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Here’s an interesting development in the battles raging between shareholders and boards of directors: Pfizer announced today that it will begin holding “a regular meeting” face-to-face between its largest shareholders and its board to discuss compensation and governance policies. The pharma company says it will be the first to initiate and regularly hold such meetings when it begins doing so this fall. In the news release, the company proudly touts its good governance history, from declassifying its board (all directors are now elected at each annual meeting) to expanding executive compensation disclosures well ahead of the new SEC regulations.
That all may be the case. But the company is also likely still smarting from 2006’s fireworks-laden meeting—a plane circling overhead the Lincoln, Neb. Cornhusker Marriott flew a banner screaming “Give it Back, Hank,” referring to former CEO McKinnell’s extravagant pay package. And it could be an attempt to extend an olive branch to shareholders concerned about the company’s future: In January, Pfizer said it would lay off 10,000 people, and sales outlooks are lukewarm.
Still, Pfizer has also been at the forefront of the increasing dialogue between shareholders and boards, which I wrote about earlier this spring as being notable this proxy season. Its corporate secretary, Peggy Foran, first reached out to the American Federation of State, County and Municipal Employees (AFSCME), the largest public service jobs union, to create a roundtable of companies and shareholders on the new “say on pay” proposals, which give shareholders the chance to vote on executive pay. And Nell Minow, the editor and co-founder of governance adviser The Corporate Library, calls Pfizer’s move “a very worthwhile initiative.”
It’s too early to tell how meaningful the meetings will be, and who will be a part of them. But considering that only five years ago, says Richard Ferlauto, AFSCME’s director of pension and benefits policy, “we would never have gotten into a corporate boardroom,” the news is notable. As Minow put it in an email to me today: “The exciting thing about this field is watching it break out of a benchmarking/compliance mindset and see the way that yesterday’s ceiling is tomorrow’s floor.”
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