Could this be contributing to the cost of pharmaceuticals?

Pfizer's McKinnell to Get $180M Package
By ELLEN SIMON
AP Business Writer

NEW YORK - Pfizer Inc.'s former chief executive, Henry A. McKinnell, who was
forced into an early retirement in part because of investor anger about his
rich retirement benefits, will get every penny of it and more, a new
regulatory filing shows.
McKinnell's package, which the company disclosed in a filing with the
Securities and Exchange Commission Thursday, totals more than $180 million.
It includes an estimated $82.3 million in pension benefits, $77.9 million in
deferred compensation, and cash and stock totaling more than $20.7 million.

The total value could grow to almost $200 million if McKinnell gets a $18.3
million stock award, but that is contingent on the future performance of the
stock of the world's largest drugmaker.

The company said McKinnell's departure "contractually obligated" it under
his employment agreement to provide McKinnell with certain severance
payments and benefits.

The deferred pension sum includes $67 million of his own money from prior
compensation he chose to set aside, the company said in the filing.

Beyond that, Pfizer will pay a lump sum severance of $11.9 million and will
fully vest stock grants worth $5.8 million, according to the filing. He also
will receive $2.2 million for 2005 bonus payments, $305,644 for unused
vacation time and $576,573 for benefits he would have received had he stayed
at the drugmaker.

The package also provides him with an annual pension of $6.6 million until
he dies. Pfizer estimated the pension's lump-sum value to be $82.3 million.

McKinnell vacated the CEO spot in July, 19 months before he was scheduled to
step down, under pressure from investors angered about his retirement
package and a drop of as much as 40 percent in the company's stock price
during his five years in charge.

For some investors, already angry over the stock's slide, McKinnell's
retirement package was a flash point. At Pfizer's April annual meeting in
Lincoln, Neb., a plane flew overhead trailing a banner that said, "Give it
back, Hank!" Two proxy advisory companies had called for removal of board
members and the AFL-CIO led a protest against the retirement package. The
board members were re-elected, however.

McKinnell earned $5.97 million in salary and bonus in 2005. When the
company's proxy was filed with the Securities and Exchange Commission in
March, his total compensation for the year was valued at $15.88 million,
including salary, bonus, stock options, stock grants and benefits. The value
of options and stock varies with the share price.

McKinnell's perquisites in 2005 included $8,500 in financial counseling,
$65,120 for use of a car and driver and $43,855 for personal use of company
aircraft, according to the proxy.

New Chief Executive Jeffrey B. Kindler also became chairman Tuesday,
replacing McKinnell, who was not slated to leave until February.

Pfizer declined to make McKinnell available Thursday, and a spokesman
emphasized the differences between McKinnell's pay package and Kindler's.

Kindler has no contract, has a much lower annual salary than McKinnell and
has more pay tied to the stock's performance, according to spokesman Paul
Fitzhenry.

Those differences may not be enough to quench shareholder's anger.

"It's a very big package and I'm sure it's going to raise investor concerns,
however, it's contractual," said Charles Elson, chair of the Weinberg Center
for Corporate Governance at the University of Delaware. "The question is not
that they've paid it, but why, initially, such a contract was entered into."

The company, which has pledged to cut $4 billion in costs by 2008, is
expected to undergo a radical shake up. 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.

Pfizer shares fell 14 cents to $26.07 Thursday on the New York Stock
Exchange.