EXHIBIT 99.8
PORTIONS OF REGISTRANT'S PROXY STATEMENT ON SCHEDULE 14A
FILED ON MARCH 14, 2002
Compensation of Non-Employee Directors
2001 Cash Retainer and Meeting Fees
Fees and Benefit Plans for Non-Employee Directors
Annual Cash Retainer Fees. Non-employee Directors receive an annual cash
retainer fee of $26,000 per year. Non-employee Directors who serve on one or
more Board committees (other than the Executive Committee) receive an additional
annual fee of $4,000. In addition, the Chair of a Board committee receives an
additional $2,000 per year, per committee.
Meeting Fees. Non-employee Directors also receive a fee of $1,500 for
attending each Board meeting, committee meeting, the Annual Meeting of
Shareholders, each day of a visit to a plant or office of ours or our
subsidiaries, and for attending any other business meeting to which the Director
is invited as a representative of the Company.
Unit Awards and Deferred Compensation. Under the Pfizer Inc. Nonfunded
Deferred Compensation and Unit Award Plan for Non-Employee Directors (the Unit
Award Plan), a non-employee Director is granted an initial award of 3,600 units
when he or she becomes a Director. Afterwards, each non-employee Director is
granted an annual award of 3,600 units (Annual Unit Award) on the day of our
Annual Meeting, provided the Director continues to serve as a Director following
the Meeting. The awards under the Unit Award Plan are made in addition to the
Directors' annual cash retainers and meeting attendance fees. Such units are not
payable until the recipient ceases to be a Director.
On the day of the 2001 Annual Meeting of Shareholders, all of our
non-employee Directors who continued as Directors were awarded 3,600 units under
the Unit Award Plan.
Non-employee Directors may defer all or a part of their annual cash
retainers and meeting fees under the Unit Award Plan until they cease to be
Directors. At a Director's election, the fees held in the Director's account may
be credited either with interest at the rate of return of the Intermediate
Treasury Index Fund of the Pfizer Savings Plan, or with units. The units are
calculated by dividing the amount of the fee by the closing price of our common
stock on the last business day before the date that the fee would be paid. The
number of units in a Director's account is increased by the value of any
distributions on the common stock. When an individual ceases to be a Director,
the amount held in the Director's account is paid in cash. The amount paid is
determined by multiplying the number of units in the account by the closing
price of the common stock on the last business day before the payment date.
1
Retainer Unit Awards. Under the Pfizer Inc. Annual Retainer Unit Award
Plan, each year, on the day of the Annual Meeting, every non-employee Director
who continues to serve as a Director following the Meeting receives the
equivalent of the value of his or her annual retainer fee in units. These awards
are in addition to the Annual Unit Awards, the Directors' annual cash retainers
and meeting attendance fees. The number of units awarded to the non-employee
Director is based upon the five-day average of the closing trading price of our
common stock on the New York Stock Exchange for the first five trading days
after April 1 of each year (rounded up to the nearest unit). On the day of the
2001 Annual Meeting, all of our non-employee Directors who continued as
Directors were awarded 652 units under this Plan.
Trusts. In certain circumstances, we fund trusts established to secure our
obligations to make payments to our Directors under the above benefit plans,
programs or agreements in advance of the date that payment is due.
Related Party Transactions
From time to time in 2001, we asked Dr. Brown to provide consulting
services in connection with our business. He received a total of $10,000 for
those services. We anticipate that Dr. Brown will continue to provide similar
services to us in the future as he and we may agree upon from time to time.
We paid Mr. Steere $50,000 in 2001 under the terms of our consulting
agreement with him. This agreement is described in this Proxy Statement under
the heading "Employment, Consulting and Severance Agreements."
We imputed income in the amount of $965 to Dr. Brown for personal use of
Company transportation.
We imputed income in the following amounts in connection with our payment
of premiums for continued coverage under Warner-Lambert's life and AD&D
insurance policies for certain of the former Warner-Lambert Directors who joined
our Board after our merger with Warner-Lambert: $1,572 to Mr. Howell, $840 to
Mr. Lorch and $564 to Mr. Mandl.
We have business arrangements with organizations with which certain of our
Directors are affiliated. However, none of these arrangements is material to
either us or any of those organizations.
Indemnification
We indemnify our Directors and officers to the fullest extent permitted by
law so that they will be free from undue concern about personal liability in
connection with their service to the Company. This is required under our
By-laws, and we have also signed agreements with each of those individuals
contractually obligating us to provide this indemnification to them.
2
Securities Ownership of Officers and Directors
The table below shows the number of shares of our common stock
beneficially owned as of February 28, 2002 by each of our Directors and each
Named Executive Officer listed in the Summary Compensation Table, as well as
the number of shares beneficially owned by all of our Directors and executive
officers as a group. Together these individuals beneficially own less than one
percent (1%) of our common stock. The table also includes information about
stock options, stock units, restricted stock and deferred
performance-contingent share awards credited to the accounts of each Director
and executive officer under various compensation and benefit plans.
There are currently no known beneficial owners of five percent (5%) or
more of our common stock.
