IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 24, 2014

 

This Notice of Annual Meeting and Proxy Statement and the 2013 Financial Report and Corporate and Shareholder Information are available on our website at www.pfizer.com/annualmeeting.

 

Except as stated otherwise, information on our website is not a part of this Proxy Statement.

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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
AND VOTING

 

WHY DID I RECEIVE THESE PROXY MATERIALS?

 

We are providing these proxy materials in connection with the solicitation by the Board of Directors of Pfizer Inc., a Delaware corporation, of proxies to be voted at our 2014 Annual Meeting of Shareholders and at any adjournment or postponement of the Meeting. The Meeting will take place on April 24, 2014, beginning at 8:30 a.m., Eastern Daylight Time, at the Hilton Short Hills Hotel in Short Hills, New Jersey.

 

Shareholders will be admitted to the Annual Meeting beginning at 8:00 a.m., Eastern Daylight Time. Seating will be limited.

 

The Hilton Short Hills Hotel is accessible to disabled persons, and upon request we will provide wireless headsets for hearing amplification. Sign interpretation also will be provided upon request. Please mail your request to the address noted below under the question “What do I need to do to attend the Annual Meeting?” For directions, contact the Hilton Short Hills Hotel at +1 (973) 379-0100.

 

This Notice of Annual Meeting and Proxy Statement and a proxy or voting instruction card are being mailed or made available to shareholders starting on or about March 13, 2014.

 

WHAT DO I NEED TO DO TO ATTEND THE ANNUAL MEETING?

 

Admission to the Annual Meeting is limited to shareholders as of the close of business on February 26, 2014 and one immediate family member; one individual designated as a shareholder’s authorized proxy holder; or one representative designated in writing to present a shareholder proposal properly brought before the Meeting. In each case, the individual must have an admission ticket or proof of ownership of Pfizer stock, as well as a valid government-issued photo identification, to be admitted to the Meeting.

 

Admission Ticket or Proof of Ownership

 

If you hold your shares in your name as a shareholder of record, you will need an admission ticket or proof of ownership of Pfizer stock. An admission ticket is attached to your proxy card or to the Notice of Internet Availability of Proxy Materials. If you plan to attend the Meeting, please vote your shares but keep the admission ticket and bring it with you to the Meeting.

 

If you misplace your admission ticket, we will verify your ownership onsite at the Annual Meeting venue.

 

If your shares are held in the name of a broker, bank or other holder of record and you plan to attend the Annual Meeting, you must present proof of your ownership of Pfizer stock, such as a bank or brokerage account statement, to be admitted to the Meeting.

 

A shareholder may appoint a representative to attend the Annual Meeting and/or vote on his/her behalf. An admission ticket must be requested by the shareholder but will be issued in the name of the authorized representative. Any individual holding an admission ticket that is not issued in his/her name will not be admitted to the Annual Meeting. To request an admission ticket, contact Pfizer Shareholder Services, 235 East 42nd Street, New York, NY 10017-5755.

 

Proponent of Shareholder Proposal

 

The proponent of a shareholder proposal included in this Proxy Statement should notify the Company in writing of the individual authorized to present the proposal at the Annual Meeting; this notice should be received at least two weeks before the Meeting.

 

No cameras, recording equipment, electronic devices, large bags, briefcases, or packages will be permitted in the Annual Meeting.

 

WILL THE ANNUAL MEETING BE WEBCAST?

 

Yes, our Annual Meeting will be audio webcast live on April 24, 2014. You are invited to visit www.pfizer.com at 8:30 a.m., Eastern Daylight Time, on April 24, 2014, to access the webcast. Registration for the webcast is required and will be available beginning on April 21, 2014. A replay will be available on our website through the first week of May 2014.

 

WHO IS ENTITLED TO VOTE AT THE ANNUAL MEETING?

 

Holders of Pfizer common stock at the close of business on February 26, 2014 are entitled to receive the Notice of Annual Meeting and to vote their shares at the Meeting. As of that date, there were 6,393,528,966 shares of the Company’s

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common stock outstanding and entitled to vote. In addition, shares of the Company’s preferred stock having votes equivalent to 2,088,392 shares of common stock were held by one of the Company’s employee benefit plan trusts. Each share of common stock is entitled to one vote on each matter properly brought before the Meeting. Shares of common stock and shares of preferred stock vote together as a single class on the matters covered in this Proxy Statement.

 

WHAT IS THE DIFFERENCE BETWEEN HOLDING SHARES AS A SHAREHOLDER OF RECORD AND AS A BENEFICIAL OWNER?

 

If your shares are registered in your name with Pfizer’s transfer agent, Computershare, you are the “shareholder of record” of those shares. This Notice of Annual Meeting and Proxy Statement and any accompanying materials have been provided directly to you by Pfizer.

 

If your shares are held in a stock brokerage account or by a bank or other holder of record, you are considered the “beneficial owner” of those shares, and this Notice of Annual Meeting and Proxy Statement and any accompanying documents have been provided to you by your broker, bank or other holder of record. As the beneficial owner, you have the right to direct your broker, bank or other holder of record how to vote your shares by using the voting instruction card or by following their instructions for voting by telephone or on the Internet.

 

HOW DO I VOTE?

 

You may vote using any of the following methods:

 

By mail

 

Complete, sign and date the accompanying proxy or voting instruction card and return it in the prepaid envelope. If you are a shareholder of record and return your signed proxy card but do not indicate your voting preferences, the persons named in the proxy card will vote the shares represented by your proxy card as recommended by the Board of Directors.

 

If you are a shareholder of record and you do not have the prepaid envelope, please mail your completed proxy card to Pfizer Inc., c/o Proxy Services, Computershare, P.O. Box 43101, Providence, RI 02940.

 

By telephone or on the Internet

 

Pfizer has established telephone and Internet voting procedures for shareholders of record. These procedures are designed to authenticate your identity, to allow you to give your voting instructions and to confirm that those instructions have been properly recorded.

 

You can vote by calling the toll-free telephone number on your proxy card. Please have your proxy card handy when you call. Easy-to-follow voice prompts will allow you to vote your shares and confirm that your instructions have been properly recorded.

If you are located outside the United States, Puerto Rico and Canada, see your proxy card for additional instructions.

 

The website for Internet voting is www.investorvote.com/pfe. Please have your proxy card handy when you go to the website. As with telephone voting, you can confirm that your instructions have been properly recorded. If you vote on the Internet, you also can request electronic delivery of future proxy materials.

 

Telephone and Internet voting facilities for shareholders of record will be available 24 hours a day until 7:30 a.m., Eastern Daylight Time, on April 24, 2014.

 

The availability of telephone and Internet voting for beneficial owners will depend on the voting processes of your broker, bank or other holder of record. We therefore recommend that you follow the voting instructions in the materials you receive.

 

If you vote by telephone or on the Internet, you do not have to return your proxy or voting instruction card.

 

In person at the Annual Meeting

 

Shareholders who attend the Annual Meeting may vote in person at the Meeting. You may also be represented by another person at the Meeting by executing a proper proxy designating that person. If you are a beneficial owner of shares, you must obtain a legal proxy from your broker, bank or other holder of record and present it to the inspectors of election with your ballot to be able to vote at the Meeting.

 

Your vote is important. You can save us the expense of a second mailing by voting promptly.

 

WHAT CAN I DO IF I CHANGE MY MIND AFTER I VOTE?

 

If you are a shareholder of record, you can revoke your proxy before it is exercised by:

 

•	giving written notice to the Corporate Secretary of the Company;
•	delivering a valid, later-dated proxy, or a later-dated vote by telephone or on the Internet, in a timely manner; or
•	voting by ballot at the Annual Meeting.

