For their work on acquiring and planning to integrate Wyeth, Pfizer cfo and senior vp Frank D'Amelio (pictured left) and Ian Read, senior vp and group president of the biopharma biz (pictured below), were awarded big prizes. The board gave D'Amelio $1.2 milllion and Read gets $1 million, according toa filing with the Securities and Exchange Commission.
The awards have three components - half of the value was paid in cash on Oct. 26, 2009 and is subject to repayment if their employment is terminated for cause or either quits before Oct. 30, 2010. And 25 percent will be paid in the form of restricted stock units, or RSUs, to be granted on Oct. 30, 2009 based upon fair market value of Pfizer common stock on that date (further details are in the filing).
We don't doubt that D'Amelio and Read worked hard these past few months trying to figure out what to do with Wyeth. But this is a company that pledged to eliminate about 15 percent of their combined workforce, or nearly 20,000 jobs, to make the acquisition work. Yet the board doles out a couple of million to already well-paid execs - last year, both men pulled down salaries of $1.05 million, and that's not including bonuses or stock awards (see page 62 of the proxy).
The payouts send a questionable message at a time when so many people - including Pfizer and former Wyeth employees - are losing their jobs. But what do you think?
Should These Pfizer Execs Have Gotten These Bonuses?
- No (91%, 206 Votes)
- Yes (9%, 20 Votes)
Total Voters: 226
32 Comments
Not when thousands of employees lose their jobs. Give me a break!
Sure they should... In their reality, if they do something that makes their company more powerful, diminishing the pool of competition, in the process (eg, a merger), and thereby bringing a monopoly closer to reality (which is probably the wet dream of these types), then they have done exactly what was asked of them, and they should be rewarded, accordingly... with lots of cash and the derision of people like me.
Matt
"Should these Pfizer execs have gotten these bonuses?" Well Ed, "should" is where I think it gets rocky. Industry isn't about democracy or fairness, and so whether paying these execs to do what they were told to do (and did) while job losses are underway is immaterial. It is not pleasant and it is offensive to the newly-redundant at Pfizer, but not all employees are equal. As heads of the business these execs carry disfferent responsibilities and are measured - and compensated - differently to the rest. If merging with Wyeth creates a stronger company (measured by Wall St) then they have done their job, or at least the part under discussion. So yes they appear to have merited the payments. Whether it seems fair just now is not really relevant imo
Hi Christopher, Good point. And I deliberately worded the question as I did to encourage this sort of discussion - merit, fairness, and so on. Cheers ed
Agree above w/Christopher. IF these companies were at the public trough with bailout money, then a socialistic empathy about fairness would be appropirate. However in our capitalist economy, more power to those that make it happen, thats the way its suppose to work.
Pfizer financed $22.5 billion in loans from banks that received at least $75 billion from the Treasury Department’s rescue plan. In other words franky and his colleagues at Pfizer can pay themselves millions because of a merger that could only happen because it was backed by the US public's dollars. Go figure. Maybe franky will help us out and lower the cost of drugs for us the tax payers who funded Pfizer's purchase.
You beat me to it, Harry. Exactly right! Weren't the bail-outs intended to soften the effects of a down-turn rather than exacerbate them? Mega-pharma mergers, takeovers and downsizings are just short-term knee-jerk management responses to the industry's frailties. They show no imagination. Perhaps when these mergers show some sign of corporate efficacy would be the appropriate time to dole out million dollar rewards to the mergerers. Has there been one example yet in the pharmaceutical industry where the product of a merger has become more profitable or productive than its parts?
"Socialistic empathy"...why not just empathy? You have to be a socialist to have empathy? Anyway, harry's obviously ahead of the game, probably a strategist of some sorts looking a couple of circles out rather than navel gazing. Fwank is certainly thinking of us all as he's proposing to close up some of that donut hole with half or less-priced brand name drugs (which would otherwise have been generic scripts), burnish Pfizer's name and maintain brand equity with docs....
