Former Pfizer (PFE) CEO Jeff Kindler had to sign a vow of silence that prevents him from saying certain "truthful statements" about the company in order to receive his $20.7 million severance package, according to an SEC disclosure.
While the agreement is not unique -- former biotech chief Corey Goodman signed a similar omertÃ -style vow -- it makes it very difficult for Kindler or any current member of management to ever describe candidly, in detail, what went on between Kindler and the board of directors in the days and hours leading up to his unexpected Sunday night resignation on Dec. 5.
Here's the relevant language in the agreement Kindler signed. It begins with an expansive definition of "confidential information" that prevents Kindler from talking about any "knowledge or data" he has about the company:
Executive shall hold all trade secrets, secret or confidential information, intellectual property, or other proprietary information, knowledge or data relating to the Company or any of its subsidiaries or affiliated companies and their respective businesses that Executive obtained during or after Executive's employment by the Company or any of its affiliated companies ("Confidential Information") in strict confidence.It then bans Kindler or Pfizer from saying anything negative or critical:
Executive covenants and agrees not to engage in any act or say anything that is intended, or may reasonably be expected, to harm the reputation, business, prospects or operations of the Company, its officers, directors, stockholders or employees.
The Company will instruct its senior management and directors not to engage in any act or say anything that is intended, or may reasonably be expected, to harm the reputation, or business prospects of Executive and further agrees to make no official statements that are intended, or may reasonably be expected, to harm the reputation of Executive.It ends by strongly hinting that "truthful statements" will only be allowed if triggered by some kind of legal proceeding, such as a subpoena:
Nothing in this Section 11 shall prohibit any person from making any truthful statements to the extent required by law or legal process.The main difference between Goodman and Kindler's agreements is that Kindler's does not contain the specific ban on talking to the media that Goodman's had; but the assurances offered in Kindler's agreement all but prevent that anyway.
While that lack of transparency may help new CEO Ian Read in the short term -- he can get to work without the distraction of a debate about whether the Kindler Kibosh was justified -- it probably hurts corporations in the long term. Investors, customers and employees get less clarity on what's really going on at the company. Rumors and whispers fill the information vacuum (for instance, there are already three competing explanations for why Kindler left, including the official one).
The manner of Kindler's resignation and the confidentiality agreements are tailor-made to generate those rumors: He resigned without warning, on a Sunday, without a succession plan in place, after only five years on the job, upon suddenly becoming "excited at the opportunity to recharge my batteries".
That harms the reputation of Pfizer by making it look like a Kremlin-esque puzzle palace where sudden, unexplained decisions leave insiders and observers confused as to who really has the power inside the company and what the lines of command are.