 

If you are a beneficial owner of shares, you may submit new voting instructions by contacting your broker, bank or other holder of record.

 

All shares for which proxies have been properly submitted and not revoked will be voted at the Annual Meeting.

 

WHAT SHARES ARE INCLUDED ON THE PROXY CARD?

 

If you are a shareholder of record, you will receive only one proxy card for all the shares you hold of record:

 

•	in certificate form;
•	in book-entry form; and
•	in book-entry form in the Computershare Investment Plan.

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If you are a Pfizer employee, you will receive a proxy or voting instruction card for all the Pfizer shares you hold:

 

•	in a Pfizer and/or Wyeth savings plan; and/or
•	in a Grantor Trust for deferred stock received by certain legacy Wyeth employees in connection with the Wyeth acquisition.

 

Your proxy card will serve as a voting instruction card for the applicable savings plan and/or Grantor Trust.

 

If you do not vote your shares or specify your voting instructions on your proxy or voting instruction card, the administrator of the applicable savings plan, and/or the trustee of a Grantor Trust, as the case may be, will vote your shares in accordance with the terms of your plan and/or Grantor Trust. To allow sufficient time for voting by the administrator of the applicable savings plan and/or the trustee of a Grantor Trust, your voting instructions must be received by 10:00 a.m., Eastern Daylight Time, on April 22, 2014.

 

If you hold Pfizer shares through any other Company plan, you will receive voting instructions from that plan’s administrator, as applicable.

 

If you are a beneficial owner, you will receive voting instructions from your broker, bank or other holder of record.

 

WHAT IS “HOUSEHOLDING” AND HOW DOES IT AFFECT ME?

 

We have adopted a procedure, approved by the Securities and Exchange Commission (SEC), called “householding.” Under this procedure, shareholders of record who have the same address and last name and receive hard copies of the Annual Meeting materials will receive only one copy of this Notice of Annual Meeting and Proxy Statement and the 2013 Financial Report, unless we are notified that one or more of these shareholders wishes to continue receiving individual copies. If you and other Pfizer shareholders living in your household do not have the same last name, you may also request to receive only one copy of future proxy statements and financial reports.

 

Householding conserves natural resources and reduces our distribution costs. Shareholders who participate in householding will continue to receive separate proxy cards. Also, householding will not in any way affect dividend check mailings.

 

If you are eligible for householding, but you and other shareholders of record with whom you share an address currently receive multiple copies of this Notice of Annual Meeting and Proxy Statement and any accompanying documents, or if you hold Pfizer stock in more than one account, and in either case you wish to receive only a single copy of each document for your household, please contact our transfer agent, Computershare in writing: P.O. Box 30170, College Station, TX 77842-3170; or by telephone: in the U.S., Puerto Rico and Canada, + 1 (800) 733-9393, and outside the U.S., Puerto Rico and Canada, + 1 (781) 575-4591.

Alternatively, if you participate in householding and wish to receive a separate copy of this Notice of Annual Meeting and Proxy Statement and any accompanying documents or prefer to discontinue your participation in householding, please contact Computershare as indicated above and a separate copy will be sent to you promptly.

 

If you are a beneficial owner, you can request information about householding from your broker, bank or other holder of record.

 

WHY DID I RECEIVE A “NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS” BUT NO PROXY MATERIALS?

 

We distribute our proxy materials to certain shareholders via the Internet under the “Notice and Access” approach permitted by rules of the SEC. This approach conserves natural resources and reduces our distribution costs, while providing a timely and convenient method of accessing the materials and voting. On March 13, 2014, we mailed a “Notice of Internet Availability of Proxy Materials” to participating shareholders, containing instructions on how to access the proxy materials on the Internet.

 

CAN I ACCESS THE PROXY MATERIALS AND THE 2013 FINANCIAL REPORT ON THE INTERNET?

 

This Notice of Annual Meeting and Proxy Statement and the 2013 Financial Report are available on our website at www.pfizer.com/annualmeeting. Instead of receiving future proxy statements and accompanying materials by mail, most shareholders can elect to receive an e-mail that will provide electronic links to them. Opting to receive your proxy materials online will conserve natural resources and will save us the cost of producing documents and mailing them to you, and will also give you an electronic link to the proxy voting site.

 

Shareholders of Record: If you vote on the Internet at www.investorvote.com/pfe, simply follow the prompts to enroll in the electronic proxy delivery service. You also may enroll in the electronic proxy delivery service at any time in the future by going directly to www.computershare-na.com/green and following the enrollment instructions.

 

Beneficial Owners: You also may be able to receive copies of these documents electronically. Please check the information provided in the proxy materials sent to you by your broker, bank or other holder of record regarding the availability of this service.

 

IS THERE A LIST OF SHAREHOLDERS ENTITLED TO VOTE AT THE ANNUAL MEETING?

 

The names of shareholders of record entitled to vote at the Meeting will be available at the Meeting and for ten days prior to the Meeting for any purpose germane to the Meeting, between the hours of 8:45 a.m. and 4:30 p.m., at our principal executive offices at 235 East 42nd Street, New York, New York, by contacting the Corporate Secretary of the Company.

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WHAT IS A BROKER NON-VOTE?

 

If you are a beneficial owner whose shares are held of record by a broker, you must instruct the broker how to vote your shares. If you do not provide voting instructions, your shares will not be voted on any proposal on which the broker does not have discretionary authority to vote. This is called a “broker non-vote.” In these cases, the broker can register your shares as being present at the Annual Meeting for purposes of determining the presence of a quorum but will not be able to vote on those matters for which specific authorization is required under the rules of the New York Stock Exchange (NYSE).

 

If you are a beneficial owner whose shares are held of record by a broker, your broker has discretionary voting authority under NYSE rules to vote your shares on the ratification of KPMG as our independent registered public accounting firm, even if the broker does not receive voting instructions from you. However, your broker does not have discretionary authority to vote on the election of Directors, the advisory approval of executive compensation, the Pfizer Inc. 2014 Stock Plan or on any shareholder proposal without instructions from you, in which case a broker non-vote will occur and your shares will not be voted on these matters.

 

WHAT IS A QUORUM FOR THE ANNUAL MEETING?

 

The presence of the holders of stock representing a majority of the voting power of all shares of stock issued and outstanding and entitled to vote at the Annual Meeting, in person or represented by proxy, is necessary to constitute a quorum. Abstentions and broker non-votes are counted as present and entitled to vote for purposes of determining a quorum.

 

WHAT ARE THE VOTING REQUIREMENTS TO ELECT THE DIRECTORS AND TO APPROVE EACH OF THE PROPOSALS DISCUSSED IN THIS PROXY STATEMENT?

 

Proposal		Vote Required		Broker Discretionary Voting Allowed
Election of Directors		Majority of
		Votes Cast		No
Ratification of KPMG		Majority of
		Votes Cast		Yes
Advisory Approval of Executive Compensation		Majority of Votes Cast		No
Pfizer Inc. 2014 Stock Plan		Majority of
		Votes Cast		No
Shareholder Proposals		Majority of
		Votes Cast		No

 

Except in the case of the proposal to approve the Pfizer Inc. 2014 Stock Plan, if you abstain from voting or there is a broker non-vote on any matter, your abstention or broker non-vote will not affect the outcome of such vote, because abstentions and broker non-votes are not considered to be votes cast under our By-laws. With respect to the proposal to approve the Pfizer Inc. 2014 Stock Plan, which is subject to New York Stock Exchange shareholder approval rules, broker non-votes will not

affect the outcome of such vote, because broker non-votes are not considered votes cast; however, abstentions are counted as votes cast and therefore will have the effect of a vote against the proposal.

