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Pfizer Will Start Meetings With Largest Investors (Update5)

http://www.bloomberg.com/apps/news?pid=20601103&sid=ajToCiEu_dzU&refer=news

These investors are so huge they want obesity drugs at a discount

By Shannon Pettypiece and Angela Zimm


Pfizer Inc. headquarters, New York June 28 (Bloomberg) -- Pfizer Inc., whose shares have lost almost a quarter of their value in the past three years, said it plans to be the first company to meet regularly with shareholders to discuss executive pay and management practices.

The first meeting will be in the third quarter with about 30 investors who together hold 35 percent of the New York-based company's shares, Pfizer spokesman Andy McCormick said in a telephone interview today. Pfizer's top shareholders include Barclays Global Investors Ltd., State Street Corp. and Vanguard Group Inc., according to data compiled by Bloomberg.

Pfizer, the world's biggest drugmaker, is initiating the meetings as investors demand more say in the direction of companies and in decisions such as executive pay. The drugmaker is trying to restore confidence as its share price declines and as it faces the loss of $21 billion in annual revenue to generic competition by 2011, analysts said.

``They are getting out ahead of the crowd to say, `We're not afraid to talk to our investors,''' said Ira Millstein, senior associate dean at Yale School of Management and an expert on corporate governance.

Pfizer's shares rose 2 cents to $25.63 as of 4:25 p.m. in New York Stock Exchange composite trading. The shares have declined 1.8 percent since the company ousted Chief Executive Officer Hank McKinnell on July 28 to help quell investor discontent.

Jobs Slashed

McKinnell's replacement, Jeffrey Kindler, has announced plans to slash 10,000 jobs, or 10 percent of Pfizer's workforce, in his first year in the job to save money and speed drug discovery. He is also seeking replacements for the company's chief financial officer and head of research.

``It will be very interesting to hear what is on their minds and what they will want to talk about,'' said Peggy Foran, Pfizer's vice president for corporate governance. ``This isn't about a dog-and-pony show or strategy. This is about listening to them and what their thoughts are.''

Topics likely to come up include executive compensation and succession planning, Foran said.

Kindler has had better rapport with investors and analysts than McKinnell, analysts say. Still, Pfizer has had major research setbacks in the past year, including ending development of the cholesterol pill torcetrapib. The drug, its most promising experimental treatment, had been expected to generate more than $13 billion in annual revenue if it were approved by regulators.

Compensation Protested

Investors, including AFL-CIO members whose pension plans own 21.8 million shares, protested the company's decision to give almost $200 million in severance, pension assets and performance awards to McKinnell. They said the exit package was excessive given that Pfizer's stock price fell almost 40 percent during McKinnell's tenure. Kindler's compensation is more closely tied to the share price.

The new meetings of Pfizer's board and the largest institutional investors, those owning more than 0.5 percent of the company's shares, will probably be held annually, Foran said.

``Pfizer wants to be at the forefront of governance issues that a lot of the institutional funds are concerned about,'' said Espen Eckbo, professor of finance at Dartmouth College's Tuck School of Business in Hanover, New Hampshire. ``One of the problems for institutional owners is the feeling that they do not have adequate representation on the board.''

To contact the reporter on this story: Shannon Pettypiece in New York at [e-mail] .

Last Updated: June 28, 2007 16:48 EDT

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