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RegistrationNo. 333-158237
• | $33.00 in cash; and | |
• | 0.985 of a share of Pfizer common stock. |
Chairman, President and Chief Executive Officer
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Pfizer Inc. 235 East 42nd Street New York, New York 10017 Attn: Investor Relations Tel: 1-212-573-2323 | Wyeth Five Giralda Farms Madison, New Jersey 07940 Attn: Investor Relations Tel: 1-877-552-4744 |
48 Wall Street, 22nd Floor
New York, New York 10005
1-800-859-8509 (toll free) or 1-212-269-5550 (call collect)
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Madison, New Jersey 07940
• | To consider and vote on a proposal to adopt the Agreement and Plan of Merger, dated as of January 25, 2009 (as it may be amended from time to time, the “merger agreement”), among Pfizer Inc. (“Pfizer”), Wagner Acquisition Corp., awholly-owned subsidiary of Pfizer, and Wyeth, a copy of which is attached as Annex A to the proxy statement/prospectus accompanying this notice; | |
• | To approve the adjournment of the meeting, if necessary, to solicit additional proxies if there are not sufficient votes to adopt the merger agreement at the time of the meeting; | |
• | To elect 11 nominees to the Wyeth board of directors, each to hold office until the earliest of Wyeth’s 2010 annual meeting of stockholders, his or her removal or resignation or, if the merger is completed, the effective time of the merger; | |
• | To ratify the appointment of PricewaterhouseCoopers LLP as Wyeth’s independent registered public accounting firm for 2009; and | |
• | To consider and vote upon two stockholder proposals: |
• | A stockholder proposal regarding reporting on Wyeth’s political contributions and trade association payments; and | |
• | A stockholder proposal regarding special stockholder meetings. |
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Corporate Secretary
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Q: | Why am I receiving this document? | |
A: | Pfizer and Wyeth have agreed to a merger, pursuant to which Wyeth will become awholly-owned subsidiary of Pfizer and will no longer be a publicly held corporation. In addition to the payment of cash, in the merger, Pfizer will issue shares of Pfizer common stock as part of the consideration to be paid to holders of Wyeth common stock. Pfizer also will issue shares of a new series of preferred stock in exchange for any Wyeth $2 Convertible Preferred Stock outstanding at the effective time of the merger; however on April 23, 2009, Wyeth announced that, pursuant to a request by Pfizer, it would redeem all of its outstanding Wyeth $2 Convertible Preferred Stock, effective on July 15, 2009. Therefore, it is expected that there will not be any shares of Wyeth $2 Convertible Preferred Stock outstanding at the effective time of the merger. In such case, Pfizer will not create or issue a new series of preferred stock in connection with the merger. In order to complete the merger, Wyeth stockholders must vote to adopt the merger agreement. | |
We are delivering this document to you as both a proxy statement of Wyeth and a prospectus of Pfizer. It is a proxy statement because the Wyeth board of directors is soliciting proxies from its stockholders to vote on the adoption of the merger agreement at Wyeth’s 2009 annual meeting of stockholders as well as the other matters set forth in the notice of the meeting and described in this proxy statement/prospectus, and your proxy will be used at the meeting or at any adjournment or postponement of the meeting. It is a prospectus because Pfizer will issue Pfizer common stock to the Wyeth common stockholders in the merger (and, if any shares of Wyeth $2 Convertible Preferred Stock are outstanding at the effective time of the merger, will issue shares of Pfizer $2 Convertible Preferred Stock to the holders of Wyeth $2 Convertible Preferred Stock). | ||
Q: | What am I being asked to vote on? | |
A: | Wyeth’s stockholders are being asked to vote on the following proposals: | |
• to adopt the merger agreement between Pfizer and Wyeth; | ||
• to approve the adjournment of the meeting, if necessary, to solicit additional proxies if there are not sufficient votes to adopt the merger agreement at the time of the meeting; | ||
• to elect to the Wyeth board of directors each of the nominees for director named in this proxy statement/prospectus; | ||
• to ratify the appointment of PricewaterhouseCoopers LLP as Wyeth’s independent registered public accounting firm for 2009; and | ||
• the following two stockholder proposals: |
• | a stockholder proposal regarding reporting on Wyeth’s political contributions and trade association payments; and | |
• | a stockholder proposal regarding special stockholder meetings. |
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Q: | Are there any other matters to be addressed at the meeting? | |
A: | We know of no other matters to be brought before the meeting, but if other matters are brought before the meeting or at any adjournment or postponement of the meeting, the officers named in your proxy intend to take such action as in their judgment is in the best interest of Wyeth and its stockholders. | |
Q: | What is a proxy and how do I vote? | |
A: | A proxy is a legal designation of another person to vote your shares on your behalf. If you hold shares in your own name or if you participate in Wyeth’s BuyDIRECT Stock Purchase and Sale Plan through The Bank of New York Mellon, you may submit a proxy for your shares by using the toll-free number or the Internet Web site if your proxy card includes instructions for using these quick, cost-effective and easy methods for submitting proxies. You also may submit a proxy in writing by simply filling out, signing and dating your proxy card and mailing it in the prepaid envelope included with these proxy materials. If you submit a proxy by telephone or the Internet Web site, please do not return your proxy card by mail. You will need to follow the instructions when you submit a proxy using any of these methods to make sure your shares will be voted at the meeting. You also may vote by submitting a ballot in person if you attend the meeting. However, we encourage you to submit a proxy by mail by completing your proxy card, by telephone or via the Internet even if you plan to attend the meeting. | |
If you hold shares through a broker or other nominee, you may instruct your broker or other nominee to vote your shares by following the instructions that the broker or nominee provides to you with these materials. Most brokers offer the ability for stockholders to submit voting instructions by mail by completing a voting instruction card, by telephone and via the Internet. If you hold shares through a broker or other nominee and wish to vote your shares at the meeting, you must obtain a legal proxy from your broker or nominee and present it to the inspector of election with your ballot when you vote at the meeting. | ||
Q: | When is this proxy statement/prospectus being mailed? |
A: | This proxy statement/prospectus and the proxy card are first being sent to Wyeth stockholders on or near June 18, 2009. |
Q: | Must you give voting instructions if you participate in Wyeth’s BuyDIRECT Stock Purchase and Sale Plan? | |
A: | Yes.If you participate in Wyeth’s BuyDIRECT Stock Purchase and Sale Plan and do not submit a proxy by mail by completing your proxy card, by telephone or via the Internet, your shares will not be voted. | |
Q: | When and where will the meeting be held? | |
A: | The meeting will be held in the Plaza Ballroom of the Hyatt Morristown at Headquarters Plaza located at 3 Speedwell Avenue, Morristown, New Jersey on July 20, 2009 at 9:00 a.m., Eastern Daylight Time. | |
Q. | Who is entitled to vote at the meeting? |
A: | All holders of Wyeth common stock and Wyeth $2 Convertible Preferred Stock who held shares at the close of business on the “record date” (June 5, 2009) are entitled to receive notice of and to vote at the meeting provided that such shares remain outstanding on the date of the meeting. On April 23, 2009, Wyeth announced that, pursuant to a request from Pfizer made in accordance with the terms and conditions of the merger agreement, Wyeth will redeem all of its outstanding Wyeth $2 Convertible Preferred Stock, effective on July 15, 2009; accordingly, Wyeth $2 Convertible Preferred Stock will not be outstanding at the time of the meeting and former holders thereof will not be entitled to vote such shares at the meeting. |
Q: | As a Wyeth stockholder, why am I electing Wyeth directors, ratifying the appointment of an independent registered public accounting firm for Wyeth and considering two Wyeth stockholder proposals when I am being asked to adopt the merger agreement? | |
A: | Delaware law requires Wyeth to hold a meeting of its stockholders each year. Wyeth has determined that it will observe this requirement and hold the meeting to elect directors to the Wyeth board of directors, ratify the appointment of PricewaterhouseCoopers LLP as Wyeth’s independent registered public accounting firm |
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for 2009 and consider two Wyeth stockholder proposals. The Wyeth directors elected at the meeting will serve as directors of Wyeth following the meeting through the earliest of Wyeth’s 2010 annual meeting of stockholders, his or her removal or resignation, or, if the merger is completed, the effective time of the merger. At the effective time of the merger, the individuals serving as Wyeth directors immediately prior to the effective time of the merger will no longer be Wyeth directors and two members of the Wyeth board of directors who were members of the Wyeth board of directors as of the date of the merger agreement will be appointed to the Pfizer board of directors. PricewaterhouseCoopers LLP will not continue to conduct an independent audit of Wyeth following the merger. The election of the nominees for director, the ratification of the selection of PricewaterhouseCoopers LLP as Wyeth’s independent registered public accounting firm and the stockholder proposals are not conditions to completion of the merger. | ||
Q: | Why is my vote important? | |
A: | If you do not submit a proxy or vote in person at the meeting, it will be more difficult for us to obtain the necessary quorum to hold the meeting. In addition, your failure to submit a proxy or to vote in person will have the same effect as a vote against the adoption of the merger agreement. If you hold your shares through a broker, your broker will not be able to cast a vote on the adoption of the merger agreement without instructions from you.The Wyeth board of directors recommends that you vote “FOR” the adoption of the merger agreement. | |
Q: | How many shares may be voted at the meeting? | |
A: | All stockholders who hold shares of Wyeth common stock or Wyeth $2 Convertible Preferred Stock at the close of business on the “record date” (June 5, 2009) are entitled to vote at the meeting provided that such shares remain outstanding on the date of the meeting. As of the close of business on the record date, there were 1,333,898,690 shares of Wyeth common stock and 7,600 shares of Wyeth $2 Convertible Preferred Stock outstanding and entitled to vote at the meeting. Each share of common stock is entitled to one vote and each share of Wyeth $2 Convertible Preferred Stock is entitled to 36 votes. On April 23, 2009, Wyeth announced that, pursuant to a request from Pfizer made in accordance with the terms and conditions of the merger agreement, Wyeth will redeem all of its outstanding Wyeth $2 Convertible Preferred Stock, effective on July 15, 2009; accordingly, Wyeth $2 Convertible Preferred Stock will not be outstanding at the time of the meeting and former holders thereof will not be entitled to vote such shares at the meeting. | |
Q: | What constitutes a quorum for the meeting? | |
A: | A majority of the outstanding shares having voting power being present in person or represented by proxy constitutes a quorum for the meeting. | |
Q: | How many votes are required for the approval of each item? | |
A: | The following are the vote requirements for the various proposals: | |
