Pfizer's Outgoing CEO to Receive $199 Million Severance Package
Former Pfizer Chief Executive Hank McKinnell -- who was replaced amid a sharp decline in the company's market value -- will receive about $199 million in total compensation after he leaves
the board in February.
McKinnell will receive a $12 million severance payment, $2 million pro-rated bonus for 2006, $6 million in restricted shares and $18 million in other share payments through his contract with the company, Pfizer said in a regulatory filing.
McKinnell was forced into an early retirement in part because of investor anger about his rich retirement benefits.
Pfizer said McKinnell's departure "contractually obligated" it under his employment agreement to provide McKinnell with certain severance payments and benefits.
He will also receive about $78 million in compensation that McKinnell has deferred and earned interest on during his roughly 35-year Pfizer career. Those payments come in addition to an already disclosed $82 million lump sum pension payment.
The world's largest drug maker abruptly replaced McKinnell in July with Jeffrey Kindler, formerly a Pfizer vice chairman and its top lawyer. McKinnell was originally expected to stay on as head of Pfizer until February 2008.
The company, which has pledged to cut $4 billion in costs by 2008, is expected to undergo a radical shakeup. Pfizer said in late November that it would look for even deeper cuts. Then it suddenly halted development of cholesterol drug torcetrapib because of safety concerns. The company had spent $800 million developing torcetrapib and hoped it would be a blockbuster.
Earlier this week, Pfizer also named Kindler as its chairman, replacing McKinnell. Pfizer shares had fallen 40% under McKinnell's tenure between May 2001, when he became chairman, and July this year, when he was replaced as CEO.