 

Election of Directors; Majority Vote Policy

 

Under our By-laws and our Corporate Governance Principles, Directors must be elected by a majority of the votes cast in uncontested elections, such as the election of Directors at the Annual Meeting. This means that the number of votes cast “for” a Director nominee must exceed the number of votes cast “against” that nominee. Abstentions and broker non-votes are not counted as votes “for” or “against” a Director nominee. Any nominee who does not receive a majority of votes cast “for” his or her election would be required to tender his or her resignation promptly following the failure to receive the required vote. Within 90 days of the certification of the shareholder vote, the Corporate Governance Committee would then be required to make a recommendation to the Board as to whether the Board should accept the resignation, and the Board would be required to decide whether to accept the resignation and to disclose its decision-making process. In a contested election, the required vote would be a plurality of votes cast. Full details of this Policy are set forth in our Corporate Governance Principles (see Annex 1 to this Proxy Statement).

 

Ratification of KPMG

 

Under our By-laws, the votes cast “for” must exceed the votes cast “against” to approve the ratification of KPMG as our independent registered public accounting firm. Abstentions are not counted as votes “for” or “against” this proposal.

 

Advisory Approval of Executive Compensation

 

Under our By-laws, the votes cast “for” must exceed the votes cast “against” to approve, on an advisory basis, the compensation of our Named Executive Officers. Abstentions and broker non-votes are not counted as votes “for” or “against” this proposal.

 

Approval of the Pfizer Inc. 2014 Stock Plan

 

Under our By-laws, the votes cast “for” must exceed the votes cast “against” to approve the Pfizer Inc. 2014 Stock Plan. This proposal is also subject to New York Stock Exchange shareholder approval rules. Broker non-votes are not counted as votes “for” or “against” the Pfizer Inc. 2014 Stock Plan; however, abstentions are counted as votes cast and therefore will have the effect of a vote “against” the proposal.

 

Shareholder Proposals

 

Under our By-laws, the votes cast “for” must exceed the votes cast “against” to approve a shareholder proposal. Abstentions and broker non-votes are not counted as votes “for” or “against” the shareholder proposal.

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HOW WILL MY SHARES BE VOTED AT THE ANNUAL MEETING?

 

At the Meeting, the Proxy Committee appointed by the Board of Directors (the persons named in the proxy card or, if applicable, their substitutes) will vote your shares as you instruct. If you sign your proxy card and return it without indicating how you would like to vote your shares, your shares will be voted as the Board of Directors recommends, which is:

 

•	FOR the election of each of the Director nominees named in this Proxy Statement;
•	FOR the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the 2014 fiscal year;
•	FOR the approval, on an advisory basis, of the compensation of our Named Executive Officers;
•	FOR the approval of the Pfizer Inc. 2014 Stock Plan; and
•	AGAINST each shareholder proposal.

 

COULD OTHER MATTERS BE DECIDED AT THE ANNUAL MEETING?

 

At the date this Proxy Statement went to press, we did not know of any matters to be raised at the Annual Meeting other than those referred to in this Proxy Statement (see “Other Business”).

 

If you return your signed and completed proxy card or vote by telephone or on the Internet and other matters are properly presented at the Annual Meeting for consideration, the Proxy Committee appointed by the Board of Directors will have the discretion to vote for you on such matters.

 

WHO WILL PAY FOR THE COST OF THIS PROXY SOLICITATION?

 

Pfizer will pay the cost of soliciting proxies. Proxies may be solicited on our behalf by our Directors, officers or employees in person or by telephone, mail, electronic transmission and/or facsimile transmission. We have hired Morrow & Co., LLC, 470 West Avenue, Stamford, Connecticut 06902, to distribute and solicit proxies. We will pay Morrow a fee of $35,000, plus reasonable expenses, for these services.

 

WHO WILL COUNT THE VOTES?

 

Representatives of our transfer agent, Computershare, will tabulate the votes and act as inspectors of election.

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Governance of the Company

 

OVERVIEW

 

The following sections provide an overview of Pfizer’s corporate governance structure and processes, including the independence and other criteria we use in selecting Director nominees; our Board leadership structure; and certain responsibilities and activities of the Board of Directors and its Committees. We also discuss how shareholders and other stakeholders can communicate with our Directors.

 

Our governance structure and processes are based upon a number of key governance documents, including our Corporate Governance Principles. The Principles, which are included as Annex 1 to this Proxy Statement, govern the operation of the Board of Directors and its Committees and guide the Board and our Executive Leadership Team in the execution of their responsibilities. The Principles are reviewed at least annually and are updated periodically in response to changing regulatory requirements, evolving practices, issues raised by our shareholders and other stakeholders and otherwise as circumstances warrant.

 

 

We will provide copies of any of these items without charge upon written request to our Corporate Secretary, Pfizer Inc., 235 East 42nd Street, New York, New York 10017-5755. The information on our website is not a part of this Proxy Statement.

 

GOVERNANCE INFORMATION

 

CRITERIA FOR BOARD MEMBERSHIP

 

The Corporate Governance Committee focuses on Board succession planning on a continuous basis. In performing this function, the Committee is responsible for recruiting and recommending to the full Board of Directors nominees for election as Directors. The goal of the Committee is to achieve a Board that provides effective oversight of the Company through the appropriate balance of diversity of

 

The goal of the Corporate Governance Committee is to achieve a Board that provides effective oversight of the Company through the appropriate balance of diversity of experience, expertise, skills, specialized knowledge and other qualifications and attributes of the individual Directors.

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experience, expertise, skills, specialized knowledge and other qualifications and attributes of the individual Directors. Important general criteria for Board membership include the following:

 

•	Members of the Board should be individuals of high integrity and independence, with substantial accomplishments, and should have prior or current associations with institutions noted for their excellence.
•	Members of the Board should have demonstrated leadership ability, with broad experience, diverse perspectives, and the ability to exercise sound business judgment.
•	The composition of the Board should reflect the benefits of diversity as to gender, ethnic background and experience.

 

In addition, the Committee considers on an ongoing basis the background, experience and skills of the individual Directors that are important to the Company’s current and future needs, including experience and skills in the following areas:

 

•	business and operations leadership;
•	finance and accounting;
•	medicine, science or research and development;
•	government and public policy;
•	healthcare and related fields (including pharmaceuticals);
•	international business;
•	academics;
•	leadership and management development; and
•	technology.

 

The satisfaction of these criteria is implemented and assessed through ongoing evaluations of Directors and nominees by the Corporate Governance Committee and the Board, as well as annual Board and Committee self-evaluations. Based upon these activities and their review of the current composition of the Board, the Committee and the Board believe that these criteria have been satisfied.

 

BOARD OF DIRECTORS COMPOSITION

 

 

 

SELECTION OF CANDIDATES

 

In recruiting and selecting Board candidates, the Corporate Governance Committee takes into account the size of the Board and considers a “skills matrix” indicating whether a particular Board member or candidate possesses one or more of the above “skill sets,” as well as whether those skills and/or other attributes qualify him or her for service on a particular Committee. The Committee also considers a wide range of additional factors, including each Director’s and candidate’s projected retirement date, to assist

 

On an ongoing basis, the Corporate Governance Committee considers potential Director candidates identified on its own initiative as well as candidates referred or recommended to it by other Directors, members of management, search firms, shareholders and other resources (including individuals seeking to join the Board).

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in Board succession planning; other positions the Director or candidate holds, including other boards of directors on which he or she serves; and the independence of each Director and candidate, to ensure that a substantial majority of the Board is independent (see “Director Independence” below).