• Adoption of the Merger Agreement: To adopt the merger agreement, the holders of a majority of the combined voting power of the outstanding shares of Wyeth common stock and Wyeth $2 Convertible Preferred Stock entitled to vote on the proposal, voting together as a single class, must vote in favor of adoption of the merger agreement. | ||
• Election of Directors: Nominees receiving a majority of the votes cast will be elected as a director. This means that for a nominee for director to be elected to the Wyeth board of directors, the number of votes cast for that director nominee must exceed the number of votes cast against that director nominee. | ||
• All Other Matters: All other matters on the agenda will be decided by the affirmative vote of the holders of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote thereon in accordance with the Wyeth bylaws. | ||
Q: | Can you keep your vote secret? | |
A: | Yes. You may request that your vote be kept secret until after the meeting by asking us to do so on your proxy card or by following the instructions when submitting your proxy by telephone or via the Internet Web site. |
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Q: | How will abstentions be counted? | |
A: | Abstentions are counted as present and entitled to vote for purposes of determining a quorum. If you abstain from voting in the election of directors, you will effectively not vote on that matter at the meeting. Abstentions are not considered to be votes cast under the Wyeth bylaws or under the laws of Delaware (Wyeth’s state of incorporation) and will have no effect on the outcome of the vote for the election of directors.For the proposal to adopt the merger agreement, abstentions have the same effect as a vote against the merger. For the proposal to adjourn the meeting to solicit additional proxies, the proposal to ratify the independent registered public accounting firm and for each of the two stockholder proposals, abstentions are treated as present and entitled to vote at the meeting and therefore have the same effect as a vote against the matter. | |
Q: | How will my shares be represented at the meeting? | |
A: | At the meeting, the officers named in your proxy card will vote your shares in the manner you requested if you correctly submitted your proxy. If you sign your proxy card and return it without indicating how you would like to vote your shares, your proxy will be voted as the Wyeth board of directors recommends, which is: | |
• FORthe adoption of the merger agreement; | ||
• FORthe approval of the adjournment of the meeting, if necessary to solicit additional proxies if there are not sufficient votes to adopt the merger agreement at the time of the meeting; | ||
• FORthe election to the Wyeth board of directors of each of the nominees for director named in this proxy statement/prospectus; | ||
• FORthe ratification of the appointment of PricewaterhouseCoopers LLP as Wyeth’s independent registered public accounting firm for 2009; and | ||
• AGAINSTthe following two stockholder proposals: | ||
• a stockholder proposal regarding reporting on Wyeth’s political contributions and trade association payments; and | ||
• a stockholder proposal regarding special stockholder meetings. | ||
Q: | What happens if I sell my shares after the record date but before the meeting? | |
A: | The record date of the meeting is earlier than the date of the meeting and the date that the merger is expected to be completed. If you transfer your Wyeth shares after the record date but before the date of the meeting, you will retain your right to vote at the meeting (provided that such shares remain outstanding on the date of the meeting), but you will not have the right to receive the merger consideration to be received by Wyeth’s stockholders in the merger. In order to receive the merger consideration, you must hold your shares through completion of the merger. | |
Q: | What do I do if I receive more than one proxy statement/prospectus or set of voting instructions? | |
A: | If you hold shares directly as a record holder and also in “street name,” or otherwise through a nominee, you may receive more than one proxy statement/prospectus and/or set of voting instructions relating to the meeting. These should each be voted and/or returned separately in order to ensure that all of your shares are voted. | |
Q: | Are Wyeth stockholders entitled to seek appraisal rights if they do not vote in favor of the adoption of the merger agreement? | |
A: | Yes. Under Delaware law, record holders of Wyeth common stock who do not vote in favor of the adoption of the merger agreement will be entitled to seek appraisal rights in connection with the merger, and if the merger is completed, obtain payment in cash of the fair value of their shares of common stock as determined by the Delaware Chancery Court, instead of the merger consideration. To exercise your appraisal rights, you must strictly follow the procedures prescribed by Delaware law. These procedures are summarized in this proxy statement/prospectus. In addition, the text of the applicable provisions of Delaware law is included as Annex D to this proxy statement/prospectus. Failure to strictly comply with these provisions will result in a loss of the right of appraisal. |
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Q: | If my Wyeth shares are held in street name by my broker, will my broker automatically vote my shares for me? | |
A: | No. If your shares are held in an account at a broker, you must instruct the broker on how to vote your shares. If you do not provide voting instructions to your broker, your shares will not be voted on any proposal on which your 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 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 current rules of the New York Stock Exchange, which is referred to as the NYSE, we believe that brokers do not have discretionary authority to vote on the proposal to adopt the merger agreement or the two stockholder proposals. A broker non-vote will have the same effect as a vote against adoption of the merger agreement but will have no effect on whether the two stockholder proposals are approved. | |
Q: | Can I revoke my proxy? | |
A: | Yes. You may revoke your proxy at any time before the meeting. If you are a stockholder of record or participate in Wyeth’s BuyDIRECT Stock Purchase and Sale Plan through The Bank of New York Mellon in your own name, you can revoke your proxy before it is exercised by written notice to the Corporate Secretary of Wyeth, by timely delivery of a valid, later-dated proxy card or a later-dated proxy submitted by telephone or via the Internet, or by voting by ballot in person if you attend the meeting. Simply attending the meeting will not revoke your proxy. If you hold shares through a broker or other nominee, you may submit new voting instructions by contacting your broker or other nominee. | |
Q: | Who may attend the meeting? | |
A: | Wyeth stockholders (or their authorized representatives) and Wyeth’s invited guests may attend the meeting. Verification of stock ownership will be required at the meeting. If you own your shares in your own name or hold them through a broker (and can provide documentation showing ownership such as a letter from your broker or a recent account statement) at the close of business on the record date (June 5, 2009), you will be permitted to attend the meeting. Stockholders may call the Wyeth Office of the Corporate Secretary at1-973-660-6073 to obtain directions to the Hyatt Morristown at Headquarters Plaza, 3 Speedwell Avenue, Morristown, New Jersey. | |
Q: | Will cameras and recording devices be permitted at the meeting? | |
A: | No. Stockholders are not permitted to bring cameras or recording equipment into the meeting room. | |
Q: | If I am a Wyeth stockholder, should I send in my Wyeth stock certificates now? | |
A: | No. After completion of the merger, Pfizer will send you instructions for exchanging your Wyeth stock certificates for the merger consideration. Unless you specifically request to receive Pfizer stock certificates, the shares of Pfizer stock you receive in the merger will be issued in book-entry form. | |
Q: | Will a proxy solicitor be used? | |
A: | Yes. Wyeth has engaged D.F. King & Co., Inc. to assist in the solicitation of proxies for the meeting and Wyeth estimates it will pay D.F. King & Co., Inc. a fee of approximately $75,000. Wyeth has also agreed to reimburse D.F. King & Co., Inc. for reasonable out-of-pocket expenses and disbursements incurred in connection with the proxy solicitation and to indemnify D.F. King & Co., Inc. against certain losses, costs and expenses. In addition, our officers and employees may request the return of proxies by telephone or in person, but no additional compensation will be paid to them. | |
Q: | Who should I call with questions? | |
A: | Wyeth stockholders should call D.F. King & Co., Inc., Wyeth’s proxy solicitor, toll-free at 1-800-859-8509 or collect at 1-212-269-5550 with any questions about the merger and the other matters to be voted on at the meeting, or to obtain additional copies of this proxy statement/prospectus or additional proxy cards. |
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• | vesting of all unvested Wyeth stock options held by Wyeth’s directors and employees (including all current executive officers) and the cancelation of these stock options (with holders of stock options having a per share exercise price that is less than the per share value of the merger consideration receiving an amount in cash (without interest and less tax withholding) equal to (i) the excess of the per share value of the merger consideration over the per share option exercise price, multiplied by (ii) the total number of shares of Wyeth common stock underlying all such options, but stock options having a per share exercise price that is greater than or equal to the per share value of the merger consideration being canceled without consideration); | |
• | vesting of all unvested RSUs held by Wyeth employees (including all executive officers), except that certain RSUs held by certain executive officers will only become vested as to 80% of such unvested RSUs, and the cancelation of all vested RSUs in exchange for an amount in cash (without interest and less tax withholding) equal to the per share value of the merger consideration for each share of Wyeth common stock into which such vested portion of the RSU would otherwise be convertible, except for RSUs that constitute deferred compensation under applicable tax rules, which will become a vested right to receive merger consideration for each share of Wyeth common stock into which such RSUs would otherwise be convertible, to be paid (less tax withholding) in accordance with the applicable deferred payment terms; | |
• | change-in-control severance agreements with Wyeth’s current executive officers; | |
• | vesting of all unvested DSUs held by Wyeth’s directors and the cancelation of those units in exchange for an amount in cash (without interest and less tax withholding) equal to the per share value of the merger consideration for each share of Wyeth common stock subject to such DSU; | |
• | the conversion of all phantom shares of Wyeth common stock held by (i) Wyeth’s directors under the Wyeth Directors’ Deferral Plan into the right to receive an amount in cash (without interest and less tax withholding) equal to the per share value of the merger consideration of such phantom shares and (ii) Wyeth employees (including executive officers) under the Wyeth Deferred Compensation Plans and Supplemental Employee Savings Plan into phantom merger consideration which, to the extent provided for under the terms of these plans, will become eligible to be reinvested in other phantom investment options provided for under these plans, and all amounts payable under all such plans will be paid in accordance with the applicable payment terms (less tax withholding); | |
• | long-term incentive awards for 2009, payable in cash, to designated Wyeth employees (including all current executive officers), which generally will become vested as to 100% of the amount of the award on the third anniversary of the applicable grant date (or, if earlier, upon a qualifying termination of employment following the effective time of the merger); | |
• | the continued service on the Pfizer board of directors by two members of the Wyeth board of directors who were members of the Wyeth board of directors as of the date of the merger agreement; and | |
