Amit Chokshi

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  • Pfizer's $199m Payout To McKinnell is Unacceptable
    That's exactly why many CEOs want to go out on buying sprees with their companies. Irrespective of how the stock performs, if they run a larger company they can use the market cap size as justification for their pay. I like Drucker's view that no CEO should be paid more than 40x the average production worker. Of course its risen to about 400x now.

    Add the idea that a study by HBS suggested only 14% of a company's value is driven by a CEO (nearly 20% by the industry) and CEO comp really can become an issue.

    The only way to deal with it is to radically restructure boards. Even having boards suggest compensation packages shareholders vote on would not do much in my opinion because of the current DNA of these board members. Boards are just saddled with other CEOs and top management of other companies which leads to massive group think across the board. Some senior mgmt guy on the board for company x isn't going to ding the CEO since he/she knows he'll be in the same "club" once his turn comes up. Midlevel company members should get board representation in some capacity as should common shareholders. I think most importantly, boards should have risk capital representation. Either board members should be forced to buy a minimum level of shares if they agree to be selected or allow significant shareholders to outright bring on their own board members. Why do you think the Icahns, Kerkorians, Daniel Loeb's, etc are so much more forceful when they want to effect change. Having real risk capital represented in the board is huge and the fact that most of these bozos get grants along with a stipend is flat out ridiculous.
    Dec 22 11:58 am |Rating: 0 0 |Link to Comment |View article
  • Pfizer's $199m Payout To McKinnell is Unacceptable
    The only way that can change is if certain shareholders can successfully sue individual board members to set a precedent that this negligence on their part is not acceptable. Secondly, the establishment of gross paying severance packages is outrageous and should be done away with completely. The CEOs at many big companies already have access to the private jet for personal use, have their taxes paid for by the firm, and a multitude of other amenities and constant stock and option grants. I don't think I've ever seen a fortune 100 CEO actually buy a meaningful amount of shares in his/her company, it's outright pathetic. At the end of their term, I don't think any of them should be given some big send off.

    The problem is that the majority of institutional shareholders (mutual funds) like Fidelity are rollover investors. They are frankly, pathetic. Rather than stick around with their tremendous risk capital at stake to effect change in stocks that underperform, they bail out and move on to the next company. And more importantly, when it comes to proxy voting, I doubt the Fidelities of the world even consider what is being held on panel to vote on and just vote yes across the board.
    Dec 22 08:43 am |Rating: 0 0 |Link to Comment |View article

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