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Tue

26

Dec

2006

Plum Puddings
Tuesday, 26 December 2006 11:51
by James Kunstler

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.
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