• | rights to indemnification and directors’ and officers’ liability insurance. |
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• | adoption of the merger agreement by Wyeth’s stockholders; | |
• | absence of any statute, law, ordinance, rule, regulation, judgment, order, injunction (whether temporary, preliminary or permanent), decision, opinion or decree issued by a court or other governmental entity in the United States or the European Union that makes the merger illegal or prohibits the consummation of the merger; | |
• | the applicable waiting period (and any extension thereof) under the HSR Act will have expired or been terminated, and competition approvals and authorizations required from the European Commission and China’s Ministry of Commerce and the applicable antitrust governmental authorities in Australia and Canada will have been obtained; |
• | approval for the listing on the NYSE of the Pfizer common stock and, if necessary, the Pfizer $2 Convertible Preferred Stock to be issued to the Wyeth stockholders in the merger, subject to official notice of issuance; |
• | the registration statement onForm S-4, of which this proxy statement/prospectus forms a part, having been declared effective by the U.S. Securities and Exchange Commission, or the SEC, and the absence of an effective stop order suspending effectiveness of theForm S-4 or proceedings pending before the SEC for that purpose; | |
• | the representations and warranties of the other party will be true and correct, subject to certain materiality thresholds, as of the date of the merger agreement and as of the closing date of the merger; and | |
• | the other party shall have performed or complied with, in all material respects, all of its material agreements and covenants under the merger agreement at or prior to the consummation of the merger. |
• | Pfizer having on the closing date, and taking into account the merger, (a) an unsecured long-term obligations rating of at least “A2” (with stable, or better, outlook) and a commercial paper credit rating of at least“P-1” (which rating will be affirmed) from Moody’s Investors Services, Inc. and (b) a long-term issuer credit rating of at least “A” (with stable, or better, outlook) and a short-term issuer credit rating of at least“A-1” (which rating will be affirmed) from Standard & Poor’s Ratings Group; and |
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• | since December 31, 2007, and subject to specified exceptions, there not having been any event, occurrence, development or state of circumstances or facts or condition that has had or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on Pfizer. |
• | Pfizer and Wyeth may mutually agree to terminate the merger agreement before completing the merger, even after stockholder approval, as long as the termination is approved by each of the Pfizer board of directors and the Wyeth board of directors. | |
• | In addition, either of Pfizer or Wyeth may terminate the merger agreement if: |
• | the merger has not been consummated by October 31, 2009 (or if an election notice has been, or is capable of being, delivered by Wyeth to Pfizer within five business days of October 31, 2009, then such date will be extended to twenty business days after October 31, 2009, and in no event after December 31, 2009), unless all conditions have been satisfied other than the condition related to receipt of antitrust regulatory approvals, in which case the date upon which Pfizer or Wyeth may terminate the merger agreement will be extended to December 31, 2009 (such date, as may be extended, being referred to as the termination date); | |
• | a governmental entity in the United States or European Union has issued a final and non-appealable order, judgment, decision, opinion, decree or ruling or taken any other action permanently enjoining or otherwise permanently prohibiting the consummation of the merger; | |
• | Wyeth’s stockholders have failed to adopt the merger agreement; or | |
• | the other party has breached its respective representations, warranties, covenants or agreements under the merger agreement such that the applicable closing conditions would not be satisfied (and such breach is incapable of being cured prior to the termination date). |
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• | Pfizer may also terminate the merger agreement if the Wyeth board of directors changes its recommendation of the merger agreement, or takes certain other actions or fails to take certain other actions in a manner that is inconsistent with its recommendation of the merger agreement. | |
• | Wyeth may also terminate the merger agreement if: |
• | Pfizer does not consummate the merger within five business days following the satisfaction or waiver of the conditions to the merger (other than (i) the condition relating to Pfizer’s financing sources not declining to make the financing (or alternative financing) available primarily by reason of the failure to satisfy either or both of the Specified Financing Conditions and (ii) the other conditions that, by their nature, cannot be satisfied until the closing of the merger, but subject to the fulfillment or waiver of those conditions), due to the failure of the condition described in clause (i) above, in which case, Wyeth must deliver an election notice notifying Pfizer of its intention to exercise its right to terminate the merger agreement, and may terminate the merger agreement only if Pfizer does not consummate the merger on the earlier of (x) the tenth business day following the date on which Pfizer receives such election notice and (y) December 31, 2009; or | |
• | at any time prior to the adoption of the merger agreement by Wyeth’s stockholders, if the Wyeth board of directors determines to enter into a superior proposal, but only if Wyeth (i) is not in material breach of its agreement not to solicit alternative proposals and (ii) the applicable termination fee is paid substantially concurrently with such termination. |
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Implied per Share | ||||||||||||
Pfizer | Wyeth | Value of Merger | ||||||||||
Common Stock | Common Stock | Consideration | ||||||||||
At January 23, 2009 | $ | 17.45 | $ | 43.74 | $ | 50.19 | ||||||
At June 16, 2009 | $ | 14.16 | $ | 44.05 | $ | 46.95 |
• | to adopt the merger agreement; |
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• | to approve the adjournment of the meeting, if necessary, to solicit additional proxies if there are not sufficient votes to adopt the merger agreement at the time of the meeting; | |
• | to elect to the Wyeth board of directors each of the nominees for director named in this proxy statement/prospectus; | |
• | to ratify the appointment of PricewaterhouseCoopers LLP as Wyeth’s independent registered public accounting firm for 2009; and | |
• | the following two stockholder proposals: |
• | a stockholder proposal regarding reporting on Wyeth’s political contributions and trade association payments; and | |
• | a stockholder proposal regarding special stockholder meetings. |
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As of and for the | As of and for the | |||||||
Three Months Ended | Year Ended | |||||||
COMPARATIVE PER SHARE DATA | March 29, 2009 | December 31, 2008 | ||||||
UNAUDITED PFIZER PRO FORMA COMBINED | ||||||||
Per common share data: | ||||||||
Income from continuing operations: | ||||||||
Basic | $ | 0.42 | $ | 1.13 | ||||
Diluted | 0.42 | 1.12 | ||||||
Cash dividends(1) | N/A | N/A | ||||||
Book value(2) | 9.85 | N/A |
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As of and for the | As of and for the | |||||||
Three Months Ended | Year Ended | |||||||
COMPARATIVE PER SHARE DATA | March 29, 2009 | December 31, 2008 | ||||||
PFIZER-HISTORICAL | ||||||||
Per common share data: | ||||||||
Income from continuing operations: | ||||||||
Basic | $ | 0.41 | $ | 1.19 | ||||
Diluted | 0.40 | 1.19 | ||||||
Cash dividends paid(1) | 0.32 | 1.28 | ||||||
Book value(2) | 8.96 | 8.56 | ||||||
As of and for the | As of and for the | |||||||
Three Months Ended | Year Ended | |||||||
March 31, 2009 | December 31, 2008 | |||||||
WYETH HISTORICAL | ||||||||
Per common share data: | ||||||||
Income from continuing operations: | ||||||||
Basic | $ | 0.90 | $ | 3.31 | ||||
Diluted | 0.89 | 3.27 | ||||||
Cash dividends paid(1) | 0.30 | 1.14 | ||||||
Book value(2) | 14.81 | 14.40 | ||||||
UNAUDITED PRO FORMA WYETH EQUIVALENTS(3) | ||||||||
Per common share data: | ||||||||
Income from continuing operations: | ||||||||
Basic | $ | 0.41 | $ | 1.11 | ||||
Diluted | 0.41 | 1.10 | ||||||
Cash dividends(1) | N/A | N/A | ||||||
Book value | 9.70 | N/A |
(1) | On June 2, 2009, Pfizer paid a second quarter 2009 dividend of $0.16 per share of common stock. On March 3, 2009, Pfizer paid a first quarter 2009 dividend of $0.32 per share of common stock. In January 2009, Pfizer announced that, effective with the dividend to be paid in the second quarter of 2009, its quarterly dividend per share of common stock would be reduced to $0.16 ($0.80 per share of common stock annualized for 2009). Following the first quarter of 2009, Pfizer will not declare or pay a quarterly dividend in excess of $0.16 per share of common stock prior to consummation of the merger and any future payment of Pfizer’s quarterly dividend is subject to future approval and declaration by the Pfizer board of directors. On June 1, 2009, Wyeth paid a second quarter 2009 dividend of $0.30 per share of common stock. On March 2, 2009, Wyeth paid a first quarter dividend of $0.30 per share of common stock ($1.20 per share of common stock annualized). On June 11, 2009, Wyeth declared its next dividend of $0.30 per share, which will be payable on September 1, 2009. Wyeth will not declare or pay a quarterly dividend in excess of $0.30 per share of common stock prior to consummation of the merger and any future payment of Wyeth’s quarterly dividend is subject to future approval and declaration by the Wyeth board of directors. The dividend policy of Pfizer following the merger will be determined by the Pfizer board of directors following the merger. | |
(2) | Amount is calculated by dividing stockholders’ equity by common shares outstanding. Pro forma book value per share as of December 31, 2008 is not meaningful as purchase accounting adjustments were calculated as of March 29, 2009. | |
(3) | Amounts are calculated by multiplying unaudited Pfizer pro forma combined per share amounts by the exchange ratio in the merger (0.985 of a share of Pfizer common stock for each share of Wyeth common stock). |
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Pfizer Common Stock | Wyeth Common Stock | |||||||||||||||||||||||
High | Low | Dividend | High | Low | Dividend | |||||||||||||||||||
2007 | ||||||||||||||||||||||||
First Quarter | $ | 27.41 | $ | 24.55 | $ | 0.29 | $ | 52.25 | $ | 47.75 | $ | 0.26 | ||||||||||||
Second Quarter | $ | 27.73 | $ | 25.23 | $ | 0.29 | $ | 62.20 | $ | 50.51 | $ | 0.26 | ||||||||||||
Third Quarter | $ | 26.15 | $ | 23.13 | $ | 0.29 | $ | 58.00 | $ | 43.65 | $ | 0.26 | ||||||||||||
Fourth Quarter | $ | 25.71 | $ | 22.24 | $ | 0.29 | $ | 49.54 | $ | 43.65 | $ | 0.28 | ||||||||||||
2008 | ||||||||||||||||||||||||
First Quarter | $ | 24.24 | $ | 20.19 | $ | 0.32 | $ | 48.84 | $ | 38.39 | $ | 0.28 | ||||||||||||
Second Quarter | $ | 21.60 | $ | 17.12 | $ | 0.32 | $ | 48.72 | $ | 41.21 | $ | 0.28 | ||||||||||||
Third Quarter | $ | 20.13 | $ | 17.16 | $ | 0.32 | $ | 49.80 | $ | 35.80 | $ | 0.28 | ||||||||||||
Fourth Quarter | $ | 19.39 | $ | 14.26 | $ | 0.32 | $ | 38.80 | $ | 28.06 | $ | 0.30 | ||||||||||||
2009 | ||||||||||||||||||||||||
First Quarter | $ | 18.48 | $ | 11.62 | $ | 0.32 | (1) | $ | 45.33 | $ | 36.40 | $ | 0.30 | |||||||||||
Second Quarter (through June 16, 2009) | $ | 15.60 | $ | 12.75 | $ | 0.16 | (1) | $ | 45.24 | $ | 41.63 | $ | 0.30 | (2) |
(1) | In January 2009, Pfizer announced that it would reduce its quarterly dividend per share to $0.16, effective with the dividend to be paid in the second quarter of 2009. See below for more information about dividends. |
(2) | On June 11, 2009, Wyeth announced its next dividend of $0.30 per share, which will be payable on September 1, 2009. |
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As of/for Three | ||||||||||||||||||||||||||||
Months Ended | ||||||||||||||||||||||||||||