Number of Shares or Units
------------------------------------------------------
Beneficial Common Stock-Equivalent Options Exercisable
Owners Stock Units Within 60 Days
- ---------- ----------- ---------------- --------------------
Michael S. Brown 1,200 26,950 (2) --
M. Anthony Burns 20,400 33,222 (2) --
Robert N. Burt 2,200 24,204 (6) --
C.L. Clemente 858,670 (1)(4)(5) 110,557 (3) 798,710
W. Don Cornwell 600 (4) 31,562 (2) --
William H. Gray III 876 48,092 (6) --
Constance J. Horner 10,914 33,222 (2) --
William R. Howell 6,350 38,285 (6) --
Stanley O. Ikenberry 39,952 (4) 125,873 (2) --
Harry P. Kamen 2,520 39,460 (2) --
Karen L. Katen 583,650 (1) 20,152 (3) 704,250
George A. Lorch 1,650 20,032 (6) --
Alex J. Mandl 2,000 42,871 (6) --
Henry A. McKinnell 1,060,088 (1)(5) 47,537 (3) 1,621,158
Dana G. Mead 9,000 28,291 (2) --
John F. Niblack 927,261 (1)(4) 32,472 (3) 970,950
Franklin D. Raines 1,500 21,563 (2) --
David L. Shedlarz 502,526 (1)(4) 16,081 (3) 331,612
Ruth J. Simmons 879 29,781 (2) --
William C. Steere, Jr 2,176,916 (1)(4)(7) 179,369 (2)(3) 4,566,950
Jean-Paul Valles 755,915 (4) 77,966 (2) --
All Directors and
Executive Officers
as a group (24 persons) 7,384,799 1,118,644 (8) 9,694,604
- -----------------------
(1) As of February 28, 2002, this number includes shares credited under the
Pfizer Savings Plan or deferred Performance--Contingent Share Awards granted
under the 2001 Performance-Contingent Share Award Plan or its predecessor
Program. These plans are described in this Proxy Statement under the heading
"Employee Benefit and Long-Term Compensation Plans."
(2) As of February 28, 2002, these units are held under the Pfizer Inc.
Nonfunded Deferred Compensation and Unit Award Plan for Non-Employee Directors
and the Pfizer Inc. Annual Retainer Unit Award Plan. The value of a Directors
unit account is measured by the price of our common stock. The Plans are
described in this Proxy Statement under the heading "Compensation of
Non-Employee Directors--Fees and Benefit Plans for Non-Employee Directors."
(3) As of February, 28, 2002, these units are held under the Supplemental
Savings Plan. The value of these units is measured by the price of our common
stock. The Supplemental Savings Plan is described in this Proxy Statement under
the heading "Employee Compensation and Long-Term Benefit Plans--Pfizer Savings
Plan."
(4) These shares do not include the following number of shares held in the names
of family members, as to which beneficial ownership is disclaimed: Mr. Clemente,
26,136 shares; Mr. Cornwell, 300 shares; Dr. Ikenberry, 8,300 shares; Dr.
Niblack, 17,508 shares; Mr. Shedlarz, 2,097 shares; Mr. Steere, 4,936 shares;
and Dr. Valles, 142,320 shares.
(5) As of February 28, 2002, this includes the following number of shares held
in a Grantor Retained Annuity Trust: Dr. McKinnell, 47,380 shares; Mr. Clemente,
53,814 shares.
(6) As of February 28, 2002, this number includes units held under the Pfizer
Inc. Nonfunded Deferred Compensation and Unit Award Plan for Non-Employee
Directors and the Pfizer Inc. Annual Retainer Unit Award Plan. The value of a
Directors unit account is measured by the price of our common stock. The Plans
are described in this Proxy Statement under the heading "Compensation of
Non-Employee Directors--Fees and Benefit Plans for Non-Employee Directors."
This number also includes the following number of units resulting from the
conversion into Pfizer units of previously deferred Warner-Lambert director
compensation under the Warner-Lambert Company 1996 Stock Plan. That Plan is
described in this Proxy Statement under the heading "Employee Benefit and
Long-Term Compensation Plans--Warner-Lambert Company 1996 Stock Plan: Mr. Burt,
16,243 units; Mr. Gray, 40,131 units; Mr. Howell, 28,265 units; Mr. Lorch,
10,562 units; and Mr. Mandl, 32,849 units.
(7) As of February 28, 2002, this includes 131,402 shares held in a Flint Trust
for Mr. Steere.
(8) As of February 28, 2002, this number includes, for one of our executive
officers, units held under the Pfizer Inc. Deferred Compensation Plan relating
to deferred bonus payments made under the Executive Annual Incentive Plan.
These Plans are described in this Proxy Statement under the heading "Employee
Benefit and Long-Term Compensation Plans-Executive Annual Incentive Plan."
ITEM 1--ELECTION OF DIRECTORS
The Board of Directors is divided into three classes, with each class
consisting of six Directors whose terms expire at successive Annual Meetings.
Six Directors will be elected at the Annual Meeting to serve for a three-year
term expiring at our Annual Meeting in 2005.
The persons named in the enclosed proxy intend to vote the proxy for the
election of each of the six nominees, unless you indicate on the proxy card that
your vote should be withheld from any or all of the nominees.