 

On an ongoing basis, the Committee considers potential Director candidates identified on its own initiative as well as candidates referred or recommended to it by other Directors, members of management, search firms, shareholders and other resources (including individuals seeking to join the Board). Shareholders who wish to recommend candidates may contact the Committee in the manner described in “Communications with Directors.” All candidates are required to meet the criteria outlined above, as well as those discussed under “Director Independence” below and in our Corporate Governance Principles and other governing documents, as applicable, as determined by the Committee in its sole discretion. Shareholder nominations must be made according to the procedures required under our By-laws and described in this Proxy Statement under the heading “Requirements for Submitting Proxy Proposals and Nominating Directors.” Shareholder-recommended candidates and shareholder nominees whose nominations comply with these procedures and who meet the criteria referred to above will be evaluated by the Committee in the same manner as the Committee’s nominees.

 

The Committee and the Board believe that each of the nominees for election at the Annual Meeting brings a strong and unique set of attributes, experiences and skills. We believe the Board as a whole has an optimal balance of experience, leadership, competencies, qualifications and skills in areas of importance to our Company.

 

Under “Item 1—Election of Directors—Nominees for Directors,” we provide an overview of each nominee’s principal occupation, business experience and other directorships, together with the key attributes, experience and skills viewed as particularly meaningful in providing value to the Board, our Company and our shareholders. See also “Proxy Statement Summary—Our Director Nominees” for a listing of the principal skills for our Director nominees.

 

DIRECTOR INDEPENDENCE

 

Our Board of Directors has adopted Director Qualification Standards to evaluate and determine Director independence. Our Standards meet and in some respects exceed the independence requirements of the NYSE. To qualify as independent under our Standards, a non-employee Director must be determined to have no material relationship with the Company other than as a Director. The Standards also contain strict guidelines for Directors and their immediate families regarding employment or affiliation with the Company or its independent registered public accounting firm; prohibitions against Audit Committee members having any direct or indirect financial relationship with the Company; and restrictions on both commercial and not-for-profit relationships between non-employee Directors and the Company. Directors may not receive personal loans or extensions of credit from the Company, must deal at arm’s length with the Company and its subsidiaries, and must disclose any circumstance that might be perceived as a conflict of interest. Our Director Qualification Standards can be found on our website at www.pfizer.com/about/corporate_governance/director_qualification_standards.jsp.

 

With the assistance of legal counsel to the Company, the Corporate Governance Committee has reviewed the applicable legal and NYSE standards for Board and Committee member independence, as well as our Director Qualification Standards. A summary of the answers to annual questionnaires completed by each of the Directors and a report of transactions with Director-affiliated entities are also made available to the Committee. On the basis of this review, the Committee has delivered a report to the full Board of Directors, and the Board has made its independence determinations based upon the Committee’s report and the supporting information.

 

The Board has affirmatively determined that all of our current Directors (other than Mr. Read) are independent of the Company and its management and meet the Company’s criteria for independence. The independent Directors are Drs. Dennis A. Ausiello, Frances D. Fergusson, Helen H. Hobbs and Marc Tessier-Lavigne; Ms. Constance J. Horner and Ms. Suzanne Nora Johnson; and Messrs. W. Don Cornwell, James M. Kilts, George A. Lorch, Shantanu Narayen and Stephen W. Sanger. The Board previously determined that each of Messrs. M. Anthony Burns, William H. Gray, III and John P. Mascotte, each of whom served as a Director during a portion of 2013, was independent during the time he was a

 

 

Aside from our CEO, all of our Directors are independent of the Company and its management.

 

To qualify as independent under our Standards, a non-employee Director must be determined to have no material relationship with the Company other than as a Director.

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Director. The Board has determined that Mr. Ian C. Read is not independent because of his employment as the Company’s current CEO.

 

In making these determinations, the Board considered that in the ordinary course of business, relationships and transactions may occur between the Company and its subsidiaries on the one hand and entities with which some of our Directors are or have been affiliated on the other. Under Pfizer’s Director Qualification Standards, certain relationships and transactions are not considered to be material transactions that would impair a Director’s independence, including the following:

 

•	the Director is an employee, or an immediate family member of the Director is an executive officer, of another company that does business with Pfizer, and our annual sales to or purchases from the other company in each of the last three fiscal years amounted to less than 1% of the annual revenues of the other company; and
•	the Director or an immediate family member of the Director is an executive officer of another company, and our indebtedness to the other company or its indebtedness to Pfizer amounts to less than 1% of the total consolidated assets of the other company.

 

In 2013, there was no indebtedness between Pfizer and any entity of which a Director or an immediate family member of a Director was an executive officer.

 

Drs. Ausiello, Hobbs and Tessier-Lavigne are employed at medical or academic institutions with which Pfizer engages in ordinary course of business transactions, and Mr. Narayen is the chief executive officer of Adobe, a company with which Pfizer engages in ordinary business transactions. We reviewed our transactions with each of these entities and found that these transactions were made in the ordinary course of business and were below the levels set forth in our Director Qualification Standards (1% of the annual revenues of these entities in each of the last three years).

 

Under our Director Qualification Standards, contributions to not-for-profit entities in which a Director of the Company, or a Director’s spouse, serves as an executive officer, amounting to less than 2% of that organization’s latest publicly available total revenues (or $1,000,000, whichever is greater), will not serve as a bar to the Director’s independence. None of our Directors or their spouses is an executive officer of a not-for-profit organization to which Pfizer contributes. Nonetheless, a summary of charitable contributions to not-for-profit organizations with which our Directors or their spouses are affiliated was made available to the Committee. None of the contributions approached the levels set forth in our Director Qualification Standards.

 

BOARD LEADERSHIP STRUCTURE

 

The Board recognizes that one of its key responsibilities is to evaluate and determine its optimal leadership structure so as to provide independent oversight of management and a highly engaged and high-functioning Board. Based on its experience, considerable engagement with shareholders, and an assessment of research on this issue, the Board understands that there are a variety of viewpoints concerning a board’s optimal leadership structure; that available empirical data concerning the impact of board leadership on shareholder value is inconclusive; and, accordingly, that there is no single, generally accepted approach to board leadership in the U.S. Given the dynamic and competitive environment in which we operate, the Board believes that the right leadership structure may vary as circumstances warrant. Consistent with this understanding, the independent Directors do not view any particular structure as preferred and consider the Board’s leadership structure on at least an annual basis. This consideration includes the pros and cons of alternative leadership structures in light of the Company’s operating and governance environment at the time, with the goal of achieving the optimal model for Board leadership and effective oversight of management by the Board.

 

Based upon these considerations, and following thorough reviews by the Corporate Governance Committee, the independent Directors reconsidered the Board’s leadership structure and determined in December 2013 to maintain the current leadership structure, with Mr. Read as Chairman. These determinations were based on the independent Directors’ strong belief that Mr. Read has extensive experience in and knowledge of the research-based biopharmaceutical industry; continues to demonstrate the leadership and vision necessary to lead the Board and the Company in our challenging industry and

 

The independent Directors believe that Mr. Read, Pfizer’s Chairman and CEO, has extensive experience in and knowledge of the research-based biopharmaceutical industry and continues to demonstrate the leadership and vision necessary to lead the Board and the Company in our challenging industry and macroeconomic environments.

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macroeconomic environments; has a fundamentally investor-driven viewpoint; and exercises leadership that has generated strong operational performance; and that he also serves as Chairman and CEO at the pleasure of the Board. The independent Directors also believe that this unified structure provides our Company with strong and consistent leadership and that, given the significant regulatory and market environment in which we operate, having one clear leader in both roles, with deep industry expertise and Company knowledge provides decisive and effective leadership internally and externally.