A couple of things:
:: However in our capitalist economy, more power to those that make it happen, thats the way its suppose to work ::
Maybe, at best. Is this statement made in the context that the end justifies the means? If top execs knowingly have their heads on chopping blocks, and gets things done "the right way" (if this applies anymore), then perhaps, yes. Under any circumstance should their bonus be about equal to their yearly already unjustifiablly absurd salary? Hell No.
If execs hire scapegoats to keep their own heads off the chopping block at the detriment to a, or some poor old saps career, then HELL NO.
"Capitalist" is not a synonym for complete jerk (or nastier words that mean the same thing). You'd be astonished to know there are actually companies that value things like fairness. The fact that our system now supports "anything goes" is why once profitable companies are driven into bankruptcy by greedy investors who mortgage the companies over and over again to give themselves bonuses. It's why the current melt-down occurred.
And it's also why those whose whole line of reasoning is "I win--life's not fair" are not going to be at the helm too much longer.
Ed wrote: "...Good point. And I deliberately worded the question as I did to encourage this sort of discussion - merit, fairness, and so on..."
Well, in that case, I think we should look at it from (one of), the reverse perspectives... The patients'.
My gripe would be this: Pharma's products don't work, at least in the sphere of psychopharmacology, which is an area that I'm particularly interested in, having tried their wares to my thorough dissatisfaction. Now, I thought the key element of capitalism was competition; survival of the fittest. And this failed paradigm is allowed to survive, when it is clearly not the ideal solution, nor anything close to it (nobody has ever been cured of their mental illness by a drug - unless somebody out there can inform me otherwise, that is). It kinda makes me doubt that capitalism is the thing that it says it is. Not only does the current model not work, but people are discouraged from seeking alternatives in a quite, erm, zealous way.
Now, obviously, if mental illness is untreatable/incurable, and psychopharmacology is the state of the art, and the best available solution, then my argument is groundless. But suppose it's not?
Matt
Does that mean the guys responsible for the $2.3 billion fine don't get paid? Oh wait, that's why the reps are getting fired.
ok...here I go. I'm just an average high school graduate, post-menopausal, flat-chested German girl...who was hospitalized twice in 2008 because of Chantix. I didn't KNOW what caused my collapse until months later.
Took two complete Chantix prescriptions, back/back. Was beyond exhausted after having nightmares constantly and conversing w/loved ones who went before me...and promised each, I would join them soon. When I was out on leave, my computer was checked by supervisors. For months, I had apparently been googling sites about death and suicide.
Jan. '08 - - taken by ambulance w/heart attack symptoms and severe stomach pains. Stayed a week. Put on oxygen and morphine. Head felt like it would explode. In fact, I WANTED it to...just to finally get rid of the pain!!
May 22, '08 - - took drive out to rural area, wrote short goodbye note...downed over 240 sleeping pills and cut self w/diabetic razors...woke up six days later in ICU surrounded by family...as I was being taken off the ventilator.
Spent time in psyche unit, intense nightly therapy, psychiatrist and therapist and group sessions. Ostracized by all...no one could understand how/why I DID it!! I didn't know either!! My mom was the only one who knew I was on Chantix (besides the doctor) and she fed me negative articles on a regular basis months later. FINALLY, I listened and did my OWN research. This drug is for real. It is like a lobotomy by mouth. Never did I doubt IF I was leaving...but, rather WHEN. I pray for the day I'll be vindicated.
Matt makes an interesting point. If a user of psychopharmcologicals is dissatisfied with the choices available, and believes that none offer any real value, why persevere and why not choose alternative approaches? I understand that the nature of capitalism is one that encourages competition amongst companies and services, and choice on the part of the consumer, or customer. In this case the customer doesn't have to choose pharmaceuticals at all, which offer just one avenue of possible help. Doesn't this argument assume that pharmaceuticals are the only choice? It is up to the suppliers of alternative approaches to compete and 'win his business' if I can use that expression. And because big pharma has more money to spend 'discouraging' users to try alternatives does not mean that smarter, more efficient competitors should not have a chance.
and while the rest of us are debating the meaning of capitalism, pharma execs are winging their way to a party (tickets cost 30,000) at the white house, where they will join the bankers. while Obama is giving one of his great speeches begging the banks to fund small businesses, the bankers and the pharma execs will be debating policy .. how to **** the american people in 2010. that is capitalism.