The Board of Directors has proposed the following nominees for election as
Directors with terms expiring in 2005 at the Annual Meeting:
Michael S. Brown, Constance J. Horner, George A. Lorch, Alex J. Mandl,
Franklin D. Raines and Jean-Paul Valles.
Each nominee elected as a Director will continue in office until his or
her successor has been elected and qualified, or until his or her earlier death,
resignation or retirement.
The Board of Directors unanimously recommends a vote FOR the election of
these nominees as Directors.
We expect each nominee for election as a Director to be able to serve if
elected. If any nominee is not able to serve, proxies will be voted in favor of
the remainder of those nominated and may be voted for substitute nominees,
unless the Board chooses to reduce the number of Directors serving on the Board.
The principal occupation and certain other information about the nominees
and other Directors whose terms of office continue after the Annual Meeting are
set forth on the following pages.
3
Name and Age as of the Position, Principal Occupation,
April 25, 2002 Annual Meeting Business Experience and Directorships
NOMINEES FOR DIRECTORS WHOSE TERMS EXPIRE IN 2005
Michael S. Brown 61
Distinguished Chair in Biomedical Sciences from 1989 and Regental Professor from
1985 at the University of Texas Southwestern Medical Center at Dallas.
Co-recipient of the Nobel Prize in Physiology or Medicine in 1985 and the
National Medal of Science in 1988. Member of the National Academy of Sciences.
Director of Regeneron Pharmaceuticals, Inc. Our Director since 1996. Member of
our Corporate Governance Committee.
Constance J. Horner 60
Guest Scholar since 1993 at The Brookings Institution, an organization devoted
to nonpartisan research, education and publication in economics, government and
foreign policy and the social sciences. Commissioner of the U.S. Commission on
Civil Rights from 1993 to 1998. Served at the White House as Assistant to
President George H. Bush and as Director of Presidential Personnel from August
1991 to January 1993. Deputy Secretary, U.S. Department of Health and Human
Services from 1989 to 1991. Director of the U. S. Office of Personnel Management
from 1985 to 1989. Director of Foster Wheeler Ltd., Ingersoll-Rand Company
Limited and Prudential Financial, Inc. Fellow, National Academy of Public
Administration; Trustee, Annie E. Casey Foundation; Member of the Board of
Trustees of the Prudential Foundation. Our Director since 1993. Chair of our
Corporate Governance Committee and member of our Executive Committee.
George A. Lorch 60
Chairman Emeritus of Armstrong Holdings, Inc., a company that manufactures
flooring and ceiling materials, since August 2000. Chairman and Chief Executive
Officer of Armstrong Holdings, Inc. from May 2000 to August 2000, and its
Chairman, President and Chief Executive Officer from September 1993 to May 1994.
President and Chief Executive Officer of Armstrong World Industries, Inc., from
September 1993 to May 2000, and a Director from 1988 to December 2000. On
December 6, 2000, Armstrong World Industries Inc. filed for voluntary
reorganization under Chapter 11 of the U.S. Bankruptcy Code. Director of
Household International, Inc. and The Williams Companies, Inc. Our Director
since June 2000. Member of our Executive Compensation Committee.
4
Name and Age as of the Position, Principal Occupation,
April 25, 2002 Annual Meeting Business Experience and Directorships
NOMINEES FOR DIRECTORS WHOSE TERMS EXPIRE IN 2005
(continued)
Alex J. Mandl 58
Principal of ASM Investments, a company focusing on early stage funding in the
technology sector, since April 2001. Chairman and Chief Executive Officer of
Teligent Inc. from 1996 to March 2001. On May 21, 2001, Teligent Inc. filed for
voluntary reorganization under Chapter 11 of the U.S. Bankruptcy Code. AT&T's
President and Chief Operating Officer from 1994 to 1996, and its Executive Vice
President and Chief Financial Officer from 1991 to 1993. Chairman of the Board
and Chief Executive Officer of Sea-Land Services Inc. from 1988 to 1991.
Director of Dell Computer Corporation. Our Director since June 2000. Member of
our Executive Compensation Committee.
Franklin D. Raines 53
Chairman and Chief Executive Officer of Fannie Mae, a company that provides a
secondary market for residential mortgages through portfolio purchases, issuance
of mortgage-backed securities, and other services, since January 1999. Director
of the Office of Management and Budget for the Clinton administration from 1996
to 1998. Director of AOL Time Warner Inc. and PepsiCo, Inc. Chairman of the
Corporate Governance Task Force of the Business Roundtable. A former Director of
Pfizer from 1993 to 1996, Mr. Raines was re-elected to our Board in October
1998. Member of our Executive Compensation Committee.
Jean-Paul Valles 65
Chairman Emeritus of Minerals Technologies Inc. (MTI), a resource and
technology-based company that develops, produces and markets specialty mineral,
mineral-based and synthetic mineral products, since October 2001. Chairman of
MTI from August 1992 to October 2001, and Chief Executive Officer of MTI from
August 1992 to December 2000. Formerly our Vice Chairman from March to October
1992. Director of the Board of Overseers, Leonard N. Stern School of Business,
New York University. Our Director since 1980. Member of our Audit Committee.
