store, there are sharp young people who are not failing to notice the stupendous economic injustice that saturates the system as it is currently running. These young people may emerge as the Dantons, Robespierres, and Saint-Justs of the 21st century. It's not a happy prospect.
Today, the New York Times reported that a new hyper-exclusive resort for the "ultra-rich" called Unlimited Speed is being developed in Georgia (where else?) featuring a private Nascar-quality race track where Goldman Sachs bonus boys and other such grandees can get their rocks off. They'd better fortify the place well. They'd better put a wall around it with an electrified fence and a death strip, because otherwise, sooner or later, if the regulatory authorities do not act, some very pissed off and energetic young Americans are going to steal into places like this and deal out some rough justice.
Merry Christmas everybody.
"During McKinnell's tenure, 1999 to 2006, Pfizer's per share price went from roughly $50 to $30 (adjusted for stock splits). With about seven billion shares in existence, this reflects a loss in value for Pfizer of $140 billion under McKinnell's leadership...
"It is amusing that a CEO who made $140 billion worth of stock value evaporate during his tenure would be regarded as worthy of a performance bonus. But the sweetest little sugar plums in the stocking are the $576,573 worth of medical and dental coverage (so Hank doesn't have to wait in some emergency room with a bunch of illegal Mexican sheet-rockers), and finally the $305,644 that McKinnell will get for paid vacation days he didn't take."
WTF?
The money he got is enough to pay each shareholder 2.5 cents a share. Of course, some of it is deferred.
If I fail to do my job and cost my company a fortune, I will be shown the door.
When this guy runs his company into the ground, he gets a $150M payday.
Something's wrong with this situation.
I have no problem with people getting paid well for doing their jobs well. But let's face it: no human being can possibly do enough work to be entitled to $150 million in compensation, especially not as an "executive". In the real world, you could replace any given CEO at any given company with a jar of mayonnaise and get exactly the same results at the end of a given workday. In the real world lower-level management types and $40K/year grunts make all the real decisions and create all the real value in a company.
And to get paid a fortune for running your company into the ground? That's not capitalism -- that's grand theft.
I'll say it again: corporatism -- capitalist and socialist alike -- is the rotten fruit of the same poison tree. A system run for the benefit of pirates like this guy is no more sustainable over the long term than a system run for the benefit of Communist Party hacks. Mark my words -- a situation like this can only go on for so long before King Mob steps up to level the playing field in a way that will destroy everything.
This guy is getting paid roughly $1 for every $1,000 in lost value for his company during his tenure. Considering that he managed to lose $140,000,000,000, his severance of $180,000,000 is absolutely staggering.
I suppose you believe that CEO compensation within large companies has been rapidly increasing because there's an oversupply of talent to do the job? Any idiot can run a company so their value increases? How exactly does that work?
In the real world lower-level management types and $40K/year grunts make all the real decisions and create all the real value in a company.
Yeah, Farnsworth at the water cooler is the driver of corporate success. LOL! I don't think you have any idea how things work in the real world.
A system run for the benefit of pirates like this guy is no more sustainable over the long term than a system run for the benefit of Communist Party hacks.
How many corporations are there in the U.S.? Five million? Every year a handful of them do something stupid like this and guys like you react by ignoring the 4,999,990 other companies who do the right thing for their shareholders and claim that this single act alone exposes our entire system as being inherently evil and populated with robber barons and other nefarious scum who only wish to fill their pockets at the expense of the little guy. The only thing little here are the minds of those who believe this claptrap. This is between management, the board and the shareholders. They'll work this out and move on. Pfizer will survive and this will not give rise to mob rule or French style revolution.
Mase, I'm with you. :-)
Of course you are right, Mase. But don't say it too loud.
The sansculotte might get wind of it and come after you.
By the way, this Kunstler freak is one more loon. Once a Y2K alarmist. He now has latched onto the peak oil fear with a demagoguery matched only by some propagandist from the French Revolution. Check out his web site. It is lunatic central.
its a fine line between being a conservative and a patriot and being a revolutionary......
we keep protecting the ill-gotten millions that these leaches are awarded and we will see Revolution in this country, and it won't be pretty....
It works like any con job works: some fast-talking sociopath convinces a bunch of suckers to pay him to do nothing.
The only talent necessary to be a pirate is ruthlessness.
Thank you, comrade. We have nothing to lose but our chains.
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