An emphatic "NO!" They are already highly paid to do the work they have done. They should be awarded bonuses just like the rest of the employees - based on the company's overall performance at year-end.
Christopher says,
"If merging with Wyeth creates a stronger company (measured by Wall St) then they have done their job, or at least the part under discussion"
"If" is one of the biggest words in the dictonary. There is no proof that this has made them stronger. As a matter of fact, if you can show where one these mega mergers in pharma made the companies stronger, let's hear it. Even if it succeeds like you say, let's wait for the results before giving them a bunch of cash to basically fire people.
The philosophy and intent of "Capitalism" is to ensure the producers of the best product prevail, and those that produce crap, don't. (In a small nutshell)
How can this be applied to brand name products vs. generic products, when the FDA itself allows a generic company to produce drugs that are 80% the potency (+ or - a certain percentage to boot) than the brand name?
What happened to bioequivalency? The FDA and manufacturers of generics are collectively blowing smoke up all of our @$$es.
But we better not consider opening the "free market" to Canada, etc., because clueless individuals in our government hold steadfastly that "those" drugs are unsafe.
It's a big bunch of crap.
Well Connie, since you seem to be directing your comments to me, I'll ask you to look again at how I answered Ed's question. I tried to acknowledge how things are, not how I, you or anyone else might like them to be. And the fact is that Wall St determines the 'strength' of a company based on its financial wellbeing, not how many shiny, happy faces there are in the United Way line. Second, as you will probably know, the merger has only just been approved so I wouldn't be so presumptious to declare it a success. And third, I don't personally believe that any mergers of this magnitude have been successful, but perhaps there are many other measures of success which might prove otherwise.
You seem to be like many others on here; looking for ways in each and every topic to hammer the industry. I started out by trying to respond objectively to Ed's question and now here I am justifying my position to you. You don't know whether I am an apologist for the industry or if I just lost my sales job with a big pharma. Don't assume, Connie
Try a bit of perspective: it makes this place more interesting.
Harry writes: "Pfizer financed $22.5 billion in loans from banks that received at least $75 billion from the Treasury Department’s rescue plan." That isn't exactly true. From my understanding, Pfizer's initial offer included loans from TARP funded banks -- but in the end, they didn't need those funds. They were able to raise all the funding they needed through corporate bonds.
That said, I'm still rather pissed at the whole thing. I stand a very good chance of loosing my job b/c of this mess. Meanwhile, the Wyeth CEO (Bernard Poussot)is walking away with around $50 million. THAT'S the guy that should be getting the flack here - not D'Amelio. Try reading this link. At least D'Amelio worked to earn his money. Poussot just delivered a half-functional company full of terrified employees into the hands of the Kindler the axman. Poussot is the one I'm ticked at. http://www.fiercepharma.com/story/wyeth-ceo-line-53m-handshake/2009-03-30
Christopher wrote: "Matt makes an interesting point. If a user of psychopharmcologicals is dissatisfied with the choices available, and believes that none offer any real value, why persevere and why not choose alternative approaches?.."
You're kind to say so. The only alternatives that I'm aware of centre around the dietic and talking therapy approaches...
I don't know how things are in the US, but in the UK, both those alternatives are difficult to come by, unless one pays for them oneself, when most couldn't afford that kind of fee. Waiting lists for CBT on the NHS are lengthy - dependent upon the NHS trust that's under discussion, we're talking a wait of months for a six-week course. As a practical matter, if somebody is suffereing from, say, anxiety, it's not likely to help them recover if they have to wait that long and know that somebody's got a stopwatch on them! I wasn't offered counselling, an introduction to a support network, nor anything else.
Psychotherapists probably have a professional body, and I probably ought to inform myself of its name! However, it is never going to have the bargaining power of an organization such as the ABPI. And let's not forget that in the UK, the Health Secretary has resonsibility for the success of the pharmaceutical industry. I'd be very surprised if psychotherapists or dieticians had similar ministerial support.