5
Name and Age as of the Position, Principal Occupation,
April 25, 2002 Annual Meeting Business Experience and Directorships
DIRECTORS WHOSE TERMS EXPIRE IN 2004
Robert N. Burt 64
Retired Chairman and Chief Executive Officer of FMC Corporation, a company that
manufactures chemicals and machinery, and FMC Technologies, Inc., a subsidiary
of FMC Corporation. Mr. Burt was Chairman of the Board of FMC Corporation from
1991 to December 2001, its Chief Executive Officer from 1991 to August 2001 and
a member of its Board of Directors since 1989. He was Chairman of the Board of
FMC Technologies, Inc., from June 2001 to December 2001 and its Chief Executive
Officer from June 2001 to August 2001. Director of Phelps Dodge Corporation.
Also a Director of the Rehabilitation Institute of Chicago and Chicago Public
Education Fund. Our Director since June 2000. Chair of our Audit Committee.
W. Don Cornwell 54
Chairman of the Board and Chief Executive Officer since 1988 of Granite
Broadcasting Corporation, a group broadcasting company. Director of Avon
Products, Inc. and CVS Corporation. Also, a Director of Hershey Trust Company,
Milton Hershey School, Wallace-Reader's Digest Funds and the Telecommunications
Development Fund. Trustee of Big Brothers/Sisters of New York and Mt. Sinai
University Medical Center. Our Director since February 1997. Member of our Audit
Committee.
Henry A. McKinnell 59
Chairman of our Board since May 2001. Our Chief Executive Officer since January
2001. Our President from May 1999 to May 2001, and President, Pfizer
Pharmaceuticals Group, the principal operating division of the Company, from
January 1997 to April 2001. Chief Operating Officer from May 1999 to December
2000 and Executive Vice President from 1992 to 1999. Director of Moody's
Corporation and John Wiley & Sons, Inc. Dr. McKinnell is currently Chairman of
the Pharmaceutical Research and Manufacturers of America (PhRMA). Member of the
Board of Directors of the Business Roundtable (BRT), Vice Chairman of the BRT's
Corporate Governance Task Force and Chairman of its SEC subcommittee. Director
of the Trilateral Commission and the Business Council, and Chairman of the
Stanford University Graduate School of Business Advisory Council. Chairman
Emeritus of the Business-Higher Education Forum, a Fellow of the New York
Academy of Medicine, and a member of the Boards of Trustees of the New York City
Public Library, the New York City Police Foundation and the Economic Club of New
York. Our Director since June 1997. Chair of our Executive Committee and a
member of the Pfizer Leadership Team.
6
Name and Age as of the Position, Principal Occupation,
April 25, 2002 Annual Meeting Business Experience and Directorships
DIRECTORS WHOSE TERMS EXPIRE IN 2004
(continued)
Dana G. Mead 66
Retired Chairman and Chief Executive Officer of Tenneco, Inc. Chairman and Chief
Executive Officer of Tenneco, Inc. from 1994 to 1999. Chairman of two of the
successor companies of the Tenneco conglomerate, Tenneco Automotive Inc. and
Pactiv Corporation, global manufacturing companies with operations in automotive
parts and packaging, from November 1999 to March 2000. Director of Zurich
Financial Services and TaskPoint.com. Director of the Center for Creative
Leadership and the Logistics Management Institute. Member of the Massachusetts
Institute of Technology Corporation and a Lifetime Trustee of the Association of
Graduates, U.S. Military Academy, West Point. Former Chairman of the Business
Roundtable and of the National Association of Manufacturers. Our Director since
January 1998. Member of our Executive Compensation Committee.
Ruth J. Simmons 56
President since July 1, 2001, of Brown University. President, from 1995 to 2001,
of Smith College. Vice Provost of Princeton University from 1992 to 1995.
Director of The Goldman Sachs Group, Inc. and Texas Instruments Incorporated.
Trustee of the Carnegie Corporation of New York. Member of the National Academy
of Arts and Sciences, the American Philosophical Society, and the Council on
Foreign Relations. Our Director since January 1997. Member of our Audit
Committee.
William C. Steere, Jr 65
Chairman Emeritus of Pfizer Inc. since July 2001. Chairman of our Board from
1992 to April 2001 and our Chief Executive Officer from February 1991 to
December 2000. Director of Dow Jones & Company, Inc., MetLife, Inc. and Minerals
Technologies Inc. Director of the New York University Medical Center and the New
York Botanical Garden. Member of the Board of Overseers of Memorial
Sloan-Kettering Cancer Center. Our Director since 1987. Member of our Corporate
Governance Committee.
7
Name and Age as of the Position, Principal Occupation,
April 25, 2002 Annual Meeting Business Experience and Directorships
DIRECTORS WHOSE TERMS EXPIRE IN 2003
M. Anthony Burns 59
Chairman of the Board since May 1985, Chief Executive Officer from January 1983
to November 2000, and President from December 1979 to June 1999 of Ryder System,
Inc., a provider of transportation and logistics services. Director of The Black
& Decker Corporation, J. C. Penney Company, Inc. and J. P. Morgan Chase & Co.