 

The independent Directors have also selected George A. Lorch to serve as Lead Independent Director—a position that, at Pfizer, entails significant responsibility for independent Board leadership. Mr. Lorch served as Non-Executive Chairman of the Board from December 2010 to December 2011 and continues to exercise his strong leadership skills in his role as Lead Independent Director. In addition, in his role as Lead Independent Director, Mr. Lorch has engaged in several robust discussions with institutional investors on matters related to public policy and Pfizer’s Board leadership structure. We believe our shareholders were appreciative of the opportunity to discuss these matters with Mr. Lorch.

 

In considering its leadership structure, the independent Directors have taken a number of factors into account. The Board—which consists entirely of independent Directors other than Mr. Read—exercises a strong, independent oversight function. This oversight function is enhanced by the fact that our Audit, Compensation, Corporate Governance, Regulatory and Compliance and Science and Technology Committees are comprised entirely of independent Directors. Further, a number of Board and Committee processes and procedures provide substantial independent oversight of our Chief Executive Officer’s performance, including regular executive sessions of the independent Directors, an annual evaluation of our Chief Executive Officer’s performance against pre-determined goals, and a separate evaluation introduced in 2012 that, among other things, assesses the CEO’s interactions with the Board in his role as Chairman.

 

In addition, the independent Directors have considered shareholder feedback on the subject of Board leadership, including discussions with institutional investors who have expressed interest in the Board’s rationale for combining the roles of Chairman and CEO. In general, these investors acknowledge that the independent members of the Board are in the best position to determine the optimal Board structure, although some investors have asked about the strength of board independence under a non-independent chair structure. In circumstances where the positions of Chairman and CEO are combined, investors believe it is imperative that the Board have independent leadership by appointing a strong Lead Independent Director with a clearly defined role and responsibilities. The Company’s Corporate Governance Principles align with investor preferences and require the appointment of a Lead Independent Director if the positions of Chairman and CEO are held by the same individual. The independent Directors believe that Mr. Lorch demonstrates strong leadership in that position.

 

The independent Directors remain committed to evaluating our Board leadership structure at least annually. Under the Company’s By-laws and Corporate Governance Principles, the Board can and will change its leadership structure if it determines that doing so is appropriate and in the best interest of Pfizer and its shareholders. The Board believes that these factors provide the appropriate balance between the authority of those who oversee the Company and those who manage it on a day-to-day basis.

 

Our independent Directors have considered shareholder feedback on the subject of Board leadership, including discussions with institutional investors who have expressed interest in the Board’s rationale for combining the roles of Chairman and CEO.

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EXECUTIVE SESSIONS

 

Executive sessions of the independent Directors (i.e., all Directors other than Mr. Read) generally take place at every regular Board meeting. At these executive sessions, the independent Directors review, among other things, the criteria upon which the performance of the Chief Executive Officer and other senior managers is evaluated, the performance of the Chief Executive Officer against those criteria, and the compensation of the Chief Executive Officer and other senior managers.

 

THE BOARD’S ROLE IN RISK OVERSIGHT

 

Management is responsible for assessing and managing risk, subject to oversight by the Board. The Board believes that its leadership structure, described above, supports the risk oversight function of the Board. The Board executes its oversight responsibility for risk assessment and risk management directly and through its Committees, as follows:

 

•	The Audit Committee has primary responsibility for overseeing the Company’s Enterprise Risk Management, or “ERM,” program. The Company’s Chief Internal Auditor, who reports to the Committee, facilitates the ERM program, in coordination with the Company’s Legal Division and

 

Our Lead Independent Director has a clear mandate, as well as significant authority and responsibilities, including leading the evaluation by the independent Directors of the CEO’s effectiveness as Chairman and CEO.

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Compliance Division, to complement the Company’s strategic and operating planning process. The Committee’s meeting agendas throughout the year include discussions of individual risk areas, as well as an annual summary of the ERM process. For additional information, see “Board and Committee Information—The Audit Committee” and “Item 2—Ratification of Independent Registered Public Accounting Firm—Audit Committee Report” later in this Proxy Statement.

 

•	The Regulatory and Compliance Committee has primary responsibility for overseeing and reviewing risks associated with the Company’s healthcare law compliance programs and the status of compliance with related laws, regulations and internal procedures. The Committee, in consultation with the Compensation Committee, is responsible for discussing with management the risks associated with our compensation policies and practices for sales and marketing personnel and the alignment of compensation practices with the Company’s compliance standards. For additional information, see “Board and Committee Information—The Regulatory and Compliance Committee” later in this Proxy Statement.
•	The Board’s other Committees—Compensation, Corporate Governance, and Science and Technology—oversee risks associated with their respective areas of responsibility. For example, the Compensation Committee considers the risks associated with our compensation policies and practices, with respect to both executive compensation and compensation generally.
•	The Board of Directors is kept informed of its Committees’ risk oversight and other activities through reports of the Committee Chairmen to the full Board. These reports are presented at every regular Board meeting and include discussions of Committee agenda topics, including matters involving risk oversight.
•	The Board considers specific risk topics, including risks associated with our strategic plan, our capital structure and our research and development activities. In addition, the Board receives regular reports from the members of our Executive Leadership Team, or “ELT”—the heads of our principal business and corporate functions—that include discussions of the risks involved in their respective areas of responsibility, and the Board is routinely informed of developments that could affect our risk profile or other aspects of our business.

 

 

PFIZER POLICIES ON BUSINESS ETHICS AND CONDUCT

 

All of our employees, including our Chief Executive Officer, Chief Financial Officer and Controller, are required to abide by Pfizer’s policies on business conduct to ensure that our business is conducted in a consistently legal and ethical manner. Pfizer’s policies form the foundation of a comprehensive process that includes compliance with corporate policies and procedures, an open relationship among colleagues to foster good business conduct, and a high level of integrity. Our policies and procedures cover all major areas of professional conduct, including employment practices, conflicts of interest, intellectual property and the protection of confidential information, and require strict adherence to laws and regulations applicable to the conduct of our business.

 

Employees are required to report any conduct that they believe in good faith to be an actual or apparent violation of Pfizer’s policies on business conduct. As required by the Sarbanes-Oxley Act of 2002, our Audit Committee has procedures to receive, retain and treat complaints received regarding accounting,

 

The Audit Committee has primary responsibility for overseeing the Company’s Enterprise Risk Management program.

 

The Regulatory and Compliance Committee has primary responsibility for overseeing and reviewing risks associated with the Company’s healthcare law compliance programs and the status of compliance with related laws, regulations and internal procedures.

 

 

 

All of our employees are required to abide by Pfizer’s policies on business conduct, which form the foundation of a comprehensive process that includes compliance with corporate policies and procedures, an open relationship among colleagues, and a high level of integrity.

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internal accounting controls or auditing matters and to allow for the confidential and anonymous submission by employees of concerns regarding questionable accounting or auditing matters.

 

CODE OF CONDUCT FOR DIRECTORS

 

Our Directors are required to comply with a Code of Business Conduct and Ethics for Members of the Board of Directors. This Code is intended to focus the Board and the individual Directors on areas of ethical risk, help Directors recognize and deal with ethical issues, provide mechanisms to report unethical conduct, and foster a culture of honesty and accountability. This Code covers all areas of professional conduct relating to service on the Pfizer Board, including conflicts of interest, unfair or unethical use of corporate opportunities, strict protection of confidential information, compliance with applicable laws and regulations, and oversight of ethics and compliance by employees of the Company. Under the Corporate Integrity Agreement Pfizer entered into in 2009 (discussed under “Board and Committee Information—The Regulatory and Compliance Committee” below), our Board members also have certain obligations with respect to our Summary of Pfizer Policies on Business Conduct, including annually certifying that they have received and reviewed the Summary.

