Pfizer to Shareholders: 'We're Listening'

In the wake of new rules for executive compensation and other corporate governance practices, drug giant Pfizer says it wants to do more than provide additional disclosures—it wants to hear firsthand what some shareholders have to say.

Pfizer recently announced that it will invite its largest institutional investors to meet with members of the board this fall to discuss its corporate governance policies and practices, including those related to executive compensation. “We have done this informally for a long time,” says Margaret “Peggy” Foran, senior vice president for corporate governance at Pfizer. “We are just formalizing the practice.”

Face-to-face meetings of this kind are hardly routine. Pfizer claims to be among the first companies to initiate a regular meeting on governance between its board and institutional investors. “I can say that this is the first time I have heard of someone doing this,” says Lou Thompson, a managing director of board advisory firm Kalorama Partners. “It’s smart to open the door and let [investors] in to have their say,” says Thompson.    

Not all are happy, however. The plan has raised the hackles of some corporate governance experts who say the practice could turn too much decision-making power over to shareholder activists. Martin Lipton, a corporate governance guru and  founding partner of law firm Wachtell, Lipton, Rosen & Katz, calls it “another example of corporate governance run amok.”

The criticism hasn’t swayed Pfizer. “I never thought of listening as a dangerous sport,” says Foran. “This is not about strategy, and it’s not about a dog and pony show. They just want to gather as much information as possible to make the best decisions.” Pfizer says it will invite investors who own a total of 35 percent of Pfizer’s shares to the meetings.