Trustee of the University of Miami. Member of the Business Council. Our Director
since 1988. Chair of our Executive Compensation Committee and a member of our
Executive Committee.
William H. Gray III 60
President and Chief Executive Officer of The College Fund/UNCF, an educational
assistance organization, since 1991. Mr. Gray served as a Congressman from the
Second District of Pennsylvania from 1979 to 1991, and at various times during
his tenure, served as Budget Committee Chair and House Majority Whip. Director
of Dell Computer Corporation, Electronic Data Systems Corporation, J. P. Morgan
Chase & Co., MBIA Inc., Prudential Financial, Inc., Rockwell International
Corporation, Viacom Inc. and Visteon Corporation. Our Director since June 2000.
Member of our Corporate Governance Committee.
William R. Howell 66
Chairman Emeritus of J. C. Penney Company, Inc., a provider of consumer
merchandise and services through department stores, catalog departments and the
Internet, since 1997. Chairman of the Board and Chief Executive Officer of J. C.
Penney Company, Inc. from 1983 to 1997. Director of American Electric Power
Company, Bankers Trust Corporation, Exxon Mobil Corporation, Halliburton
Company, The Williams Companies, Inc. and Viseon, Inc. Chairman of the Board of
Trustees of Southern Methodist University from 1996 to 2000. Our Director since
June 2000. Member of our Audit Committee.
Stanley O. Ikenberry 67
President Emeritus, Regent Professor, Department of Educational Organization and
Leadership, University of Illinois, since September 2001. President, November
1996 to June 2001, of the American Council on Education, an independent
nonprofit association dedicated to ensuring high-quality education at colleges
and universities throughout the United States. President from 1979 through July
1995 of the University of Illinois. Director of Utilicorp United Inc. President,
Board of Overseers of Teachers' Insurance & Annuity Association - College
Retirement Equities Fund (TIAA-CREF). Director of the National Museum of Natural
History, Smithsonian Institution. Our Director since 1982. Member of our
Corporate Governance Committee and of our Executive Committee.
8
Name and Age as of the Position, Principal Occupation,
April 25, 2002 Annual Meeting Business Experience and Directorships
DIRECTORS WHOSE TERMS EXPIRE IN 2003
(continued)
Harry P. Kamen 68
Retired Chairman of the Board and Chief Executive Officer of Metropolitan Life
Insurance Company (now known as MetLife, Inc.), a multi-service insurance
provider. Chairman of the Board and Chief Executive Officer of MetLife, Inc.
from 1993 through June 1998, and President from 1995 through November 1994.
Director of BDirect Capital, Bethlehem Steel Corporation, and MetLife, Inc.
Member of the Board of Governors of the National Association of Securities
Dealers, Inc. Our Director since 1996. Member of our Corporate Governance
Committee.
John F. Niblack 63
Our Vice Chairman since May 1999 and President of Pfizer Global Research and
Development since June 2000. Our Executive Vice President from 1993 to May 1999.
Responsible for our Global Research and Development Division and pharmaceutical
Licensing and Development. Our Director since June 1997. Member of the Pfizer
Leadership Team.
NAMED EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
C.L. Clemente 64
Our Executive Vice President - Corporate Affairs since May 1999. Secretary and
Corporate Counsel since 1992. Senior Vice President from 1992 to May 1999. He is
a Director of IMS Health Incorporated, and Chairman of the United Way of New
York City. Mr. Clemente, a member of the Pfizer Leadership Team, joined us in
1964.
Karen L. Katen 53
Our Executive Vice President and President of Pfizer Pharmaceuticals Group, the
Company's worldwide pharmaceutical organization, since April 2001. President of
our U.S. Pharmaceuticals Group since 1995; Executive Vice President of the
Global Pfizer Pharmaceuticals Group since 1997. She is a Director of General
Motors Corporation and Harris Corporation and also serves on the International
Council of J. P. Morgan Chase & Co. Ms. Katen, a member of the Pfizer Leadership
Team, joined us in 1974.
9
Name and Age as of the Position, Principal Occupation,
April 25, 2002 Annual Meeting Business Experience and Directorships
NAMED EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
(continued)
David L. Shedlarz 53
Our Executive Vice President since 1999 and our Chief Financial Officer since
1995. Mr. Shedlarz was appointed a Senior Vice President in January 1997 with
additional worldwide responsibility for our former Medical Technology Group. He
is a Director of Pitney Bowes Inc., a member of the J. P. Morgan Chase & Co.
National Advisory Board, Co-Chair of the Principal Financial Officers Task Force
at the Business Roundtable, and Director of the Board of Overseers, Leonard N.
Stern School of Business, New York University. Mr. Shedlarz, a member of the
Pfizer Leadership Team, joined us in 1976.
10
EXECUTIVE COMPENSATION
Summary Compensation Table
* Dr. McKinnell and Ms. Katen received promotions to the positions indicated
in the Table above during 2001.