 

 

Shareholder communications are distributed to the Board, or to any individual Director or Directors, as appropriate, depending on the facts and circumstances outlined in the communication. The Board of Directors has requested that certain items that are unrelated to the duties and responsibilities of the Board be excluded or redirected, as appropriate, such as business solicitations or advertisements, junk mail and mass mailings, new product suggestions, product complaints, product inquiries, resumes and other forms of job inquiries, spam and surveys. In addition, material that is unduly hostile, threatening or similarly unsuitable will be excluded; however, any communication will be made available to any Director upon his or her request.

 

SHAREHOLDER OUTREACH

 

Shareholder outreach is a long-standing cornerstone of our governance profile. Because of this, we engage regularly with our global investors to gain valuable insights into the governance issues about which they care most. We aim to seek a collaborative and mutually beneficial approach to issues of importance to investors that affect our business, and also to ensure that our corporate governance practices remain industry-leading from their perspectives.

 

Throughout 2013, we engaged in discussions with institutional investors based in the United States and the United Kingdom representing approximately 30% of our outstanding shares. These investors expressed appreciation for our outreach efforts. The feedback received was summarized and presented to the Corporate Governance Committee and full Board.

 

Our agenda centered on board composition, executive compensation, written consent, corporate political spending and other matters. Investors were keenly interested in board composition and board succession planning, the discussions of which generally related to skill sets relative to our industry, director evaluations, refreshment policies and leadership structure. In general, investors have minimal concerns about our Board and individual directors, or with our Board policies. With respect to our Board’s leadership structure, a majority of our U.S. investors appear to have little or no concerns, with most evaluating this issue by assessing our strong counterbalancing structure of a robust Lead Independent Director in connection with the Company’s operating performance. In contrast, our investors in the U.K., where the roles of Chair and CEO are held by two separate individuals at a vast majority of companies, generally prefer that companies separate the two roles.

 

 

Our Directors are required to comply with a Code of Business Conduct and Ethics for Members of the Board of Directors.

 

 

Shareholders and other interested parties may communicate with any of our Directors, including the Lead Independent Director or the Audit Committee Chair.

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On the topic of executive compensation, our investors continue to support our current philosophy and program, seeing it as well-structured and aligning with performance. We also discussed the usefulness of including pay ratios (comparing CEO total annual compensation to that of the company’s median employee) prior to that disclosure being required. Most shareholders consulted expressed uncertainty about the usefulness of this information in their assessment of the Compensation Committee’s compensation decisions. See “Item 3—Advisory Approval of Executive Compensation” and “Compensation Discussion and Analysis” elsewhere in this Proxy Statement.

 

In addition, we discussed the desirability of providing shareholders with the ability to act by written consent. As a matter of policy, some investors support written consent proposals under any circumstances; however, there is general consensus among Pfizer shareholders that the ability to call special meetings under our existing By-laws is sufficient and preferable in some circumstances. Moreover, the ability to call special meetings affords investors a formal and more equitable opportunity, including notice and disclosure to all shareholders, to conduct matters than enabling a limited group of shareholders to act by written consent. See “Item 7—Shareholder Proposal regarding Action by Written Consent.”

 

We also discussed the potential benefits and risks of giving shareholders the ability to nominate Directors without having to resort to a proxy contest, and the terms on which such “proxy access” might be provided. Investors continue to mostly evaluate resolutions on a case-by-case basis, and to formulate their respective internal voting policies on proxy access.

 

Investor feedback concerning our political contributions disclosures and rigorous internal approval process (involving government affairs leaders and oversight by the Corporate Governance Committee) remains positive. A minority of investors indicated an interest in viewing additional disclosures involving Pfizer’s association with trade associations, and its lobbying expenditures and priorities. See “Item 6—Shareholder Proposal regarding Lobbying Activities.”

 

In addition to speaking with our institutional investors, we also are highly responsive to our retail shareholders. In 2013, Pfizer responded to over 1,000 written communications received by our Board of Directors mailboxes on a variety of topics, including product comments and shareholder services inquiries. Shareholder sentiment from these smaller, but valuable shareholders is also regularly shared with the Board.

 

PUBLIC POLICY ENGAGEMENT AND POLITICAL PARTICIPATION

 

Engaging in Public Policy

 

In the highly regulated and competitive pharmaceutical industry, it is fundamental to our business that we engage on public policy issues such as barriers to access, counterfeit medicines, illegal drug importation and challenges to our intellectual property protection that may affect our ability to meet patient needs and enhance shareholder value. Because we have extensive knowledge about healthcare and many ideas about improving its efficiency, as well as a global perspective on public health, disease prevention and health education and wellness, we regularly work with policy makers to help create and maintain an innovative environment where we can cultivate new medicines, bring them to market and ensure that patient health and safety remain a priority.

 

To broaden our engagement efforts, we are also a member of several industry and trade groups, including the Pharmaceutical Research and Manufacturers of America, the National Association of Manufacturers, the Biotechnology Industry Association, the U.S. Chamber of Commerce and the Business Roundtable. These organizations along with the others to which we belong represent both the pharmaceutical industry and the business community at large in an effort to bring about consensus on broad policy issues that can impact our business and service to patients. Our support of these organizations is evaluated based on their expertise in healthcare policy/advocacy and issues that impact the life sciences industry. In addition, we require that these organizations support key issues of importance to Pfizer, including advancing biomedical research, healthcare innovation, advocating for protecting intellectual property rights and access to care. In addition to their positions on healthcare policy issues, these organizations may engage in activities pertaining to a myriad of issues. At times we may not share the views promoted by these industry and trade groups and/or members on certain issues, but we are able to voice our concerns, as appropriate, through our colleagues who serve on the

 

Shareholder outreach is a long-standing cornerstone of our governance profile.

 

Throughout 2013, we engaged in discussions with institutional investors based in the U.S. and the U.K. representing approximately 30% of our outstanding shares on a variety of matters of interest to both parties.

 

We also are highly responsive to our retail shareholders. In 2013, Pfizer responded to over 1,000 written communications received by our Board of Directors mailboxes. Shareholder sentiment from these retail shareholders is also regularly shared with the Board.

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boards and committees of these groups. We also believe that our participation in an organization can provide opportunities to positively influence how they operate.

 

Corporate Political Contributions

 

Our Company complies fully with all federal, state, and local laws and reporting requirements governing corporate political contributions. We also request that trade associations receiving total payments of $100,000 or more from Pfizer annually, report the portion of Pfizer dues or payments used for expenditures or contributions that, if made directly by Pfizer, would not be deductible under section 162(e)(1)(B) of the Internal Revenue Code. All corporate political contributions are published semiannually in the Political Action Committee (PAC) and Corporate Political Contributions report in compliance with Pfizer corporate policy. Every two years, at the end of each federal election cycle, the report is audited by Bond Bebee, a certified public accounting and advisory firm.

 

To ensure its corporate governance program remains industry leading, Pfizer regularly discusses its political contributions reporting practices with investors and other stakeholders to ensure that its disclosures meet their needs. Shareholder engagement has helped the Company expand its level of disclosure and create or modify corporate policies related to political expenditures in recent years.

 

Independent Expenditures

 

Our Company does not make direct independent expenditures. We adopted a strict policy precluding Pfizer from making direct “independent expenditures” in connection with any federal or state election. This action formalized a process that was underway for many years at Pfizer and was adopted in response to shareholders’ concerns about corporate political spending in the wake of Citizens United .

