The autopsy of Pfizer (PFE) CEO Jeff Kindler's sudden Sunday night resignation continues as Wall Street turns its attention to the role of the company's board of directors. The average Pfizer director has sat on the board for nine years -- meaning they gave the thumbs up to lousy strategic decisions for five years before Kindler got the top job. In that light, the story since Sunday -- that the board ousted Kindler because they didn't like his micromanaging --- makes less and less sense.
The FT reports that an investor revolt is brewing against the Pfizer board:
Charles Butler at Barclays Capital wrote in a research note: "Had Ian Read been appointed the interim CEO, allowing for some time for the board and shareholders to evaluate his leadership, we would have viewed the announcement in a more positive light."
Martin Shkreli, head of MSMB Capital Management, a hedge fund with a small holding in Pfizer, has written to several large investors this week ... "Pfizer's board of directors has been largely composed of the same value destroyers for more than a decade," he said.
Tim Anderson, an analyst with Sanford Bernstein, said: "When does the board take accountability? It's been in place for many years and is partly responsible."Pfizer's board looks more and more like a liability as the years go by. Not counting new CEO Ian Read, only one of the 14 directors is under 60. Only three of them have a background in medicine or chemicals. The Pfizer board is, literally, a bunch of old people who don't know much about drugs. And they're handsomely compensated for their lack of pharmaceutical experience -- many receive more than $200,000 a year for approving the decisions they didn't like Kindler executing.
There's a sobering bulletin board on Cafe Pharma, the gossip web site for pharma industry employees, in which Pfizer staff are asked to "Name your favorite Pfizer blunder in the last 15 years." It's been viewed by 6,400 people and features 138 replies. What's startling about it -- other than the sheer number of strategic errors that Pfizer has committed over the years; it's in the dozens -- is how many of the blunders came from decisions made before Kindler became CEO:
- The $16.6 billion sale of Pfizer's lucrative non-prescription product division, a steady-eddie cash earner that would have been vital to Pfizer in the run up to the loss of Lipitor? That was former CEO Hank McKinnell's decision.
- Burning $2.8 billion on the failed insulin inhaler Exubera? McKinnell's decision.
- The $1.3 billion lost on Esperion, a cholesterol drug maker? McKinnell, again.
- Losing $100 million on indiplon, a failed sleeping pill? McKinnell.