Pfizer CEO's pay triples to $18M in first year
Friday, March 16, 2012
TRENTON, N.J. (AP) — Pfizer Inc. nearly tripled CEO Ian Read’s compensation in 2011, his first full year as top executive of the world’s largest drugmaker, which has been cutting costs and making other moves to compensate for generic competition hurting sales of top medicines.
Read, 58, received compensation worth a total of $18.12 million in 2011, up from $6.42 million in 2010, according to an Associated Press analysis of a regulatory filing Thursday by the maker of Viagra and cholesterol fighter Lipitor.
The total includes a salary of $1.7 million, up 42 percent, stock awards and option awards totaling about $12.5 million, a $3.5 million incentive award and about $319,000 in other compensation. The last category ranges from use of company aircraft and a car and driver to contributions to Read’s retirement savings.
Read, who has spent his entire career at the New York-based drugmaker, became Pfizer’s CEO in December 2010 after running its worldwide pharmaceutical business since 2006. He added the title of board chairman in December 2011.
Read took the helm after Pfizer’s board apparently forced out CEO Jeffrey Kindler after a 4 1/2-year tenure marked by multiple disappointments for investors. Among them were a languishing stock price, repeated failures of high-profile experimental drugs and a strategy mainly focused on improving the bottom line through repeated acquisitions that boosted revenue and allowed steep cuts of jobs and other costs.
The company’s October 2009 mega-acquisition of fellow drugmaker Wyeth for $68 billion bought Kindler some time, but not enough to adequately address worsening generic competition to key Pfizer drugs.
At the top of that list was Lipitor, the top-selling drug in history with peak sales of nearly $13 billion — now down sharply since Lipitor got U.S. generic competition on Nov. 30.
Pfizer, which had total sales of $67.4 billion last year, has managed to retain significantly more U.S. Lipitor revenue than would normally be expected, through an unprecedented campaign.
One of the two generic versions of Lipitor now on sale is an authorized one manufactured by Pfizer and sold by partner Watson Pharmaceuticals Inc. In addition, Pfizer continues to advertise brand-name Lipitor pills to consumers and it’s been offering big discounts and rebates to patients and insurance plans that stick with Lipitor rather than switching to generic atorvastatin, at least until several more generic versions hit the market in June and push prices much lower.
That strategy could be widely copied by the pharmaceutical industry, because virtually all brand-name drugmakers are being squeezed by the weak global economy, government pricing pressures, a tidal wave of new generic drugs, manufacturing quality lapses and declining productivity in multibillion-dollar research programs.
Over the past year, Read has narrowed the focus of Pfizer’s huge research operations to diseases with big sales potential or few existing treatment options, trimming the research budget significantly in the process. He has been exploring options for selling or spinning off two of Pfizer’s smaller businesses, nutrition and animal health. And he’s boosted sales in emerging markets seen as the best hope for growth, with European government health programs and insurance plans in the U.S. pushing ever harder for lower prices.
Last year, Pfizer won U.S. approval for lung cancer drug Xalkori and for use of blockbuster pneumococcal vaccine Prevnar 13 in adults. A few other new drugs are awaiting approval and could add significant revenue. The biggest likely will be anti-clotting drug Eliquis, or apixaban, which could get U.S. approval at the end of June. Pfizer would have to split that revenue with partner Bristol-Myers Squibb Co.
Pfizer’s compensation committee noted that under Read the company had set a course “to redefine and strengthen Pfizer,” restructuring the research operations, maximizing use of capital, improving the company’s reputation and returning more than $15 billion to shareholders through dividends and stock repurchases.
Read and Pfizer’s other 13 board members will face re-election at the company’s annual meeting on April 26. Stockholders also will vote on several shareholder proposals, all opposed by Pfizer’s board.
Those include publicizing all company political contributions, allowing shareholders to have written votes on issues between the annual meetings, allowing shareholders with 10 percent of common stock to call special shareholder meetings and giving shareholders an annual, non-binding vote on pay for board members.
Pfizer noted in the proxy that the shareholders’ advisory vote on executive pay passed by only 56 percent at last year’s annual meeting, well below the 96.8 percent approval voted at the 2010 meeting. The proxy blamed the decline in approval on the big payout given to Kindler when he left. He got nearly $29 million, between 2010 compensation and accumulated retirement benefits.
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