No, all in all, the alternatives would have to be spectacularly more efficient, almost to the point where it looked like the pharmaceutical industry was trying to sell people a square wheel, in order to outweigh the marketing, lobbying and other support available for drugs (let's not forget, the CEOs of the biggest companies have the ear of the most senior politicians).
Again, harking back to my own experience, frontline doctors are part of this slanted playing field, although it's difficult to lay the blame at their door due the fact that there are far too few counsellors (and dieticians, probably), available on the NHS. And, just to labour the point about a disparity of resources, when has anybody heard of psychotherapy reps hastling doctors, offering speaking engagements, and so on, in return for scripts?
One might argue that pharma is playing to its strengths and this is part of capitalism's "survival of the fittest", but the point I made initially concerned the interest of the patient in getting the best treatment. If the best treatment isn't available (or, at the least, there is no choice of treatment), then pharma's claim to excellence is no more than a victory at a tallest midget competition.
Matt
Nathan, thank for the info. can you forward the link re: corporate bonds. I just try to follow the news, so forgive me if I was incorrect with regards to the TARP! I wish you luck with Pfizer.
Both harry and Nathan are right -- in parts. Pfizer did rely on bridge financing -- without which, the deal would not have come together.
Then, Pfizer "termed out" the bridge financing -- with corporte debt. But again, without the (TARP-funded) banks' putting up bridge commitments -- there would have been NO DEAL. From the SEC Rule 424 prospectus, issued on the deal:
". . . .In connection with the merger, on March 12, 2009, Pfizer entered into a bridge loan agreement with JPMorgan Chase Bank, N.A. as administrative agent. The bridge loan agreement had a term of 364 days and provided Pfizer with unsecured financing in an aggregate principal amount of up to $22.5 billion. On March 24, 2009, in connection with its financing of the merger, Pfizer issued $13.5 billion of senior unsecured notes in a public offering. On June 3, 2009, in connection with its financing of the merger, Pfizer issued €5.85 billion and £1.50 billion of senior unsecured notes (totaling approximately $10.5 billion) in a private placement pursuant to Regulation S of the Securities Act. Due to the issuance of the senior unsecured notes, as of June 3, 2009, the commitments under the bridge loan agreement have been replaced with the proceeds obtained by Pfizer through the issuance of the senior unsecured notes, and the bridge loan agreement has been terminated. . . ."
Namaste -- to you both!
PS: Nathan is right, the Wyeth CEO role ($50 million) here, is very much like the Schering CEO role ($170 million), in the "Merck-ified" deal -- all to kill a compnay.
Whatever the particulars, it's nice to see an issue here in which there is 91% agreement!
Bloggers who say that 'they' are merely playing by 'their' rules are only trying to enhance their own chances of becoming the next generation of 'yes person' company directors, by showing they understand how the most ferocious capitalist game in the world is played; winner takes all, and FUM.
So, we have to save the company at any cost, which includes firing all the underpaid domestic grunts and hiring even lower paid grunts in Asia. Whatever happened to corporate social responsibility and 'our people ARE the company'? (The other big pharma are doing exactly the same thing, and actually started earlier, just more quietly; 2.3B dollars more quietly!) Until American citizens wake up and tell 'them' that 'their' rules stink, the million dollar boobies will continue to take home the loot (That is what it is, because 'they' are robbing their companies blind, right?) I wonder when the stockholders will notice, or are they being paid off? Probably worth investigating.
The USA is becoming the most dysfunctional, least civilised country in the world. Thought: Perhaps this is just the next phase of the al Quaida plan to destroy the 'evil' USA; all the major shareholders in big pharma are arab oil billionaires and the obscenely overpaid (only peanuts in the 'grand design') COOs are just their lackeys. The Iraq and Afghan nonsense is just a smokescreen; they are really and actually sticking it to us via our own corrupt systems, greed, and hypocrisy.
I just caught something about big pharma getting semi-jilted in the new 20 lb. house version of the health care bill. Something concerning the give and take, where they gave based on how much they could take, only they may not be taking quite as much now.
Anyone got the story?