** Mr. Steere served as Chairman of the Company until April 30, 2001.
(1) The amounts shown in this column constitute the Annual Incentive Awards
made to each officer based on the Board's evaluation of each officer's
performance. These awards are discussed in further detail in the Executive
Compensation Committee Report.
(2) The amounts shown in this column represent tax payments made by us on
behalf of each officer relating to his or her use of Company
transportation and personal financial counseling.
(3) The amounts shown in this column represent the dollar value of the
Company's common stock on the date of grant of the restricted stock. All
grants of restricted stock are made under our 2001 Stock and Incentive
Plan, or were made under its predecessor Plan.
11
On February 21, 2001, Dr. McKinnell received a grant of 31,440 shares of common
stock, Dr. Niblack received a grant of 24,480 shares of common stock, Ms. Katen
received a grant of 15,360 shares of common stock, Mr. Shedlarz received a grant
of 17,040 shares of common stock; Mr. Clemente received a grant of 14,400 shares
of common stock, and Mr. Steere received a grant of 60,000 shares of common
stock. All of these restricted stock grants vested on February 21, 2002, except
for Mr. Steere's grant, which vested upon his retirement from the Company on
July 1, 2001.
On August 26, 1999, Dr. McKinnell received a grant of 50,000 shares of common
stock and Dr. Niblack received a grant of 45,000 shares of common stock. Dr.
McKinnell's restricted stock grant vests on August 24, 2004 and Dr. Niblack's
restricted stock grant vests on August 26, 2002.
On February 25, 1999, Ms. Katen received a grant of 1,000 shares of common stock
(subsequently adjusted to 3,000 shares to reflect our June 1999 3-for-1 stock
split), and, Mr. Shedlarz received a grant of 500 shares of common stock
(subsequently adjusted to 1,500 shares to reflect our June 1999 3-for-1 stock
split). These shares vested on February 25, 2002.
Dividends are paid during the restricted period on all restricted shares.
As of December 31, 2001, the aggregate number of shares of restricted stock held
by the officers, and the dollar value of such shares was: Dr. McKinnell, 81,440
shares ($3,245,384); Dr. Niblack, 69,480 shares, ($2,768,778); Ms. Katen, 18,360
shares ($731,646); Mr. Shedlarz, 18,540 shares, ($738,819); Mr. Clemente, 14,400
shares, ($573,840); and Mr. Steere, 0 shares ($0). The dollar values are based
on the closing price of our common stock on December 31, 2001.
(4) Adjusted for our June 1999 3-for-1 stock split.
(5) The 2001 payout represents the dollar market value of shares of our common
stock on February 27, 2002 (the payment date) earned under the Company's
previous Performance-Contingent Share Award Program using the closing
sales price of our common stock ($41.25) on the New York Stock Exchange on
that date. The number of Performance-Contingent Shares awarded to each
Named Executive Officer was as follows: Dr. McKinnell, 192,000 shares; Dr.
Niblack, 142,800 shares; Ms. Katen, 99,600 shares; Mr. Shedlarz, 93,600
shares; Mr. Clemente, 72,000 shares; Mr. Steere, 0 shares and all
Executive Officers and Directors as a group, 698,400 shares.
(6) The amounts shown in this column represent Company matching funds under
the Pfizer Savings Plan (a tax-qualified retirement savings plan) and
related Supplemental Plan, which are discussed under the heading "Employee
Benefit and Long-Term Compensation Plans."
For Mr. Steere, the amount also includes a $323,200 payment for vacation
accrued but not used. Under the Company's policy, such payment is made \
after retirement.
12
Total Options Exercised in 2001 and Year-End Values
This table gives information for options exercised by each of the Named
Executive Officers in 2001 and the value (stock price less exercise price) of
the remaining options held by those executive officers at year-end, using the
average ($40.145) of the high and low trading price of our common stock on
December 31, 2001.
Option Grants in 2001
This table shows all options to purchase our common stock granted to each
of our Named Executive Officers in 2001 and the potential value of such grants
at stock price appreciation rates of 0%, 5% and 10%, compounded annually over
the maximum ten-year term of the options. Also shown is the potential gain of
all outstanding shares of common stock held by our shareholders as of December
31, 2001, using the same base price and appreciation rates and compounded over
the same ten-year period. The 5% and 10% rates of appreciation are required to
be disclosed by SEC rules and are not intended to forecast possible future
appreciation, if any, in our stock price.
Potential Realizable Value at Assumed
(1) Option grants for Named Executive Officers who received grants in 2001
consisted of Grants that are exercisable one-fifth on each anniversary
date beginning on February 22, 2002.
(2) Option grants for Named Executive Officers who received grants in 2001
consisted of Grants that are exercisable three years from anniversary date
beginning on February 22, 2004.
(3) The exercise price for all stock option grants is the fair market value of
our common stock on the date of the grant.