March 29, | March 30, | As of/for the Year Ended December 31 | ||||||||||||||||||||||||||
2009 | 2008 | 2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||||||||
($ in millions, except ratios and per common share data) | ||||||||||||||||||||||||||||
Revenues | $ | 10,867 | $ | 11,848 | $ | 48,296 | $ | 48,418 | $ | 48,371 | $ | 47,405 | $ | 48,988 | ||||||||||||||
Research and development expenses(a) | 1,705 | 1,791 | 7,945 | 8,089 | 7,599 | 7,256 | 7,513 | |||||||||||||||||||||
Other costs and expenses | 4,805 | 5,924 | 27,349 | 28,234 | 25,586 | 26,341 | 25,850 | |||||||||||||||||||||
Acquisition-related in-process research and development charges(b) | — | 398 | 633 | 283 | 835 | 1,652 | 1,071 | |||||||||||||||||||||
Restructuring charges and acquisition-related costs(c) | 554 | 178 | 2,675 | 2,534 | 1,323 | 1,356 | 1,151 | |||||||||||||||||||||
Income from continuing operations before provision for taxes on income, allocation to noncontrolling interests and cumulative effect of a change in accounting principles | 3,803 | 3,557 | 9,694 | 9,278 | 13,028 | 10,800 | 13,403 | |||||||||||||||||||||
Provision for taxes on income | (1,074 | ) | (763 | ) | (1,645 | ) | (1,023 | ) | (1,992 | ) | (3,178 | ) | (2,460 | ) | ||||||||||||||
Income from continuing operations attributable to Pfizer Inc. before cumulative effect of a change in accounting principles | 2,728 | 2,788 | 8,026 | 8,213 | 11,024 | 7,610 | 10,936 | |||||||||||||||||||||
Discontinued operations — net of tax | 1 | (4 | ) | 78 | (69 | ) | 8,313 | 498 | 425 | |||||||||||||||||||
Cumulative effect of a change in accounting principles — net of tax(d) | — | — | — | — | — | (23 | ) | — | ||||||||||||||||||||
Net income attributable to Pfizer Inc. | 2,729 | 2,784 | 8,104 | 8,144 | 19,337 | 8,085 | 11,361 | |||||||||||||||||||||
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As of/for Three | ||||||||||||||||||||||||||||
Months Ended | ||||||||||||||||||||||||||||
March 29, | March 30, | As of/for the Year Ended December 31 | ||||||||||||||||||||||||||
2009 | 2008 | 2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||||||||
($ in millions, except ratios and per common share data) | ||||||||||||||||||||||||||||
Effective tax rate — continuing operations | 28.2 | % | 21.5 | % | 17.0 | % | 11.0 | % | 15.3 | % | 29.4 | % | 18.4 | % | ||||||||||||||
Depreciation and amortization(e) | $ | 1,008 | $ | 1,487 | $ | 5,090 | $ | 5,200 | $ | 5,293 | $ | 5,576 | $ | 5,093 | ||||||||||||||
Property, plant and equipment additions(e) | 253 | 483 | 1,701 | 1,880 | 2,050 | 2,106 | 2,601 | |||||||||||||||||||||
Cash dividends paid | 2,133 | 2,138 | 8,541 | 7,975 | 6,919 | 5,555 | 5,082 | |||||||||||||||||||||
Working capital(f) | 30,913 | 29,329 | 16,067 | 25,014 | 25,559 | 18,433 | 17,582 | |||||||||||||||||||||
Property, plant and equipment, less accumulated depreciation | 12,936 | 15,383 | 13,287 | 15,734 | 16,632 | 16,233 | 17,593 | |||||||||||||||||||||
Total assets(f) | 122,932 | 118,550 | 111,148 | 115,268 | 115,546 | 116,970 | 125,848 | |||||||||||||||||||||
Long-term debt | 21,064 | 8,143 | 7,963 | 7,314 | 5,546 | 6,347 | 7,279 | |||||||||||||||||||||
Long-term capital(g) | 84,354 | 83,144 | 68,662 | 80,134 | 84,993 | 81,895 | 88,959 | |||||||||||||||||||||
Total Pfizer Inc. stockholders’ equity | 60,255 | 67,417 | 57,556 | 65,010 | 71,358 | 65,764 | 68,433 | |||||||||||||||||||||
Earnings per common share — basic: | ||||||||||||||||||||||||||||
Income from continuing operations attributable to Pfizer Inc. before cumulative effect of a change in accounting principles | 0.41 | 0.41 | 1.19 | 1.19 | 1.52 | 1.03 | 1.45 | |||||||||||||||||||||
Discontinued operations — net of tax | — | — | 0.01 | (0.01 | ) | 1.15 | 0.07 | 0.06 | ||||||||||||||||||||
Cumulative effect of a change in accounting principles — net of tax(d) | — | — | — | — | — | — | — | |||||||||||||||||||||
Net income attributable to Pfizer Inc. | 0.41 | 0.41 | 1.20 | 1.18 | 2.67 | 1.10 | 1.51 | |||||||||||||||||||||
Earnings per common share — diluted: | ||||||||||||||||||||||||||||
Income from continuing operations attributable to Pfizer Inc. before cumulative effect of a change in accounting principles | 0.40 | 0.41 | 1.19 | 1.18 | 1.52 | 1.02 | 1.43 | |||||||||||||||||||||
Discontinued operations — net of tax | — | — | 0.01 | (0.01 | ) | 1.14 | 0.07 | 0.06 | ||||||||||||||||||||
Cumulative effect of a change in accounting principles — net of tax(d) | — | — | — | — | — | — | — | |||||||||||||||||||||
Net income attributable to Pfizer Inc. | 0.40 | 0.41 | 1.20 | 1.17 | 2.66 | 1.09 | 1.49 | |||||||||||||||||||||
Market value per share (December 31) | — | — | 17.71 | 22.73 | 25.90 | 23.32 | 26.89 | |||||||||||||||||||||
Market value per share (March 29, 2009/March 30, 2008) | 14.04 | 20.50 | — | — | — | — | — | |||||||||||||||||||||
Return on Pfizer Inc. stockholders’ equity | 4.63 | % | 4.20 | % | 13.22 | % | 11.94 | % | 28.20 | % | 12.0 | % | 17.7 | % | ||||||||||||||
Cash dividends paid per common share | $ | 0.32 | $ | 0.32 | $ | 1.28 | $ | 1.16 | $ | 0.96 | $ | 0.76 | $ | 0.68 |
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As of/for Three | ||||||||||||||||||||||||||||
Months Ended | ||||||||||||||||||||||||||||
March 29, | March 30, | As of/for the Year Ended December 31 | ||||||||||||||||||||||||||
2009 | 2008 | 2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||||||||
($ in millions, except ratios and per common share data) | ||||||||||||||||||||||||||||
Pfizer Inc. stockholders’ equity per common share | $ | 8.96 | $ | 10.00 | $ | 8.56 | $ | 9.65 | $ | 10.05 | $ | 8.98 | $ | 9.21 | ||||||||||||||
Current ratio | 2.32:1 | 2.35:1 | 1.59:1 | 2.15:1 | 2.16:1 | 1.65:1 | 1.63:1 | |||||||||||||||||||||
Weighted-average shares used to calculate: | ||||||||||||||||||||||||||||
Basic earnings per common share amounts | 6,723 | 6,739 | 6,727 | 6,917 | 7,242 | 7,361 | 7,531 | |||||||||||||||||||||
Diluted earnings per common share amounts | 6,753 | 6,762 | 6,750 | 6,939 | 7,274 | 7,411 | 7,614 |
(a) | Research and development expenses includes co-promotion charges and milestone payments for intellectual property rights of $150 million in the three months ended March 29, 2009; $377 million in 2008; $603 million in 2007; $292 million in 2006; $156 million in 2005 and $160 million in 2004. | |
(b) | In the three months ended March 30, 2008 and in the years ended December 31, 2008, 2007, 2006, 2005 and 2004, Pfizer recorded charges for the estimated portion of the purchase price of acquisitions allocated to in-process research and development. As a result of adopting Financial Accounting Standards Board Statement of Financial Accounting Standards No. 141R,Business Combinations, as amended, beginning January 1, 2009, acquisition-related in-process research and development related to future acquisitions will be recorded on Pfizer’s consolidated balance sheet as indefinite-lived intangible assets. Pfizer made no acquisitions in the first-quarter of 2009. | |
(c) | Restructuring charges and acquisition-related costs primarily includes the following: | |
Three months ended March 29, 2009 — Restructuring charges of $157 million related to Pfizer’s cost-reduction initiatives and acquisition-related costs of $397 million related to Pfizer’s pending acquisition of Wyeth. The acquisition-related costs are comprised of transaction costs of $369 million and pre-integration and other costs of $28 million. The transaction costs include banking, legal, accounting and other costs directly related to Pfizer’s pending acquisition of Wyeth and through March 29, 2009 substantially represent fees related to the bridge-term facility entered into with financial institutions on March 12, 2009 to partially fund the pending acquisition of Wyeth. Pre-integration costs represent external, incremental costs directly related to Pfizer’s pending acquisition of Wyeth and include costs associated with preparing for systems and other integration activities. | ||
Three months ended March 30, 2008 — Restructuring charges of $178 million related to Pfizer’s cost-reduction initiatives. | ||
2008 — Restructuring charges of $2.6 billion related to Pfizer’s cost-reduction initiatives. | ||
2007 — Restructuring charges of $2.5 billion related to Pfizer’s cost-reduction initiatives. | ||
2006 — Restructuring charges of $1.3 billion related to Pfizer’s cost-reduction initiatives. | ||
2005 — Integration costs of $532 million and restructuring charges of $372 million related to Pfizer’s acquisition of Pharmacia in 2003 and restructuring charges of $438 million related to Pfizer’s cost-reduction initiatives. | ||
2004 — Integration costs of $454 million and restructuring charges of $680 million related to Pfizer’s acquisition of Pharmacia in 2003. | ||
(d) | In 2005, as a result of the Financial Accounting Standards Board adopting Interpretation No. 47, Accounting for Conditional Asset Retirement Obligations, referred to as FIN 47, Pfizer recorded a non-cash pre-tax charge of $40 million ($23 million, net of tax). | |
(e) | Includes discontinued operations. |
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(f) | For 2005 and 2004, includes assets held for sale of Pfizer’s Consumer Healthcare business, and for 2004, also includes in-vitro allergy and autoimmune diagnostic testing, surgical ophthalmic, certain European generics, confectionery and shaving businesses and the femhrt, Loestrin and Estrostep women’s health product lines. | |
(g) | Defined as long-term debt, deferred taxes, noncontrolling interests and Pfizer Inc. stockholders’ equity. |
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Three Months Ended March 31, | Year Ended December 31, | |||||||||||||||||||||||||||
2009 | 2008 | 2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||||||||
($ in thousands, except per common share data) | ||||||||||||||||||||||||||||
Summary of Net Revenue and Earnings | ||||||||||||||||||||||||||||
Net revenue | $5,376,973 | $5,710,649 | $ | 22,833,908 | $ | 22,399,798 | $ | 20,350,655 | $ | 18,755,790 | $ | 17,358,028 | ||||||||||||||||
Income (loss) from continuing operations(a)(b) | 1,198,160 | 1,196,947 | 4,417,833 | 4,615,960 | 4,196,706 | 3,656,298 | 1,233,997 | |||||||||||||||||||||
Diluted earnings (loss) per share from continuing operations(a)(b) | 0.89 | 0.89 | 3.27 | 3.38 | 3.08 | 2.70 | 0.91 | |||||||||||||||||||||
Dividends per common share | 0.30 | 0.28 | 1.14 | 1.06 | 1.01 | 0.94 | 0.92 | |||||||||||||||||||||
Period-End Financial Position | ||||||||||||||||||||||||||||
Current assets | $ | 23,739,097 | $ | 23,142,165 | $ | 23,481,340 | $ | 22,983,598 | $ | 17,514,241 | $ | 18,044,841 | $ | 14,438,029 | ||||||||||||||
Current liabilities | 6,249,088 | 6,624,069 | 6,850,423 | 7,324,279 | 7,221,848 | 9,947,961 | 8,535,542 | |||||||||||||||||||||
Total assets | 43,998,392 | 43,456,557 | 44,031,724 | 42,717,282 | 36,478,715 | 35,841,126 | 33,629,704 | |||||||||||||||||||||
Long-term debt | 10,740,734 | 11,669,921 | 10,826,013 | 11,492,881 | 9,096,743 | 9,231,479 | 7,792,311 | |||||||||||||||||||||
Average stockholders’ equity | 19,450,436 | 18,759,347 | 18,692,189 | 16,431,645 | 13,323,562 | 10,921,136 | 9,571,142 | |||||||||||||||||||||
Outstanding Shares | ||||||||||||||||||||||||||||
Weighted average common shares outstanding used for diluted earnings (loss) per share calculation (in thousands) | 1,354,297 | 1,360,311 | 1,357,466 | 1,374,342 | 1,374,053 | 1,363,417 | 1,354,489 |
(a) | See “Management’s Discussion and Analysis of Financial Condition and Results of Operation” contained in Wyeth’s Annual Report onForm 10-K for the year ended December 31, 2008 and Wyeth’s Quarterly |
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Report onForm 10-Q for the quarterly period ended March 31, 2009 for a discussion of productivity initiatives and other significant items for the years ended December 31, 2008, 2007 and 2006 and for the three months ended March 31, 2009 and March 30, 2008. | ||
(b) | Pre-tax charges of $4,500,000 in 2004, related to the litigation brought against Wyeth regarding the use of the diet drugsRedux orPondimin are included in Income (loss) from continuing operations. |
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• | separate historical financial statements of Pfizer as of and for the year ended December 31, 2008 and the related notes included in Pfizer’s Annual Report onForm 10-K for the year ended December 31, 2008, which is incorporated by reference into this proxy statement/prospectus; | |
