Pfizer yanks Hank

Drug giant Pfizer reports that departing CEO Hank McKinnell will receive nearly $200 million compensation on his departure next February. Mr McKinnell is one of the increasingly rare breed of leader, a ‘lifer’, who has spent his business career working his way to the top of a major corporation. As the company faces major problems to retain its market leadership we explore the issues of valuing a corporate leader.

[The original post of December 21st 2006 was modified January 23rd 2007].
As a fellow lifer albeit in a different sector, I wish him well. Lifers have some empathy, even when incarcerated in different prisons, and bound with different kinds of handcuff.

Hank and I have served a total of several life sentences. In some ways mine in a more open prison to the end, although the longer I stayed, the greater reluctance I felt towards making a break for freedom.

The Handcuffs we deserve?

I estimate that Hank’s claim to compensation is around a thousand times greater than my own. It has become a question of our leaders: Do they deserve the rewards they get? Discussion suggests a range of views on this, ranging from never, to sometimes, to only for a few leaders who really made a difference. And that’s the rub. More often than not it’s difficult to arrive at a clear economic view.

For example, a leader’s contributions may be within a system which has only loose connections between real world impact, and financial rewards. For example, I don’t know how much the Pope influences people around the World, or how much is his remuneration.

What do you think?

From my academic resting place, I can argue (not particularly convincingly) that I have taught at least one person who went on to become a major political figure, and a clutch of business students who later became successful national and more rarely international leaders. I have served on boards with a few others from the ranks of the good and the great. Maybe, just maybe, my assorted writings or forays into business consultancy have influenced a company here and there.

What do you think? Should our thought leaders expect remuneration close to that of business leaders? Are our business acedemics in need of a leader to secure their rightful returns for their dedication to a lifetime of work? If you reply never or without a doubt, do you have a convincing argument – or are you just sharing your belief system about the leaders we deserve?

Afterthoughts

The thrust of this, one of the first posts to this Blog, was the currently fashionable issue of director remuneration. It lies at the heart of the debate on leaders. Can the rewards earned by strategic leaders be justified through their rewards? According to leadership texts, the answer is ‘sometimes’, although it turns out to be difficult to disentangle the impact of a leader from the consequences of wider economic variations (the rising tide, or falling tide effect).

For Pfizer, the issue could have been stated more clearly as follows. Hank McKinnell had presided over a rise in corporate furtunes, and then a decline. It appears that under pressure from major shareholders, his leadership style was confrontational, and his belief that he was worth a handsome final remuneration package may also have contributed to the pressures for change. Interestingly, the company has opted for a Lawyer to replace him, perhaps a signal of one major dimension that the new leader will have to confront.

As The Wall Street Journal put it :

Pfizer Inc. directors named Jeffrey B. Kindler, the company’s general counsel and a former McDonald’s Corp. executive, as chief executive, succeeding Henry “Hank” McKinnell at the helm of the world’s largest pharmaceutical company

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4 Responses to Pfizer yanks Hank

  1. Hillbilly says:

    At least big rewards get people into business and thereby drive the economy. If a ‘lifer’ can do well, maybe some of the glamour of instant celebrity is rivalled in some way. All that money and hey, no-one notices when Hank pops out for a bag of chips. What’s even better than being rich and famous? Just rich.

  2. Tudor says:

    Nice point. Hank has not hit headlines like some (Jack Welsh comes to mind). Rich and not celebrity distracted. I’d prefer that. And ‘quiet winners’ have had a boost from recent studies by Jom Collins of ‘fifth level’ leaders, who have often won out unnoticed over more ego-driven bosses.

  3. peter k says:

    I hadn’t actually heard of ‘Good to Great’ by Collins, but I’ve taken a look on Amazon tonight. Reading the reviews, it put me in mind of Professor Ray Paul of Brunel, with whom I spent much of Friday. Ray is a revolutionary with a very distinguished track-record of success (and some frustration, I suppose, too). Ray is fond of teasing us with the lessons of his life (to be published in a book, soon-ish). Perhaps the primary managerial lesson, Ray describes is this:

    Good people = positive
    Bad people = negative

    So, put good people in an organisation and all will be well.

    So, the real question is how do we tell good folk from bad. After that, all is simple.

    Typically Pauline, this. Like many others, I have huge respect for Ray.

  4. Jarunee says:

    I think Chief Executive Hank McKinnell has already received what he has contributed to Pfizer in terms of great achievement – bringing Pfizer to the top of the list of the world’s companies. This is invaluable and may be worth more than what can be estimated in terms of money. He has the right to claim the rewards in financial terms. The compensation depends on the social system and the social value.

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