Newspapers were filled with information about Dr. McKinnell’s $82 million pension package this spring.
Shareholders were upset that Dr. McKinnell would receive this amount considering that Pfizer’s stock had lost almost 50% of its value during Dr. McKinnell’s tenure.
Dr. McKinnell claimed that this wasn’t his fault. He said that the stock had been overvalued when he took over. He didn’t say that shareholders had been stupid, but in essence that is the conclusion.
Dr. McKinnell, however, has been anything but stupid. On December 18, 2006, Pfizer entered into an agreement with Dr. McKinnell which details the terms of his departure from Pfizer.
What Dr. McKinnell and Pfizer kept as their own little secret is that the $82 million retirement package wasn’t all this CEO had coming his way. Dr. McKinnell got canned from his CEO job in July 2006, almost two years before he was scheduled to step down, under pressure from investors angered about his retirement package and lack of performance.
Dr. McKinnell then “decided” to retire from his chairman job a few months early, on December 18, 2006, so Pfizer has now been forced to file an 8-K statement.
Turns out Dr. McKinnell had a few more dollars stashed away: $78 million in deferred pay to be exact, and $38 million in stock and severance payments.
So congratulations are appropriate. Not every CEO can set investors straight; cut the share price in half, and take off with $198 million in his knapsack. That takes a certain kind of talent.
According to the separation agreement, Dr. McKinnell agrees to “provide reasonable assistance to and cooperate with the Company and its counsel in regard to any litigation presently pending or subsequently initiated involving matters of which Executive has particular knowledge as a result of Executive’s employment with the Company. Such assistance and cooperation shall consist of Executive making himself available at reasonable times for consultation with officers of the Company and its counsel and for depositions or other similar activity should the occasion arise.”
That’s good news for the many law firms that may be lining up to take Dr. McKinnell’s deposition. After all, he might now have few excuses not to attend.
Peter Rost, M.D., is a former Vice President of Pfizer. He became well known in 2004 when he emerged as the first drug company executive to speak out in favor of reimportation of drugs. He is the author of “The Whistleblower, Confessions of a Healthcare Hitman.” See: http://the-whistleblower-by-peter-rost.blogspot.com/