• | separate historical financial statements of Wyeth as of and for the year ended December 31, 2008 and the related notes included in Wyeth’s Annual Report onForm 10-K for the year ended December 31, 2008, which is incorporated by reference into this proxy statement/prospectus; | |
• | separate historical financial statements of Pfizer as of and for the three months ended March 29, 2009 and the related notes included in Pfizer’s Quarterly Report onForm 10-Q for the quarterly period ended March 29, 2009, which is incorporated by reference into this proxy statement/prospectus; and | |
• | separate historical financial statements of Wyeth as of and for the three months ended March 31, 2009 and the related notes included in Wyeth’s Quarterly Report onForm 10-Q for the quarter ended March 31, 2009, which is incorporated by reference into this proxy statement/prospectus. |
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For the Year Ended December 31, 2008
Pro Forma | ||||||||||||||||
Adjustments | Pro Forma | |||||||||||||||
Pfizer | Wyeth | (Note 6) | Combined | |||||||||||||
(In millions, except per share data) | ||||||||||||||||
Revenues | $ | 48,296 | 22,834 | 71,130 | ||||||||||||
Cost and expenses: | ||||||||||||||||
Cost of sales | 8,112 | 5,906 | 14,018 | |||||||||||||
Selling, informational and administrative expenses | 14,537 | 6,542 | 21,079 | |||||||||||||
Research and development expenses | 7,945 | 3,309 | 11,254 | |||||||||||||
Amortization of intangible assets | 2,668 | 79 | 2,895 | (a) | 5,642 | |||||||||||
Acquisition-related in-process research and development charges | 633 | 31 | 664 | |||||||||||||
Restructuring charges and acquisition-related costs | 2,675 | 467 | 3,142 | |||||||||||||
Otherdeductions-net | 2,032 | 142 | 2,086 | (b) | 4,260 | |||||||||||
Income from continuing operations before provision for taxes on income | 9,694 | 6,358 | (4,981 | ) | 11,071 | |||||||||||
Provision for taxes on income | 1,645 | 1,920 | (1,606 | )(c) | 1,959 | |||||||||||
Income from continuing operations before allocation to noncontrolling interests | 8,049 | 4,438 | (3,375 | ) | 9,112 | |||||||||||
Less: Net income attributable to noncontrolling interests | 23 | 20 | 43 | |||||||||||||
Income from continuing operations attributable to Pfizer/Wyeth | $ | 8,026 | 4,418 | (3,375 | ) | 9,069 | ||||||||||
Income from continuing operations attributable to Pfizer/Wyeth per common share — basic | $ | 1.19 | 3.31 | 1.13 | ||||||||||||
Income from continuing operations attributable to Pfizer/Wyeth per common share — diluted | $ | 1.19 | 3.27 | 1.12 | ||||||||||||
Weighted-average shares used to calculate earnings per common share amounts: | ||||||||||||||||
Basic | 6,727 | 1,333 | (20 | ) | 8,040 | |||||||||||
Diluted | 6,750 | 1,357 | (45 | ) | 8,062 | |||||||||||
Cash dividends paid per common share | $ | 1.28 | 1.14 | |||||||||||||
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Pro Forma | ||||||||||||||||
Adjustments | Pro Forma | |||||||||||||||
Pfizer | Wyeth | (Note 6) | Combined | |||||||||||||
(In millions, except per share data) | ||||||||||||||||
Revenues | $ | 10,867 | 5,377 | 16,244 | ||||||||||||
Cost and expenses: | ||||||||||||||||
Cost of sales | 1,408 | 1,305 | 2,713 | |||||||||||||
Selling, informational and administrative expenses | 2,876 | 1,550 | 4,426 | |||||||||||||
Research and development expenses | 1,705 | 773 | 2,478 | |||||||||||||
Amortization of intangible assets | 578 | 19 | 724 | (a) | 1,321 | |||||||||||
Restructuring charges and acquisition-related costs | 554 | 99 | (396 | )(d) | 257 | |||||||||||
Other (income)/deductions-net | (57 | ) | (62 | ) | 452 | (b) | 333 | |||||||||
Income from continuing operations before provision for taxes on income | 3,803 | 1,693 | (780 | ) | 4,716 | |||||||||||
Provision for taxes on income | 1,074 | 490 | (226 | )(c) | 1,338 | |||||||||||
Income from continuing operations before allocation to noncontrolling interests | 2,729 | 1,203 | (554 | ) | 3,378 | |||||||||||
Less: Net income attributable to noncontrolling interests | 1 | 5 | 6 | |||||||||||||
Income from continuing operations attributable to Pfizer/Wyeth | $ | 2,728 | 1,198 | (554 | ) | 3,372 | ||||||||||
Income from continuing operations attributable to Pfizer/Wyeth per common share — basic | $ | .41 | .90 | .42 | ||||||||||||
Income from continuing operations attributable to Pfizer/Wyeth per common share — diluted | $ | .40 | .89 | .42 | ||||||||||||
Weighted-average shares used to calculate earnings per common share amounts: | ||||||||||||||||
Basic | 6,723 | 1,332 | (19 | ) | �� | 8,036 | ||||||||||
Diluted | 6,753 | 1,354 | (41 | ) | 8,066 | |||||||||||
Cash dividends paid per common share | $ | .32 | .30 | |||||||||||||
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As of March 29, 2009
Pro Forma | ||||||||||||||||
Adjustments | Pro Forma | |||||||||||||||
Pfizer | Wyeth | (Note 6) | Combined | |||||||||||||
(In millions) | ||||||||||||||||
ASSETS | ||||||||||||||||
Cash and cash equivalents | $ | 1,247 | 8,830 | (8,830 | )(e) | 1,247 | ||||||||||
Short-term investments | 32,805 | 5,717 | (27,428 | )(e) | 11,094 | |||||||||||
Accounts receivable, less allowance for doubtful accounts | 9,596 | 3,632 | 13,228 | |||||||||||||
Short-term loans | 793 | 793 | ||||||||||||||
Inventories | 4,458 | 3,054 | 4,600 | (f) | 12,112 | |||||||||||
Taxes and other current assets | 5,055 | 2,506 | (1,364 | )(c)(j) | 6,197 | |||||||||||
Assets held for sale | 299 | 299 | ||||||||||||||
Total current assets | 54,253 | 23,739 | (33,022 | ) | 44,970 | |||||||||||
Long-term investments and loans | 13,536 | 13,536 | ||||||||||||||
Property, plant and equipment, less accumulated depreciation | 12,936 | 10,981 | 23,917 | |||||||||||||
Goodwill | 21,482 | 4,255 | 8,339 | (g) | 34,076 | |||||||||||
Identifiable intangible assets, less accumulated amortization | 16,923 | 398 | 50,502 | (h) | 67,823 | |||||||||||
Other assets, deferred taxes and deferred charges | 3,802 | 4,625 | 29 | (i) | 8,456 | |||||||||||
Total assets | $ | 122,932 | 43,998 | 25,848 | 192,778 | |||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||
Short-term borrowings, including current portion of long-term debt | $ | 7,613 | 853 | 8,466 | ||||||||||||
Accounts payable | 1,573 | 1,084 | 2,657 | |||||||||||||
Dividends payable | 1 | 1 | ||||||||||||||
Income taxes payable | 542 | 509 | 1,132 | (c)(j) | 2,183 | |||||||||||
Accrued compensation and related items | 1,565 | 242 | 1,807 | |||||||||||||
Other current liabilities | 12,046 | 3,561 | 496 | (c)(k) | 16,103 | |||||||||||
Total current liabilities | 23,340 | 6,249 | 1,628 | 31,217 | ||||||||||||
Long-term debt | 21,064 | 10,740 | 8,792 | (l) | 40,596 | |||||||||||
Pension benefit obligations | 4,038 | 1,645 | 5,683 | |||||||||||||
Postretirement benefit obligations | 1,604 | 1,792 | 3,396 | |||||||||||||
Deferred taxes | 2,849 | 218 | 16,212 | (c) | 19,279 | |||||||||||
Other taxes payable | 6,770 | 1,578 | 8,348 | |||||||||||||
Other noncurrent liabilities | 2,826 | 1,955 | 4,781 | |||||||||||||
Total liabilities | 62,491 | 24,177 | 26,632 | 113,300 | ||||||||||||
Preferred stock | 69 | 69 | ||||||||||||||
Common stock | 443 | 444 | (378 | )(m) | 509 | |||||||||||
Additional paid-in capital | 70,201 | 7,546 | 11,606 | (n) | 89,353 | |||||||||||
Employee benefit trust | (285 | ) | (285 | ) | ||||||||||||
Treasury stock | (57,363 | ) | (57,363 | ) | ||||||||||||
Retained earnings | 51,863 | 13,625 | (13,900 | )(o) | 51,588 | |||||||||||
Accumulated other comprehensive income/(expense) | (4,673 | ) | (1,888 | ) | 1,888 | (p) | (4,673 | ) | ||||||||
Total Pfizer/Wyeth stockholders’ equity | 60,255 | 19,727 | (784 | ) | 79,198 | |||||||||||
Equity attributable to noncontrolling interests | 186 | 94 | 280 | |||||||||||||
Total stockholders’ equity | 60,441 | 19,821 | (784 | ) | 79,478 | |||||||||||
Total liabilities and stockholders’ equity | $ | 122,932 | 43,998 | 25,848 | 192,778 | |||||||||||
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COMBINED FINANCIAL STATEMENTS
1. | Description of Transaction |
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2. | Basis of Presentation |
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3. | Accounting Policies |
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4. | Estimate of Consideration Expected to be Transferred |
Conversion | Estimated | Form of | ||||||||
Calculation | Fair Value | Consideration | ||||||||
(In millions, except per share amounts) | ||||||||||
Number of shares of Wyeth common stock outstanding as of March 29, 2009 | 1,332.4 | |||||||||
Multiplied by Pfizer’s stock price as of June 4, 2009 multiplied by the exchange ratio of 0.985 ($14.64x0.985) | $ | 14.42 | $ | 19,213 | Pfizer common stock | |||||
Number of shares of Wyeth common stock outstanding as of March 29, 2009 | 1,332.4 | |||||||||
Multiplied by cash consideration per common share outstanding | $ | 33.00 | $ | 43,969 | Cash | |||||
Number of shares of Wyeth common stock into which Wyeth $2 Convertible Preferred Stock outstanding at March 29, 2009 is convertible (8,896 actual shares x 36)(a) | 0.3 | |||||||||
Multiplied by Pfizer’s stock price as of June 4, 2009 multiplied by the exchange ratio of 0.985 ($14.64x0.985) | $ | 14.42 | $ | 5 | Pfizer common stock | |||||
Number of shares of Wyeth common stock into which Wyeth $2 Convertible Preferred Stock outstanding at March 29, 2009 is convertible (8,896 actual shares x 36)(a) | 0.3 | |||||||||
Multiplied by cash consideration per common share outstanding | $ | 33.00 | $ | 10 | Cash | |||||
Number of shares of Wyeth stock options vested and unvested as of March 29, 2009 expected to be canceled and exchanged for a cash payment | 55.0 | |||||||||
Multiplied by the difference between the per share value of the merger consideration and the weighted-average option exercise price ofin-the-money options | $ | 5.62 | $ | 309 | Cash | |||||
Number of outstanding shares of restricted stock and each outstanding deferred or restricted stock unit, including performance share unit awards, as of March 29, 2009, expected to be canceled | 9.4 | |||||||||
Multiplied by the per share value of the merger consideration | $ | 47.42 | $ | 446 | Cash | |||||
Estimate of consideration expected to be transferred(b) | $ | 63,952 | ||||||||
(a) | Under the terms of the merger agreement, upon completion of the merger, each share of Wyeth $2 Convertible Preferred Stock issued and outstanding immediately prior to completion of the merger will be converted into the right to receive one share of a new series of Pfizer preferred stock having the same powers, designations, preferences and rights (to the fullest extent practicable) as the shares of the Wyeth $2 Convertible Preferred Stock. As of March 29, 2009, 8,896 actual shares of the Wyeth $2 Convertible Preferred Stock were outstanding. On April 23, 2009, Wyeth announced that, pursuant to a request from Pfizer made in accordance with the terms and conditions of the merger agreement, Wyeth will redeem all of its outstanding Wyeth $2 Convertible Preferred Stock, effective on July 15, 2009, at a redemption price of $60.08 per share. Therefore, it is expected that there will not be any shares of Wyeth $2 Convertible Preferred Stock outstanding at the effective time of the merger. In such case, Pfizer will not create or issue a new series of preferred stock in connection with the merger. Prior to the redemption date, holders of Wyeth $2 Convertible Preferred Stock can elect to convert all, or a portion, of their holdings into Wyeth common stock. Each share of Wyeth $2 Convertible Preferred Stock can be converted into 36 shares of Wyeth common stock. For purposes of these unaudited pro forma condensed combined |
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financial statements, Pfizer has assumed holders of Wyeth $2 Convertible Preferred Stock will elect to convert their shares into Wyeth common stock prior to the redemption date since Pfizer believes that election would be most favorable to such holders. | ||
