Former Pfizer Inc. (PFE) chief executive of Henry A. "Hank" McKinnell, who was forced out earlier this year due in part to anger over his pension, will leave the company with a package of pay and benefits valued at a potential $200 million, according to a regulatory filing.
The bulk of the package was contained in the pension, valued at $82.3 million, which became the subject of shareholder ire earlier this year when the number was first disclosed. The disclosure was prompted by Harvard academic Lucian Bebchuk, who estimated it to be worth roughly $80 million.
McKinnell will also receive $78 million in deferred compensation, with $67 million of it coming from his pocket. Pfizer contributed $2.5 million to the plan; the remaining $8.2 million was earnings on the investment.
McKinnell will also receive a lump-sum severance of $11.9 million, which is two times his base salary and bonus. The company will pay him a 2006 bonus, pro rata, of $2.1 million, and $5.8 million in accelerated vesting of his restricted stock and restricted stock units. Unused vacation, benefits and unpaid bonus accounted for an additional $3 million.
McKinnell was replaced as chief executive by Jeffrey Kindler in July amid shareholder discontent over the pension and the company's five-year stock price. Between 2000 and 2005, Pfizer's stock declined by 49%, yet the company paid its chief executive an average annual salary of $25 million, according to data from Institutional Shareholder Services, a firm that advises shareholders on proxy votes.
The company announced Monday that Kindler had also succeeded McKinnell as chairman. McKinnell is to depart the board of directors in February.
At the company's annual shareholder meeting in April, investors flew a plane with a banner reading "Give it back Hank." But despite a campaign backed by high-profile investors like John Bogle to oust the directors responsible for McKinnell's pay package, no board member received less than 78% of the vote for retention.
The pension value is an estimated lump-sum amount for McKinnell's 35 years with the company, the filing said. Annually, the pension is worth about $6.6 million.
McKinnell will also continue to be eligible for performance-based stock compensation. If Pfizer meets its targets, he will be due about $18.3 million worth of stock at recent Pfizer stock prices, the filing said. Otherwise, he walks away with more than $180 million.
McKinnell's stock options will also fully vest, the filing said. The company didn't estimate the value of that benefit.
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