How we came about and who we are…. We believe that the time is ripe for the true owners of corporate America to join together to force their direct, legal representatives – corporate directors – to begin once again to act in the best interests of shareholder owners.

Exploding executive pay unrelated to performance, multiplying corporate scandals, failing pension funds, and a stock market that has gone nowhere in six years have made it obvious that something is desperately wrong. The chorus of critics is growing, most prominently among them Warren Buffett, Jack Bogle and David Swensen.

The math is simple. Over time and after inflation, stocks have risen 6 to 7%. In the last decade management and its entourage have absorbed an ever-expanding share of the value that corporate America generates. Managers and their friends have done well while future retirees, endowments, universities, museums, widows and orphans have broken even – if they are lucky. This is not a coincidence.

About a year ago, a group of Texas investors – concerned that they would have to pay for the problem twice – first as investors and second as taxpayers who would have to foot the bill for failed retirement plans – started talking. The talking spread – to Maine, to New York, to California, to Washington DC. Intense meetings were held where potential solutions were suggested and frequently shot down.

Talk is cheap, and the clock is ticking. All the arguing and all the discussion boils down to this: Shareholders in a united front must cause directors first and foremost to act in the interests of the shareholder owners they are paid and legally bound to serve.

We emphasize that we are investors and capitalists. We prize the driven, egocentric, imperial Chief Executive Officer who builds shareholder value. But we want our representatives – corporate directors – to preserve that value for the shareholders for whom they are the direct, legal representatives.

Mushrooming management compensation, unconnected to performance, is an obvious area where directors have failed the people they legally represent. Investors for Director Accountability screened the largest 1,000 American corporations in order to pinpoint the most egregious disconnects. Qualitative judgments were then applied. Long story short: Investors for Director Accountability has concluded that shareholders should withhold their votes for the four nominees for the Pfizer Board of Directors who are members of the Board’s compensation committee. This would be a first step on a long road to restore director accountability to owners.

CEO Hank McKinnell has served as Pfizer’s Chief Executive Officer for five years. During that time frame his annual cash compensation has risen to $5,970,500 . Pfizer estimates the present value of Mr. McKinnell’s total compensation for 2005 at $15,880,989. The value of Mr. McKinnell’s direct holdings of Pfizer stock represents less than one month’s compensation. Pfizer’s compensation committee and its full Board have further seen fit to reward Mr. McKinnell with a $6.5 million per year retirement package for life. Average compensation for non-employee Board members has risen to approximately $200,000 per year.

At the same time, in the five years since Mr. McKinnell became CEO, Pfizer’s stock price has declined approximately 44% . A number of Pfizer’s leading drugs representing billions in sales will soon go off patent. Some investors believe Pfizer’s pipeline of new drugs is running dry and have raised serious questions about the future prosperity of the company.

Specifically, we suggest that shareholders withhold their votes for the four nominees for the Pfizer Board of Directors who are members of the Board’s compensation committee:

1. Robert N. Burt
2. Stanley O. Ikenberry
3. George A. Lorch
4. Dana G. Mead

Public company directors must remember whom they work for and act in the best interests of their shareholder owners. As a starting point, Investors for Director Accountability suggests that Pfizer shareholders specifically withhold their votes for these four men.

In the coming days and weeks, Investors for Director Accountability will announce further initiatives that will remind directors of their fiduciary obligations.

Sincerely,


Frederick E. Rowe, Jr.
President and Trustee
info@investorsfordirectoraccountability.org