13
Long-Term Incentive Plan Awards in 2001
This table gives information concerning the participation of the Named
Executive Officers in a long-term compensation plan called the 2001
Performance-Contingent Share Award Plan. Under this plan, they were awarded the
right to earn shares of our common stock (Performance-Contingent Shares). Actual
payouts of these Performance-Contingent Shares, if any, will be determined by a
non-discretionary formula which measures our performance over a five-year period
using total shareholder return (including reinvestment of dividends) and growth
in diluted earnings per share, measured over the performance period relative to
the industry Peer Group. If our minimum performance in both measures is below
the threshold level relative to the Peer Group, then no Performance Contingent
Shares will be earned. To the extent the Company's performance on either or both
measures exceeds the threshold performance level relative to the Peer Group, a
varying amount of shares of common stock up to the maximum will be earned. These
awards are also discussed in the Executive Compensation Committee Report.
(1) The actual number of Performance-Contingent Shares that will be paid out
at the end of the applicable period, if any, cannot be determined because
the shares earned by the Named Executive Officers will be based upon our
future performance compared to the future performance of the Peer Group.
(2) If our minimum performance in both measures is below the threshold level
relative to the Peer Group, then no Performance Contingent Shares will be
earned. To the extent the Company's performance on either or both measures
exceeds the threshold performance level relative to the Peer Group, a
varying amount of shares of common stock up to the maximum will be earned.
14
Employee Benefit and Long-Term Compensation Plans
Retirement Annuity Plan
The Retirement Annuity Plan (the Retirement Plan) is a funded,
tax-qualified, noncontributory defined-benefit pension plan that covers certain
employees, including the Named Executive Officers. Benefits under the Retirement
Plan are based upon the employee's years of service and the employee's highest
average earnings for a five calendar-year period with us and/or our "Associate
Companies," and are payable after retirement in the form of an annuity or a lump
sum. Earnings covered by the Retirement Plan are base pay, bonus, and restricted
stock awards granted under the Company's previous Stock and Incentive Plan, and
Performance-Contingent Share awards granted for performance periods beginning
prior to January 1, 2001. Any restricted stock awards granted after April 26,
2001, and any Performance-Contingent Share awards for periods beginning on
January 1, 2001 and later, are not counted as earnings covered by the Retirement
Plan. The amount of annual earnings that may be considered in calculating
benefits under the Retirement Plan is limited by law. For 2002, the annual
limitation is $200,000.
Benefits under our Retirement Plan are calculated as an annuity equal to
the greater of:
- 1.4 percent of the participant's highest final average earnings
multiplied by years of service; or
- 1.75 percent of such earnings less 1.5 percent of Primary Social
Security benefits multiplied by years of service.
Years of service under these formulas cannot exceed 35. Contributions to
the Retirement Plan are made entirely by us and are paid into a trust fund from
which the benefits of participants will be paid.
The Retirement Plan currently limits pensions paid under the Plan to an
annual maximum of $160,000, payable at age 65. We also have an unfunded
supplemental plan that provides out of our general assets an amount
substantially equal to the difference between the amount that would have been
payable under the Retirement Plan, in the absence of legislation limiting
pension benefits and earnings that may be considered in calculating pension
benefits, and the amount actually payable under the Retirement Plan. In certain
circumstances, we fund trusts established to secure obligations to make payments
under the supplemental plan.
Pension Plan Table
The following table shows, for the final compensation and years of service
indicated, the annual pension benefit payable commencing upon retirement at age
65 under the present benefit formula of the Retirement Plan and its related
supplemental plan. The estimated retirement benefits have been computed on the
assumptions that:
- payments will be made in the form of a 50 percent joint and survivor
annuity (and both the Retirement Plan member and spouse are age 65);
- during the period of employment the employee received annual
compensation increases of six percent; and
- the employee retired as of December 31, 2001.
As of July 1, 2001, the date of his retirement, from the Company, Mr. Steere had
35 years; and as of December 31, 2001, Dr. McKinnell had 31 years; Dr. Niblack
had 34 years; Ms. Katen had 27 years; Mr. Shedlarz had 25 years; and Mr.
Clemente had 35 years under the Retirement Plan and the related supplemental
plan.
Compensation covered by the Retirement Plan and its related supplemental plan
for the Named Executive Officers equals the amounts set forth in the 2001
"Salary," "Bonus" and "LTIP Payouts" columns of the Summary Compensation Table,
as well as restricted stock awards granted prior to April 26, 2001.
15
Employment, Consulting And Severance Agreements
Employment Agreement
In 2001, we entered into an employment agreement with Dr. McKinnell that
provides for his employment as Chief Executive Officer of the Company through
February 29, 2008. Dr. McKinnell's agreement provides that he will receive an
annual base salary of at least $1,350,000, and will be eligible to receive an
incentive bonus in accordance with the guidelines established by the Executive
Compensation Committee, as well as to participate in our executive benefit and
incentive plans (including stock-based plans).
Under the terms of the agreement, if Dr. McKinnell's employment is
terminated by reason of death, disability or retirement, he is entitled to
receive (a) a payment equal to his base salary through the date of termination
to the extent not already paid, (b) a prorated portion of his incentive bonus
based on his prior year's incentive bonus, (c) his actual earned incentive bonus
for any period not already paid, (d) amounts to which he is entitled under our
benefit plans, (e) vesting of outstanding unvested stock options and other
equity-based awards, and (f) continued coverage in our health benefit plans. If
Dr. McKinnell's employment is terminated by the Company without cause or by Dr.