 

Policies and Procedures for Approval/Oversight of Corporate and PAC Political Expenditures

 

All corporate and PAC political spending decisions undergo a rigorous review process conducted by the PAC Steering Committee comprised of colleagues from various divisions throughout the Company to ensure that each contribution we make is done to advance our business objectives, and is not based on the political preferences or views of any individual colleague within Pfizer.

 

The PAC Steering Committee evaluates candidates to whom we contribute on the basis of their views on issues that impact not only Pfizer but our patients as well. The Committee also takes note of whether Pfizer facilities or colleagues reside in a candidate’s district or state. All PAC and corporate contribution requests are shared with the Pfizer Political Contributions Policy Committee (PCPC), chaired by the Executive Vice President, Corporate Affairs and composed of senior leaders from different divisions in the organization.

 

The Corporate Governance Committee of the Board of Directors is responsible for maintaining an informed status on public policy and corporate political spending practices through periodic discussions and reviews of the Company’s PAC and Corporate Political Contributions reports.

 

Federal and State Lobbying Activity

 

We file quarterly reports of our federal lobbying activity in compliance with the Honest Leadership and Open Government Act of 2007. In addition to Pfizer’s federal lobbying activity, the amount we report also includes the amount spent on federal lobbying activity by trade associations of which Pfizer is a member. These reports are available to the public at: http://soprweb.senate.gov/index.cfm?event=selectfields.

 

With regard to Pfizer’s state lobbying activity, Pfizer complies with state registration and reporting requirements in all the states where Pfizer is currently active.

 

Our Company does not make direct independent expenditures. We adopted a strict policy precluding Pfizer from making direct “independent expenditures” in connection with any federal or state election.

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Corporate Governance Committee Report

 

The Corporate Governance Committee seeks to maintain and enhance Pfizer’s record of excellence in corporate governance by continually refining Pfizer’s corporate governance policies, procedures and practices. The following are examples of how we worked to achieve these objectives in 2013.

 

•	Board and Committee Matters: During 2013, the Committee assessed Director independence and qualifications to serve on various Committees; enhanced and conducted a comprehensive self-evaluation process for the Board and its Committees and implemented changes in response to the evaluation; reviewed and, where appropriate, recommended changes to other governing documents, including our By-Laws, Committee Charters and Corporate Governance Principles; and continued to review the functioning of the Board and Committees in developing areas. Changes to the Board self-evaluation process in 2013 included the implementation of the decision to conduct the evaluation in house (rather than through a third party) and the addition of several new topics to the evaluation. Among other changes to the Corporate Governance Principles, the Committee recommended that the Board consider certain refreshment mechanisms, including the rotation of Committee assignments and Committee Chairs.
•	Board Leadership Structure: The Committee conducted its robust annual review of the Board’s leadership structure, resulting in determinations to retain the current leadership structure and to enhance the Lead Independent Director Charter to further expand the authority of this important position. See “Board Leadership Structure” and “Lead Independent Director.”
•	Corporate Responsibility and Public Policy: Under its Charter, the Committee is responsible for maintaining an informed status on Company issues related to public policy, social responsibility, and philanthropy, and for monitoring emerging issues potentially affecting the reputation of the pharmaceutical industry and Pfizer specifically. The Charter also requires that the Committee stay informed of Pfizer’s public policy and corporate political spending practices, which it does through periodic discussions and reviews of the Company’s bi-annual Political Action Committee and Corporate Political Contributions Report. In 2013, the Committee reviewed Pfizer’s PAC and Corporate Political Contributions Report prior to its publication. Further, the Committee participated in discussions concerning Pfizer’s continued membership in and contributions to certain industry and trade groups. Because it is a topic of interest among certain of our shareholders and other stakeholders, a summary discussion of public policy engagement and political participation has been included in this Proxy Statement. See “Governance of the Company—Governance Information—Public Policy Engagement and Political Participation.”
•	Recruitment and Assessment of New Directors: In 2013, the Committee continued an ongoing Board succession planning process to assess candidates for election as Directors, based upon a “skills matrix.” Resulting from this process, in September 2013, the Committee recommended and the Board elected Mr. Shantanu Narayen as a Director and a member of the Corporate Governance and Science and Technology Committees. Among other qualifications, Mr. Narayen brings leadership and technology experience to the Board. The Committee considered the election of Mr. Narayen as a Director upon recommendation by a non-management Director and evaluation by a third-party search firm. The Committee also reviewed unsolicited requests to join the Board.
•	Leadership Planning: During 2013, the Committee reviewed emergency succession scenarios and approved and recommended to the Board new executive appointments for its consideration.
•	Legislative and Regulatory Developments: The Committee continued to monitor and evaluate corporate governance and executive compensation developments, including SEC rules and NYSE listing standards.
•	Shareholder Engagement: The Committee engaged in ongoing reviews of shareholder and stakeholder communications at each of its meetings, including proposals submitted by shareholders for inclusion in this Proxy Statement. In addition, the Company expanded its engagement in 2013, with corporate governance outreach extending around the U.S. and the U.K. This engagement included direct involvement by the Committee’s Chairman in discussions with shareholder proponents.

 

 

In 2013, the Corporate Governance Committee worked on numerous matters, including enhancing and conducting a comprehensive self-evaluation process for the Board and its Committees and implementing changes in response to the evaluation and recommending that the Board consider certain refreshment mechanisms, including the rotation of Committee assignments and Committee chairs.

 

 

 

In 2013, the Corporate Governance Committee recommended and the Board elected Mr. Shantanu Narayen as a Director. Among other qualifications, Mr. Narayen brings leadership and technology experience to the Board.

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•	Other Matters: The Committee executed its responsibilities under the Company’s Related Person Transaction Approval Policy and reviewed service by Directors and senior management on other boards of directors.

 

The Committee wishes to acknowledge the hard work and dedication of its former Chairman Bill Gray, who passed away in July and is greatly missed, having made a number of significant contributions to Pfizer’s strong governance profile over the years.

 

The Corporate Governance Committee

 

Dennis A. Ausiello		Helen H. Hobbs		Constance J. Horner

 

Shantanu Narayen		Stephen W. Sanger, Chair

 

THE REGULATORY AND COMPLIANCE COMMITTEE

 

The Regulatory and Compliance Committee is composed entirely of independent Directors and is governed by a Board-approved Charter stating its responsibilities. Under its Charter, the Committee is primarily responsible for assisting the Board of Directors with overseeing and reviewing the Company’s healthcare-related regulatory and compliance issues, including its compliance programs and the status of compliance with related laws, regulations, internal procedures, and the Company’s Corporate Integrity Agreement (CIA) discussed below. Management has primary responsibility for the operation of the Company’s compliance program and for implementing the requirements of the CIA. The Committee consults with management and evaluates various information and reports on compliance-related activities and matters. The Committee is also responsible for overseeing the integration and implementation of the Company’s compliance programs in acquired entities.

 

The Committee, in consultation with the Compensation Committee, is responsible for discussing with management the alignment of compensation practices for sales and marketing personnel with the Company’s compliance standards, and is expected to make recommendations to the Compensation Committee on the extent, if any, to which incentive-based compensation of any executive, senior manager, compliance personnel and/or attorney involved in any significant misconduct resulting in certain government or regulatory action, or other person with direct supervision over such employee, should be reduced, canceled or recovered.

