The investment fund of a major union activist is targeting the pay packages of two major pharmaceutical companies.
The American Federation of State, County and Municipal Employees (AFSCME), the largest public employee and health care workers union in the United States, is recommending that shareholders of both Pfizer and Johnson & Johnson vote against the executive compensation proposals at the annual meetings of both companies, which take place on April 28.
The union stressed in its announcement that under the Wall Street Reform Act, shareholders now have use Say on Pay to register their disapproval of CEO pay. Say on pay allows shareholders to either give an up or down vote for the entire compensation table contained in a company's proxy statement. However, the vote is not binding.
"It's up to investors to use this tool judiciously and send a clear message to boards of directors: pay needs to be tied to performance," said President Gerald W. McEntee, in a statement.
AFSCME points out that J&J paid Chairman and CEO William Weldon nearly $29 million even though the company issued 11 recalls of JNJ drugs at a cost of $900 million. It also notes that the company lost $7 billion in market value last year.
The union is also unhappy that Pfizer's retired CEO Jeffrey Kindler received nearly $25 million, a 60 percent increase over his 2009 compensation. It adds that during Kindler's tenure, he received over $72 million in compensation during which time the stock price dropped by more than a third and Pfizer lost approximately $68 billion in market value.
"Pfizer's CEO pay is indefensible," added McEntee. "CEOs should not get massive rewards after shareholder value is destroyed on their watch. This lavish reward for failure is simply madness."