(b) | The estimated consideration expected to be transferred reflected in these unaudited pro forma condensed combined financial statements does not purport to represent what the actual consideration transferred will be when the merger is consummated. In accordance with SFAS No. 141R, as amended, the fair value of equity securities issued as part of the consideration transferred will be measured on the closing date of the merger at the then-current market price. This requirement will likely result in a per share equity component different from the $14.42 assumed in these unaudited pro forma condensed combined financial statements and that difference may be material. Pfizer believes that an increase or decrease by as much as 35% in the Pfizer common stock price on the closing date of the merger from the common stock price assumed in these unaudited pro forma condensed combined financial statements is reasonably possible based upon the recent history of Pfizer’s common stock price. A change of this magnitude would increase or decrease the consideration expected to be transferred by about $7 billion, which would be reflected in these unaudited pro forma condensed combined financial statements as an increase or decrease to goodwill. |
5. | Estimate of Assets to be Acquired and Liabilities to be Assumed |
(In millions) | ||||
Book value of net assets acquired at March 29, 2009 | $ | 19,727 | ||
Adjusted for: | ||||
Elimination of existing goodwill and intangible assets | (4,653 | ) | ||
Adjusted book value of net assets acquired | $ | 15,074 | ||
Adjustments to: | ||||
Inventories(a) | 4,600 | |||
Property, plant and equipment(b) | — | |||
Identifiable intangible assets(c) | 50,900 | |||
Debt(d) | 208 | |||
Contingencies(e) | — | |||
Taxes(f) | (19,424 | ) | ||
Goodwill(g) | 12,594 | |||
Estimate of consideration expected to be transferred | $ | 63,952 | ||
(a) | As of the effective time of the merger, inventories are required to be measured at fair value, which Pfizer believes will approximate net realizable value. Pfizer does not have detailed information at this time as to the specific finished goods on hand, the actual stage of completion ofwork-in-progress inventories (which inventories represent approximately 55% of total inventories, as disclosed in Wyeth’s Quarterly Report onForm 10-Q for the quarterly period ended March 31, 2009, which is incorporated by reference into this proxy statement/prospectus) or the specific types and nature of raw materials and supplies. However, the fair valuation of inventory should ordinarily result in an increase to pre-acquisition book value due to lower of cost or market requirements. This expectation is particularly true in the pharmaceutical industry where the selling price is significantly influenced by ownership of intellectual property and less by the costs associated with the manufacturing of the products. For these reasons, Pfizer believes including a fair valuestep-up adjustment for inventory is factually supportable and provides a reasonable indication of the adjustment that is likely to occur. |
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• | The acquisition, by a pharmaceutical company, of a biopharmaceutical company engaged in developing, manufacturing, marketing and selling prescription medicines for €11 billion. | |
• | The acquisition, by a pharmaceutical company, of a portfolio of animal health products for more than €100 million. | |
• | The acquisition, by a pharmaceutical company, of a company engaged in the manufacturing and marketing of pharmaceutical drugs for $3.9 billion. | |
• | The acquisition, by a consumer products company, of a company engaged in the manufacturing and marketing of consumer products for $2.9 billion. | |
• | The acquisition, by a consumer products company, of a company engaged in the manufacturing and marketing of consumer products for $11.8 billion. | |
• | The acquisition, by a diversified pharmaceutical and consumer-health company, of a company engaged in the consumer health business for more than $100 million. | |
• | The acquisition, by a consumer products company, of a company engaged in the production and distribution of consumer products for $1.6 billion. |
(b) | As of the effective time of the merger, property, plant and equipment is required to be measured at fair value, unless those assets are classified asheld-for-sale on the acquisition date. The acquired assets can include assets that are not intended to be used or sold, or that are intended to be used in a manner other than their highest and best use. Pfizer does not have sufficient information at this time as to the specific |
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nature, age, condition or location of the land, buildings, machinery and equipment, and construction-in- progress, as applicable, and Pfizer does not know the appropriate valuation premise, in-use or in-exchange, as the valuation premise requires a certain level of knowledge about the assets being evaluated as well as a profile of the associated market participants. All of these elements can cause differences between fair value and net book value. |
(c) | As of the effective time of the merger, identifiable intangible assets are required to be measured at fair value and these acquired assets could include assets that are not intended to be used or sold or that are intended to be used in a manner other than their highest and best use. For purposes of these unaudited pro forma condensed combined financial statements, it is assumed that all assets will be used and that all assets will be used in a manner that represents the highest and best use of those assets, but it is not assumed that any market participant synergies will be achieved. The consideration of synergies has been excluded because they are not considered to be factually supportable, which is a required condition for these pro forma adjustments. |
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Estimated Fair Value | Estimated Useful Life | |||||||
Developed technology — finite-lived | $ | 30.9 billion | 11 years | |||||
Brands — finite-lived | 3.3 billion | 20 years | ||||||
Brands — indefinite-lived | 5.0 billion | NA | ||||||
In-process R&D — indefinite-lived | 11.7 billion | Unknown* | ||||||
Total | $ | 50.9 billion | ||||||
* | Acquired in-process research and development assets are initially recognized at fair value and are classified as indefinite-lived assets until the successful completion or abandonment of the associated research and development efforts. Accordingly, during the development period after the acquisition date, these assets will not be amortized into earnings; instead these assets will be subject to periodic impairment testing. Upon successful completion of the development process for an acquired in-process research and development project, determination as to the useful life of the asset will be made; at that point in time, the asset would then be considered a finite-lived intangible asset and Pfizer would begin to amortize the asset into earnings. |
(d) | As of the effective time of the merger, debt is required to be measured at fair value. Pfizer has calculated the adjustment using publicly available information and believes the pro forma adjustment amount to be reasonable. | |
(e) | As of the effective time of the merger, except as specifically excluded, contingencies are required to be measured at fair value, if the acquisition-date fair value of the asset or liability arising from a contingency can be determined. If the acquisition-date fair value of the asset or liability cannot be determined, the asset or liability would be recognized at the acquisition date if both of the following criteria were met: (i) it is probable that an asset existed or that a liability had been incurred at the acquisition date, and (ii) the amount of the asset or liability can be reasonably estimated. These criteria are to be applied using the guidance in SFAS No. 5,Accounting for Contingencies(SFAS 5), and FASB Interpretation No. 14,Reasonable Estimation of the Amount of a Loss(FIN 14). As disclosed in Wyeth’s 2008 Annual Report onForm 10-K for the year ended December 31, 2008, which is incorporated by reference into this proxy statement/prospectus, Wyeth is “involved in various legal proceedings, including product liability, patent, commercial, environmental and antitrust matters, of a nature considered normal to its business.” However, Pfizer does not have sufficient information at this time to evaluate if the fair value of these contingencies |
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can be determined and, if determinable, to value them under a fair value standard. A fair valuation effort would require intimate knowledge of complex legal matters and associated defense strategies, which cannot occur prior to the consummation date. As required, Wyeth currently accounts for these contingencies under SFAS 5 and FIN 14. If fair value cannot be determined for Wyeth’s contingencies, the combined company would continue to account for the Wyeth contingencies using SFAS 5 and FIN 14. Since Wyeth’s current accounting approach is subject to external audit and as Wyeth management, unlike Pfizer management, has full and complete access to relevant information about these contingencies, Pfizer believes that it has no basis for modifying Wyeth’s current application of these standards. So, for the purpose of these unaudited pro forma condensed combined financial statements, Pfizer has not adjusted the Wyeth book values. This approach is preliminary and subject to change. |
(f) | As of the effective time of the merger, Pfizer will provide deferred taxes and other tax adjustments as part of the accounting for the acquisition, primarily related to the estimated fair value adjustments for acquired inventory and intangibles (seeNote 6. Pro Forma Adjustments, items (f) and (h)). In addition, Pfizer will provide deferred taxes on Wyeth’s unremitted earnings for which no taxes have been previously provided, as it is Pfizer’s current intention to repatriate these earnings as opposed to permanently reinvesting them overseas. The amount of these deferred taxes, which is calculated by Wyeth on an annual basis as of December 31, is based upon Wyeth’s 2008 Annual Report onForm 10-K for the year ended December 31, 2008, which is incorporated by reference into this proxy statement/prospectus, and this disclosure is the basis for Pfizer’s repatriation adjustment. The pro forma adjustment to record the effect of deferred taxes and other tax adjustments was computed as follows: |
(In millions) | ||||
Estimated fair value of identifiable intangible assets to be acquired | $ | 50,900 | ||
Estimated fair value adjustment of inventory to be acquired | 4,600 | |||
Estimated fair value adjustment of debt to be assumed | 208 | |||
Total estimated fair value adjustments of assets to be acquired and liabilities to be assumed | $ | 55,708 | ||
Deferred taxes associated with the estimated fair value adjustments of assets to be acquired and liabilities to be assumed, at 30%(i) | $ | 16,713 | ||
Estimated tax on Wyeth’s historical unremitted earnings(ii) | 2,711 | |||
Estimated adjustment to taxes | $ | 19,424 | ||
(i) | Represents an estimate of the weighted-average statutory tax rates in the various jurisdictions where the fair value adjustments may occur. Amount is included in the pro forma adjustments to “Deferred taxes” ($15,332 million) and “Other current liabilities” ($1,381 million — see Note 6.Pro Forma Adjustments, item (k)). |
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(ii) | As calculated by Wyeth and disclosed in Wyeth’s 2008 Annual Report onForm 10-K for the year ended December 31, 2008, which is incorporated by reference into this proxy statement/prospectus. Included in pro forma adjustment to “Income taxes payable” ($1,831 million) — seeNote 6. Pro Forma Adjustments, item (j) and “Deferred taxes” ($880 million). |
(g) | Goodwill is calculated as the difference between the acquisition date fair value of the consideration expected to be transferred and the values assigned to the assets acquired and liabilities assumed. Goodwill is not amortized. |
6. | Pro Forma Adjustments |
Year Ended | Three Months | |||||||
December 31, | Ended | |||||||
2008 | March 29, 2009 | |||||||
(In millions) | (In millions) | |||||||
Eliminate Wyeth’s historical intangible asset amortization expense | $ | (79 | ) | $ | (19 | ) | ||
Estimated amortization expense of developed technology — finite-lived (estimated to be $30.9 billion over useful life of 11 years) | 2,809 | 702 | ||||||