 

In connection with the resolution of certain U.S. government investigations concerning various products, Pfizer entered into the CIA in 2009 with the Office of the Inspector General of the U.S. Department of Health and Human Services (OIG). In the CIA, Pfizer agreed to take certain actions to promote compliance with federal healthcare program and U.S. Food and Drug Administration (FDA) requirements. The Committee, based on agreement with the OIG, has assumed the Audit Committee’s responsibilities under the CIA. The CIA obligations related to the Committee include the following (i) the Committee must meet at least quarterly to review and oversee Pfizer’s compliance program; (ii) the Committee must adopt resolutions each year summarizing its review and oversight of the Company’s compliance program and its compliance with federal healthcare program requirements, FDA requirements and the obligations of the CIA and concluding that, to the best of its knowledge, Pfizer has adopted an effective compliance program to meet those requirements and obligations; and (iii) Pfizer must promptly report any changes in the composition of the Committee or any actions or changes that would affect the Committee’s ability to perform the duties necessary to meet the obligations of the CIA. The CIA is effective through 2014.

 

The Regulatory and Compliance Committee Charter is available on our website at www.pfizer.com/about/corporate_governance/regulatory_compliance_committee.jsp.

 

 

The Regulatory and Compliance Committee assists the Board of Directors with the oversight of significant healthcare-related regulatory and compliance issues.

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Regulatory and Compliance Committee Report

 

The Regulatory and Compliance Committee assists the Board of Directors with the oversight of significant healthcare-related regulatory and compliance issues. Under the terms of its charter, the Committee receives reports regarding Pfizer’s compliance program and oversees compliance with the requirements of the Company’s CIA. Management has primary responsibility for the operation of the Company’s compliance program and for implementing the requirements of the Company’s CIA.

 

In 2013, the Regulatory and Compliance Committee received reports and discussed with management, including the Chief Compliance and Risk Officer, healthcare-related regulatory and compliance risks and related compliance program initiatives and functions. Among the matters considered by the Committee were (i) potential healthcare-related regulatory or compliance risks in connection with the development, manufacture and marketing of Pfizer products, and efforts to mitigate those risks; (ii) government investigations and other legal proceedings involving the Company; (iii) internal investigations of potential healthcare-related compliance or regulatory matters; (iv) results of internal audits conducted in areas within the Committee’s oversight; (v) the Company’s responses to FDA Warning Letters and other regulatory communications; (vi) the integration of acquired companies into the Company’s compliance program; (vii) the Company’s anti-retaliation policies and procedures, and the retaliation claims received by the Company; (viii) the Company’s compensation practices for sales and marketing personnel; and (ix) external reviews of Pfizer policies and practices for compliance with federal healthcare laws and regulations.

 

In its activities, the Committee considered potential risks and steps the Company has taken to mitigate risk in areas within the Committee’s oversight. With respect to the CIA, the Committee monitored the status of the Company’s compliance with CIA requirements.

 

The Regulatory and Compliance Committee

 

Dennis A. Ausiello		W. Don Cornwell		Frances D. Fergusson, Chair

 

Constance J. Horner		Marc Tessier-Lavigne

 

THE AUDIT COMMITTEE

 

The Audit Committee is composed entirely of independent Directors and is governed by a Board-approved Charter stating its responsibilities. Under its Charter, the Audit Committee is responsible for reviewing, with the independent registered public accounting firm, Internal Audit and management, the adequacy and effectiveness of internal controls over financial reporting. The Committee also reviews and consults with management, Internal Audit and the independent registered public accounting firm on matters related to the annual audit, the published financial statements, earnings releases, and the accounting principles applied. In addition, the Committee reviews reports from management relating to the status of compliance with laws, regulations and internal procedures.

 

The Committee is directly responsible for the appointment, compensation, retention and oversight of the Company’s independent registered public accounting firm. To execute this responsibility, the Committee engages in a comprehensive annual evaluation of the independent registered public accounting firm’s qualifications, performance and independence and whether the independent registered public accounting firm should be rotated, and considers the advisability and potential impact of selecting a different independent registered public accounting firm.

 

In addition, the Committee is responsible for reviewing and discussing with management the Company’s policies with respect to risk assessment and risk management. Further information about the

 

The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the Company’s independent registered public accounting firm. In 2013, the Audit Committee met 13 times.

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role of the Audit Committee in risk assessment and risk management is included in the section entitled “Governance Information—The Board’s Role in Risk Oversight.”

 

The Audit Committee has established policies and procedures for the pre-approval of all services provided by the independent registered public accounting firm. The Audit Committee also has established procedures for the receipt, retention and treatment, on a confidential basis, of complaints received by the Company regarding its accounting, internal controls and auditing matters. Further details of the role of the Audit Committee, as well as the Audit Committee Report, may be found in “Item 2—Ratification of Independent Registered Public Accounting Firm” later in this Proxy Statement.

 

The Board of Directors has determined that each member of the Audit Committee is financially literate and independent, as defined by the rules of the SEC and the NYSE, as well as independent under our Director Qualification Standards. The Board of Directors also has determined that each of Ms. Nora Johnson and Messrs. Cornwell and Sanger is an “audit committee financial expert” for purposes of the SEC’s rules.

 

The Audit Committee Charter is available on our website at www.pfizer.com/about/corporate_governance/audit_committee.jsp.

 

THE COMPENSATION COMMITTEE

 

The Compensation Committee is composed entirely of independent Directors and is governed by a Board-approved Charter stating its responsibilities. The Committee determines and oversees the execution of the Company’s executive compensation philosophy and oversees the administration of the Company’s executive compensation programs. Its responsibilities also include overseeing Pfizer’s compensation and benefit plans and policies, administering its stock plans (including reviewing and approving equity grants) and reviewing and approving annually all compensation decisions for the Company’s executive officers, including the Named Executive Officers identified in the 2013 Summary Compensation Table. See “Compensation Discussion and Analysis” later in this Proxy Statement for information concerning the Committee’s role, processes and activities in overseeing executive compensation. See also “Compensation Committee Report” later in this Proxy Statement.

 

The Board of Directors has determined that each of the members of the Compensation Committee is independent, as defined by SEC rules, NYSE listing standards and Pfizer’s Director Qualification Standards. In addition, each Committee member is a “non-employee director” as defined in Rule 16b-3 under the Securities Exchange Act of 1934 and an “outside director” as defined in Section 162(m) of the Internal Revenue Code.

 

The Compensation Committee Charter is available on our website at www.pfizer.com/about/corporate_governance/compensation_committee.jsp. The Compensation Committee Report appears under “Executive Compensation” later in this Proxy Statement.

 

Compensation Committee Interlocks and Insider Participation. During 2013 and as of the date of this Proxy Statement, none of the members of the Compensation Committee was or is an officer or employee of the Company, and no executive officer of the Company served or serves on the compensation committee or board of any company that employed or employs any member of the Company’s Compensation Committee or Board of Directors.

 

The Compensation Committee determines and oversees the execution of the Company’s executive compensation philosophy and oversees the administration of our executive compensation programs.

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THE SCIENCE AND TECHNOLOGY COMMITTEE

 

The Science and Technology Committee is composed entirely of independent Directors and is governed by a Board-approved Charter stating its responsibilities. Under its Charter, the Science and Technology Committee is responsible for periodically examining management’s strategic direction of and investment in the Company’s pharmaceutical research and development (R&D) and technology initiatives. This includes monitoring progress of the Company’s R&D pipeline, and evaluating the quality and direction of the Company’s R&D programs and the Company’s approach to acquiring and maintaining key scientific technologies. The Committee also identifies emerging issues, assesses the performance of R&D leaders, and evaluates the sufficiency of review by external scientific experts. The Science and Technology Committee Charter is available on our website at www.pfizer.com/about/corporate_governance/science_technology_committee.jsp.

 

The Science and Technology Committee is responsible for periodically examining management’s strategic direction of and investment in our pharmaceutical research and development and technology initiatives.

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