McKinnell for good reason (as defined in the agreement), he is entitled to
receive (a) a payment equal to his base salary earned but unpaid through the
date of termination, a prorated portion of his incentive bonus based on the
prior year's incentive bonus, and any incentive bonus amount earned but not yet
paid, (b) a payment equal to his annual base salary plus the most recent year's
incentive bonus multiplied by the greater of (i) two or (ii) the number of years
remaining on the contract, (c) vesting of outstanding stock options and
equity-based awards, (d) benefits under all plans for a period of two years
following termination, as well as vesting of all awards under the plans, and (e)
continued coverage in the Company's health benefit plans.
If any payment or distribution by the Company to Dr. McKinnell is
determined to be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code, he is entitled to receive from the Company a payment on
an after-tax basis equal to the federal, state and local income and excise taxes
imposed, and any penalties and interest. The agreement also contains provisions
that restrict Dr. McKinnell's ability to engage in any business which is
competitive with the Company's business for a period of one year following his
retirement or termination for cause or without good reason or to solicit Company
employees for a period of two years following such retirement or termination.
Consulting Agreement
We entered into a consulting agreement with Mr. Steere in 2000 which
provides that, following his retirement, he will serve as Chairman Emeritus of
the Company and, when and as requested by the Chief Executive Officer, provide
consulting services and advice to the Company and participate in various
external activities and events for the benefit of the Company. The initial term
of the agreement is for 5 years, and will automatically extend for successive
5-year terms unless Mr. Steere or the Company terminates the agreement at the
end of its then current term. Mr. Steere will provide up to 30 days per year to
the Company, subject to his reasonable availability, for his consulting services
or his participation as a Company representative in external activities and
events. He will obtain the approval of the Board of Directors before providing
any consulting services, advice or service of any kind to any other company or
organization that competes with us. For his services and commitments, the
Company will pay Mr. Steere (i) an annual retainer of $50,000 (subject to his
ability to continue to provide the contemplated services), and (ii) a fee of
$5,000 for each day he renders services. We also will reimburse him for
reasonable travel and living expenses that he incurs in providing these services
for us. In addition, we will provide him continued lifetime access to Company
facilities and services comparable to those that were made available to him by
the Company prior to his retirement.
16
Severance Agreements
We have entered into severance agreements with our executive officers,
including each of the Named Executive Officers apart from Mr. Steere. The
agreements continue through September 30 of each year, and provide that they are
to be automatically extended in one-year increments unless we give prior notice
of termination.
These agreements are intended to provide for continuity of management in
the event of a change in control. The agreements provide that covered executive
officers could be entitled to certain severance benefits following a change in
control of the Company. If, following such a change in control, the executive
officer is terminated for any reason, other than for disability or for cause, or
if such executive officer terminates his or her employment for good reason (as
defined in the agreements), then the executive officer is entitled to a
severance payment that will be 2.99 times the greater of (i) the executive
officer's base amount, as defined in the agreements or (ii) the sum of the
executive officer's (a) base salary in effect at the time of termination and (b)
the higher of the (x) last full-year annual incentive payment or (y) target
annual incentive payment for the year in which termination occurs. The severance
payment generally would be made in the form of a lump sum.
In addition, in the event of such a termination following a change in
control, under the agreements each executive officer would receive a payout of
all outstanding Performance-Contingent Share Awards that had been granted prior
to the date of termination at the maximum amounts that could have been earned
pursuant to the awards, along with all shares earned but deferred in accordance
with the deferral feature of the Performance-Contingent Share Award Plan and its
predecessor Program. The executive officer also would receive a benefit payable
from our general funds calculated using the benefit calculation provisions of
our Retirement Annuity Plan and our unfunded Supplemental Retirement Plan with
the following additional features:
- the executive officer would receive credit for an additional three
years of service and compensation for purposes of calculating such
benefit;
- the benefit would commence at age 55 (or upon the date of
termination, if the executive officer is then over age 55) and for
this purpose, three years would be added to the executive officer's
age;
- such benefit would be further determined without any reduction on
account of its receipt prior to age 65; and
- such benefit would be offset by any amounts otherwise payable under
our Retirement Annuity Plan and unfunded Supplemental Retirement
Plan.
The executive officer would also become vested in all other benefits
available to our retirees. All restrictions on restricted stock awarded to such
executive officer would lapse and all unvested options granted to such executive
officer would vest and become exercisable for the remainder of the term of the
option.
If a change in control occurs, the agreements are effective for a period
of four years from the end of the then existing term. Under the severance
agreements, a change in control would include any of the following events:
- any "person," as defined in the Securities Exchange Act of 1934, as
amended, acquires 20 percent or more of our voting securities;
- a majority of our Directors are replaced during a two-year period;
or
- shareholders approve certain mergers, or a liquidation or sale of
our assets.
In the event that any payments made in connection with a change in control
would be subjected to the excise tax imposed by Section 4999 of the Code, we
will "gross up" the executive officer's compensation for all federal, state and
local income and excise taxes and any penalties and interest.
In certain circumstances, we fund trusts established to secure our
obligations to make payments under the severance agreements in advance of the
time payment is due.
17