Pfizer's Shareholders Approve Say-On-Pay; J&J's Say No Thanks
April 23 2009 - 3:33PM
Dow Jones News
Pfizer Inc.'s (PFE) shareholders voted Thursday in favor of
giving themselves an advisory vote on executive compensation at the
drug giant, while shareholders at rival Johnson & Johnson (JNJ)
defeated a similar proposal.
The shareholder proposals were part of a push among some
investors -- and lawmakers -- for "say on pay" at publicly traded
companies. Advocates say such advisory, non-binding votes are
needed to give voice to frustrations about hefty compensation
packages awarded even when companies perform poorly.
At Pfizer's annual shareholders meeting in Atlanta, a say-on-pay
proposal garnered support from 52.4% of shares voted, versus 47.6%
against, according to a preliminary tally released by the
company.
The proposal requests that Pfizer's board adopt a policy
allowing shareholders to vote annually on an advisory resolution
ratifying the compensation of top executives. The vote would be
non-binding and wouldn't affect any compensation paid or awarded to
the executives.
Pfizer's board had recommended against the proposal. Chief
Executive Jeffrey Kindler said the New York company held regular
discussions with shareholders about executive compensation. An
advisory vote wouldn't provide the board with enough information to
address specific concerns, he added.
Kindler also defended his and other top executives'
compensation. He noted that his combined salary and bonus have been
essentially frozen, and his long-term incentive compensation is
tightly linked to increasing shareholder value.
Kindler's total compensation, as calculated under regulatory
reporting requirements, rose to $13.8 million in 2008 from $9.5
million in 2007. But measured another way, which Pfizer called
"total direct compensation," Kindler's pay package declined 5% to
$13.1 million for 2008.
Pfizer shares declined 22% in 2008 and have fallen an additional
26% this year, trading recently at $13.05, weighed down by actions
taken in connection with its planned acquisition of Wyeth (WYE),
including a 50% dividend cut. Kindler on Thursday defended the
dividend cut as necessary to help fund the Wyeth deal.
A majority of Pfizer shareholders also voted in favor of asking
the board to give holders of 10% of shares outstanding the power to
call special shareholder meetings, down from the 25% threshold
adopted by the board last year.
"Certainly we understand that given the preliminary results,
these topics are very important to shareholders," Pfizer
spokeswoman Joan Campion said. "And our board will carefully
consider these proposals and the appropriate actions."
The J&J say-on-pay proposal sought an advisory shareholder
vote annually to ratify and approve a report from the board's
compensation committee and executive compensation policies. The
board opposed the measure. Some 46% of J&J shareholders
approved the proposal, while 54% opposed it at an annual meeting
near the company's New Brunswick, N.J., headquarters.
Though the proposal was defeated, J&J Chief Executive
William Weldon acknowledged the level of support it received, and
told shareholders that J&J would continue to monitor
developments in say-on-pay policy.
J&J's compensation committee had recommended a merit salary
raise for Weldon this year based on 2008 performance, but he
recommended it stay unchanged due to the economic weakness.
Weldon's total compensation as calculated under regulatory
requirements declined by about 4% to $29.4 million for 2008 from
$30.6 million the year before.
J&J shares fell 10% in 2008 and are off nearly 15%
year-to-date, trading recently at $51.05.
-By Peter Loftus; Dow Jones Newswires; 215-656-8289;
peter.loftus@dowjones.com