Estimated amortization expense of brands — finite-lived (estimated to be $3.3 billion over useful life of 20 years) | 165 | 41 | ||||||
Estimated adjustment to intangible asset amortization expense | $ | 2,895 | $ | 724 | ||||
Year Ended | Three Months | |||||||
December 31, | Ended | |||||||
2008 | March 29, 2009 | |||||||
(In millions) | (In millions) | |||||||
Amortization of the fair value adjustment to debt | $ | (11 | ) | $ | (3 | ) | ||
Additional expense on incremental debt to finance the merger(*) | 1,241 | 311 | ||||||
Estimate of forgone interest income on the combined company’s cash and cash equivalents and short-term investments used to effect the merger(**) | 856 | 144 | ||||||
Total | $ | 2,086 | $ | 452 | ||||
(*) | Pfizer estimates additional interest expense of $1,241 million in 2008 and $311 million in the first three months of 2009 associated with the incremental debt Pfizer has issued in connection with the merger: |
• | Additional interest expense of approximately $1,231 million in 2008 and $308 million in the first three months of 2009 based on $22.5 billion of U.S. and foreign currency denominated senior unsecured notes Pfizer has issued in 2009 to partially fund the merger. The debt securities are a combination of fixed and floating rate notes with nine maturity tranches ranging from 2-30 years. The fixed rate securities total $21.25 billion and have individual coupon rates ranging from 3.63%-7.20%. The floating rate notes total $1.25 billion and bear interest at3-month LIBOR (which was 1.22810% when these notes were issued in March 2009), plus 195 basis points. The weighted-average U.S. dollar effective interest rate associated with the $22.5 billion of debt is 5.47%. If LIBOR were to increase or decrease by 0.125% from the rate assumed on the $1.25 billion floating rate notes, pro forma interest expense could increase or decrease by about $1.6 million for 2008 and $0.4 million for the first three months of 2009. |
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• | Additional interest expense of approximately $10 million in 2008 and $3 million in the first three months of 2009 for the amortization of bond issuance costs associated with the $22.5 billion of debt securities Pfizer issued in connection with the merger. Bond issuance costs associated with the $22.5 billion of debt securities are approximately $116 million ($61 million of issuance costs associated with debt securities Pfizer issued in March 2009 and $55 million of issuance costs associated with debt securities Pfizer issued in June 2009 to partially fund the merger (see items (e) and (i))), which are amortized over the weighted-average life of the debt of 11.29 years (see item (l)). |
(**) | For purposes of these unaudited pro forma condensed combined financial statements, Pfizer estimated the forgone interest income in 2008 of the combined company as follows: |
• | the loss of Wyeth’s entire interest income in 2008 of $467 million has been assumed, under the assumption that all of Wyeth’s cash and short-term investments would be used to partially fund the merger; and | |
• | the loss of approximately $389 million of Pfizer’s interest income on short-term investments has been assumed, under the assumption that a portion of these investments will be used to partially fund the merger. Pfizer’s estimate is based on a weighted-average annual interest rate realized in 2008 of 3.98%. |
For purposes of these unaudited pro forma condensed combined financial statements, Pfizer estimated the forgone interest income for the combined entity in the three months ended March 29, 2009 could be approximately $144 million associated with short-term investments assumed to have been used to partially fund the merger. Pfizer’s estimate is based on a weighted-average annual interest rate realized in the three months ended March 29, 2009 of 2.48%. |
(c) | To record an estimate of the tax impacts of the acquisition on the balance sheet and income statement, primarily related to the additional expense associated with incremental debt to finance the merger, estimated fair value adjustments for acquired inventory, intangibles and debt, the elimination of transaction costs directly attributable to the merger assumed to be non-recurring, repatriation decisions and the assumed utilization of deferred tax attributes, as applicable (see items (a), (b), (d), (f), (h), (j), (k) and (l) andNote 5, Estimates of Assets to be Acquired and Liabilities to be Assumed, item (f)). |
(d) | To eliminate advisory, legal and regulatory costs incurred in the three months ended March 29, 2009, which are directly attributable to the pending merger but which are not expected to have a continuing impact on the combined entity’s results, as follows: |
(In millions) | ||||
Eliminate Pfizer’s advisory, legal and regulatory costs assumed to be non-recurring | $ | (369 | ) | |
Eliminate Wyeth’s acquisition-related transaction costs assumed to be non-recurring | (27 | ) | ||
Total | $ | (396 | ) | |
(e) | To record the cash portion of the merger consideration estimated to be $44,734 million and to record estimated payments of $280 million in additional fees related to a bridge term facility and permanent debt financing, which are assumed to be paid on or before the acquisition, $120 million for Pfizer’s remaining acquisition-related transaction costs and $124 million to fund deferred compensation plans at Wyeth upon the effective time of the merger. The cash is expected to be sourced from a combination of permanent |
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debt financing completed in June 2009 ($9.0 billion), available cash and cash equivalents ($8,830 million) and the sale or redemption of certain short-term investments ($27,428 million), which includes the proceeds from the $13.5 billion of debt issued in March 2009 to partially fund the merger. The $280 million in fees consist of $225 million (including $220 million of fees previously accrued — see item (k)) associated with a $22.5 billion bridge term facility Pfizer entered into on March 12, 2009, which was subsequently terminated in June 2009, and approximately $55 million in costs incurred in connection with Pfizer’s issuance in June 2009 of permanent debt financing to partially fund the merger. | ||
(f) | To adjust acquired inventory to an estimate of fair value. Pfizer’s cost of sales will reflect the increased valuation of Wyeth’s inventory as the acquired inventory is sold, which for purposes of these unaudited pro forma condensed combined financial statements is assumed will occur within the first year post-acquisition. There is no continuing impact of the acquired inventory adjustment on the combined operating results and as such is not included in the unaudited pro forma condensed combined statement of income. | |
(g) | To adjust goodwill to an estimate of acquisition-date goodwill, as follows: |
(In millions) | ||||
Eliminate Wyeth’s historical goodwill | $ | (4,255 | ) | |
Estimated transaction goodwill | 12,594 | |||
Total | $ | 8,339 | ||
(h) | To adjust intangible assets (including in-process research and development intangibles) to an estimate of fair value, as follows: |
(In millions) | ||||
Eliminate Wyeth’s historical intangible assets | $ | (398 | ) | |
Estimated fair value of intangible assets acquired | 50,900 | |||
Total | $ | 50,502 | ||
(i) | To adjust other assets, deferred taxes and deferred charges, as follows: |
(In millions) | ||||
Eliminate Pfizer’s historical deferred charges associated with a bridge term facility entered into on March 12, 2009 in connection with the merger and subsequently terminated in June 2009 | $ | (150 | ) | |
Estimated costs to fund deferred compensation plans at Wyeth upon merger | 124 | |||
Estimated debt issuance costs associated with permanent financing issued in June 2009 in connection with the merger | 55 | |||
Total | $ | 29 | ||
(j) | To adjust income taxes payable, as follows: |
(In millions) | ||||
Estimated tax on Wyeth’s historical unremitted earnings | $ | 1,831 | ||
Reclassification of other tax amounts on the balance sheet to “Income taxes payable”(*) | (699 | ) | ||
Total | $ | 1,132 | ||
(*) | These reclassifications result from certain business decisions expected to be executed to fund the merger, which is expected to result in the utilization of certain tax credits and carryforwards. These amounts were previously included in “Other current liabilities” ($665 million — see item (k)) and “Taxes and other current assets” ($1,364 million). |
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(k) | To adjust other current liabilities as follows: |
(In millions) | ||||
Estimated deferred taxes associated with the estimated fair value adjustments of assets to be acquired and liabilities to be assumed, at 30% | $ | 1,381 | ||
Reclassification to “Income taxes payable” — see item (j) | (665 | ) | ||
Elimination of accrued fees associated with the bridge term facility costs assumed paid — see item (e) | (220 | ) | ||
Total | $ | 496 | ||
(l) | To record the debt incurred by Pfizer to effect the merger and to adjust Wyeth’s debt to an estimate of fair value, as follows: |
(In millions) | ||||
Establish incremental borrowings to effect the merger(*) | $ | 9,000 | ||
Estimated fair value decrease to debt assumed | (208 | ) | ||
Total | $ | 8,792 | ||
(*) | In June 2009, Pfizer issued foreign currency denominated senior unsecured notes (totaling approximately $10.5 billion) to partially fund the merger. Of the approximately $10.5 billion of senior unsecured notes issued in June 2009, $9.0 billion is reflected in this item (l), and together with the $13.5 billion of senior unsecured notes Pfizer issued in March 2009, Pfizer has completed the $22.5 billion of permanent financing it needs to partially fund the merger. The $22.5 billion of debt securities consist of nine maturity tranches ranging from 2-30 years and have a weighted average life of 11.29 years (see item (b)). |
(m) | To record the stock portion of the merger consideration, at par, and to eliminate Wyeth’s common stock, at par, as follows: |
(In millions) | ||||
Eliminate Wyeth common stock | $ | (444 | ) | |
Issuance of Pfizer common stock | 66 | |||
Total | $ | (378 | ) | |
(n) | To record the stock portion of the merger consideration, at fair value less par, and to eliminate Wyeth’s additionalpaid-in-capital, as follows: |
(In millions) | ||||
Eliminate Wyeth additional paid-in capital | $ | (7,546 | ) | |
Issuance of Pfizer common stock | 19,152 | |||
Total | $ | 11,606 | ||
(o) | To eliminate Wyeth’s retained earnings, and to record estimated non-recurring costs of Pfizer for advisory, legal, regulatory and valuation costs and certain costs related to the bridge term facility, which Pfizer will not utilize, as follows: |
(In millions) | ||||
Eliminate Wyeth retained earnings | $ | (13,625 | ) | |
Remaining fees associated with the bridge term facility entered into on March 12, 2009 in connection with the merger and subsequently terminated in June 2009 | (155 | ) | ||
Estimated remaining advisory, legal, regulatory and valuation costs assumed to be non-recurring | (120 | ) | ||
Total | $ | (13,900 | ) | |
(p) | To eliminate Wyeth’s accumulated other comprehensive expense. |
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• | those discussed and identified in public filings with the SEC made by Pfizer or Wyeth; | |
• | the possibility that the estimated synergies will not be realized, or will not be realized within the expected time period; | |
• | general economic conditions; | |
• | actions taken or conditions imposed by the United States and foreign governments; | |
• | fluctuations in foreign currency exchange rates; | |
• | the possibility that the merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events; | |
• | the possibility that the integration of Wyeth’s business and operations with those of Pfizer may be more difficultand/or take longer than anticipated, may be more costly than anticipated and may have unanticipated adverse results relating to Wyeth’s or Pfizer’s existing businesses; | |
• | adverse outcomes of pending or threatened litigation or government investigations; | |
• | anticipated dates on which Pfizer and Wyeth will begin marketing certain products or therapies or will reach specific milestones in the development and implementation of their respective business strategies; | |