Yes -- It is the latest hit from that Doo-Wop Group, stormin' the Nation:
Harry Reid and the Blenders!
Seriously, it is the price negotiation feature in BOTH the House and Senate versions that will very-likely bite both phrama and med. device makers profits.
Namaste
Times were better when MDs and PhDs ran pharmaceutical companies (Dr. Vagelos--where are you when we need you?), they knew what was needed for success --a rich and varied pipeline. Somewhere along the way the business school graduates took over and looked at three-month profits. The pipelines suffered. Now Pfizer/Wyeth are firing scientists and giving bonuses to business people; bad choice! We need people who invent new drugs not put together ingenious deals. I say "no" to Ed's question; use that money to keep more scientists inventing drugs to --in the goodness of time-- make a decent profit for the company and, importantly, help the patients who depend on them for cures.
They should all get tumors, is what they should get. And in all the right places.
On the day of your daughters wedding, I will come to you with a favor for which you cannot refuse.
;-/
Mayor Bloomberg's media outlets are running <A href ="Bloomberg is running a massive piece on Pfizer, this morning -- and its $2.3 billion settlement with the DoJ -- mostly related to off-label promotion of Bextra. This is a fabulously comprehensive run-down of the history, here. But I saw scarcely any new details.
So, I'll admit that it made me wonder whether Jeff Kindler supported Mr. Bloomberg's opponent, last Tuesday. Heh. Answer, by clicking the NYC Campaign Finance Badge, at right
I'll go look. [Or perhaps, now that he has been re-elected, the gloves come off, even if Kindler and Pfizer supported his mayoral candidacy.] In any event, while this long and devastating article breaks very little "new" ground, it does collect -- in one place -- most of the manifold evils of blockbuster off-label promotion, as it was practiced in the early part of the decade.It also makes plain the calculus at least some upper-level managers silently made: "Will the fine be larger than the increase in profitability, from selling off-label?" And usually, the answer to that question was clearly "no" -- so off-label they went.
What the article doesn't do -- as good as it is -- is explain that the center-piece of the largest criminal fine ever paid for off-label promotion was actually presided over by Fred Hassan and Carrie Smith Cox (see mine on it, there). Both were most-recently in charge at Schering-Plough -- but back then, the pair was leading Pharmacia's efforts to bring Bextra to market, and turn it into a blockbuster (before they sold the company, that is -- "lock, stock and barrel" -- to Pfizer):
Actually, heart attacks were among the side-effects. And Pfizer pulled the drug from the market in 2005, after being asked to do so by FDA. Do go read it all, but don't forget that Hassan and Cox were clearly in charge here, when the drug launched, and undoubtedly had a hand in overseeing all the messaging for this drug.Was there "a wink and a nod", about off label pain relief, from the pair? We don't know. [And don't misunderstand, Pfizer is culpable here, too -- as it plainly learned of all of this -- in its acquisition due-diligence, and chose to continue the practices.]
What we do know, now seven years later, is that the above seems to fit a pattern, for the pair -- Hassan and Cox. A pattern seen previously at Pharmacia -- in Celebrex marketing (and unfavorable study-results delay and minimization), and of course, in Vytorin/Zetia, most recently (unfavorable study results delay, and minimization). But this whole blog -- some 970 posts of it -- tells that story.">a truly-massive story, this morning -- one detailing the history of Pfizer's various record-breaking criminal pleas, and fines.
One wonders whether (1) that will be taken into account, when the bonuses are reviewed; and (2) perhaps partly tongue-in-cheek, wheter Hizzoner was upset that Pfizer donated to Thompson, in the 2009 mayoral election-cycle, and did so early.
Heh.
Namaste
So sorry -- the code got all garbled, there -- this is what I meant to say:
Bloomberg’s media outlets are running a massive piece on Pfizer, this morning.
One wonders whether (1) that will be taken into account, when the bonuses are reviewed; and (2) perhaps partly tongue-in-cheek, wheter "Hizzoner" was upset that Pfizer donated to Thompson, in the 2009 mayoral election-cycle, and did so early.
Heh.
Namaste