• | the ability to respond to and the impact of the loss of patent protection to Pfizer’s, Wyeth’s or the combined company’s drugs; | |
• | the impact of competition in the industries and in the specific markets in which Pfizer and Wyeth, respectively, operate, including competition from the makers of generic drugs; | |
• | the ability to successfully complete clinical trials and obtain and maintain regulatory approval for new products in the United States and other countries; and | |
• | the ability to attract and retain qualified management and other personnel. |
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• | integrating the research and development, manufacturing, distribution, marketing and promotion activities and information technology systems of Pfizer and Wyeth; | |
• | conforming standards, controls, procedures and policies, business cultures and compensation structures between the companies; | |
• | consolidating corporate and administrative infrastructures; |
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• | consolidating sales and marketing operations; | |
• | retaining existing customers and attracting new customers; | |
• | identifying and eliminating redundant and underperforming operations and assets; | |
• | coordinating geographically dispersed organizations; | |
• | managing tax costs or inefficiencies associated with integrating the operations of the combined company; and | |
• | making any necessary modifications to operating control standards to comply with the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder. |
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• | Wyeth may be required to pay Pfizer a termination fee of up to $2 billion if the merger is terminated under certain circumstances (plus, in certain circumstances relating to a change in recommendation by the Wyeth board of directors, Wyeth also would be obligated to reimburse Pfizer for up to $700 million of Pfizer’s actual expenses incurred in connection with the merger), all as described in the merger agreement and summarized in this proxy statement/prospectus; | |
• | Pfizer and Wyeth will be required to pay certain costs relating to the merger, whether or not the merger is completed; | |
• | under the merger agreement, Wyeth is subject to certain restrictions on the conduct of its business prior to completing the merger which may affect its ability to execute certain of its business strategies; and | |
• | matters relating to the merger (including integration planning) may require substantial commitments of time and resources by Pfizer and Wyeth management, which could otherwise have been devoted to other opportunities that may have been beneficial to Pfizer and Wyeth as independent companies, as the case may be. |
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• | to adopt the merger agreement; |
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• | to approve the adjournment of the meeting, if necessary, to solicit additional proxies if there are not sufficient votes to adopt the merger agreement at the time of the meeting; | |
• | to elect to the Wyeth board of directors each of the nominees for director named in this proxy statement/prospectus; | |
• | to ratify the appointment of PricewaterhouseCoopers LLP as Wyeth’s independent registered public accounting firm for 2009; and | |
• | the following two stockholder proposals: |
• | a stockholder proposal regarding reporting on Wyeth’s political contributions and trade association payments; and | |
• | a stockholder proposal regarding special stockholder meetings. |
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• | Consideration; Historical Market Prices. The value of the consideration to be received by Wyeth stockholders pursuant to the merger, including that the implied merger consideration as of January 25, 2009 of $50.19 per share, represented a significant premium over the market prices at which Wyeth common stock had previously traded, including a premium of approximately: |
• | 29.3% over the closing price of Wyeth common stock of $38.83 per share on January 22, 2009, the last trading day prior to press reports regarding the proposed merger; |
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• | 33.1% over the average closing price of Wyeth common stock for one month prior to January 22, 2009; and | |
• | 42.6% over the average closing price of Wyeth common stock for the three months prior to January 22, 2009. |
• | Uncertainty of Future Common Stock Market Price. The Wyeth board of directors considered Wyeth’s business, financial condition, results of operations, pipeline, intellectual property, management, competitive position and prospects, as well as current industry, economic and stock and credit market conditions. The Wyeth board of directors considered Wyeth’s financial plan and the initiatives and the potential execution risks associated with such plan and the effects of the recent economic downturn on Wyeth specifically, and the global health care industry, generally. In connection with these considerations, the Wyeth board of directors considered the attendant risk that, if Wyeth did not enter into the merger agreement with Pfizer, the price that might be received by Wyeth’s stockholders selling shares of Wyeth common stock in the open market could be less than the merger consideration, especially in light of recent negative trends and volatility in the stock market. | |
• | Significant Portion of Merger Consideration in Cash. The fact that a large portion of the merger consideration will be paid in cash, giving Wyeth stockholders an opportunity to immediately realize value for a significant portion of their investment and providing certainty of value. The Wyeth board of directors also considered the fact that Wyeth stockholders would be able to reinvest the cash consideration received in the merger in Pfizer common stock if they desired to do so. | |
• | Participation in Potential Upside. The benefits to the combined company that could result from the merger, including an enhanced competitive and financial position, increased diversity and depth in its product line, pipelines and geographic areas and the potential to realize significant cost and sales synergies, and the fact that, since a portion of the merger consideration will be paid in Pfizer stock, Wyeth stockholders would have the opportunity to participate in any future earnings or growth of the combined company and future appreciation in the value of Pfizer common stock following the merger should they determine to retain the Pfizer common stock payable in the merger. | |
• | Financial Advisors’ Opinions. The fact that the Wyeth board of directors received separate opinions, each dated January 25, 2009, from Morgan Stanley and Evercore, in each case, as to the fairness, from a financial point of view and as of the date of such opinion, of the merger consideration to be received by holders of Wyeth common stock, as more fully described below under the headings “— Opinion of Morgan Stanley” beginning on page 72 and “— Opinion of Evercore” beginning on page 83. | |
• | Terms of the Merger Agreement. The terms and conditions of the merger agreement, including: |
• | The limited closing conditions to Pfizer’s obligations under the merger agreement, including the fact that the merger agreement is not subject to approval by Pfizer stockholders; | |
• | The provisions of the merger agreement that allow Wyeth to engage in negotiations with, and provide information to, third parties in response to credible inquiries from third parties regarding alternative acquisition proposals; | |
• | The provisions of the merger agreement that allow the Wyeth board of directors to change its recommendation that Wyeth stockholders vote in favor of the adoption of the merger agreement in response to certain acquisition proposals and certain intervening events, if the Wyeth board of directors determines in good faith that the failure to change its recommendation could reasonably be determined to be inconsistent with its fiduciary duties under applicable law; | |
• | The ability of Wyeth to specifically enforce the terms of the merger agreement; | |
• | The obligation of Pfizer to pay to Wyeth $4.5 billion in liquidated damages if the merger agreement is terminated by Wyeth in the event that all conditions are satisfied (or capable of being satisfied) other than the condition relating to Pfizer’s financing sources declining to make financing available primarily due to the failure of either or both of the Specified Financing Conditions; and | |
• | The provisions of the merger agreement that require Pfizer to take certain actions designed to conserve cash which would facilitate Pfizer obtaining the requisite minimum credit rating from |
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Moody’s and S&P, including the restriction prohibiting Pfizer from making acquisitions for which the cash consideration paid prior to closing of the merger exceeds $750 million in the aggregate, the restriction prohibiting Pfizer from effecting any buybacks of its outstanding equity securities for consideration in excess of $500 million in the aggregate (subject to certain exceptions) and the requirement that Pfizer not increase its quarterly dividend above $0.16 per share during the pendency of the merger. |
• | Efforts to Consummate the Transaction. The belief that regulatory approvals and clearances necessary to complete the merger would likely be obtained and the obligation of Pfizer in the merger agreement (i) to use its reasonable best efforts to obtain those approvals and clearances and (ii) to negotiate, offer to commit and effect (and if such offer is accepted, commit to and effect) any sale, divestiture or disposition of any assets or businesses of Pfizer or any of its subsidiaries (including after the closing of the merger, Wyeth) as may be required in order to avoid any injunction or order by a governmental entity that would prevent the closing of the merger, except to the extent that such sale, divestiture or disposition would result in the one year loss of net sales revenues (as measured by net 2008 sales revenue) in excess of $3 billion. | |
• | Financing Strength of Pfizer. The likelihood that Pfizer would be able to finance the merger given Pfizer’s financial resources, the financing commitments that it obtained from J.P. Morgan Securities Inc., JPMorgan Chase Bank, N.A., Banc of America Securities LLC, Bank of America, N.A., Barclays Bank PLC, Citigroup Global Markets Inc. and Goldman Sachs Credit Partners L.P. and the indications from rating agencies that, as of the date of such indications, Pfizer would retain credit ratings above the requisite minimum ratings after giving effect to the merger and the financing thereof. | |
• | Absence of Competing Offers. The Wyeth board of directors’ belief, in consultation with its legal and financial advisors, that it was unlikely that any strategic purchaser would make a higher offer for Wyeth based on market conditions and antitrust considerations. In this regard, the Wyeth board of directors noted that, although Company X had approached Wyeth on an unsolicited basis prior to the signing of the merger agreement, Company X ultimately suggested a possible transaction value well below the implied offer price made by Pfizer at such time. The Wyeth board of directors also noted that Wyeth did not receive any inquiries concerning alternative transactions following the publication of press reports on the evening of January 22, 2009 speculating as to the proposed transaction with Pfizer. In addition, the Wyeth board of directors noted that in view of the difficult credit environment and the size of the transaction, it was unlikely that a non-strategic buyer would be in a position to propose a transaction with more attractive terms (both in terms of value and certainty of closing) than the proposed merger. The Wyeth board of directors noted that, in the event that any third party were to seek to make such a proposal, Wyeth retained the ability to consider unsolicited proposals after the execution of the merger agreement and to enter into an agreement with respect to an acquisition proposal under certain circumstances (concurrently with terminating the merger agreement and paying a termination fee to Pfizer, with a lower termination fee payable if the merger agreement were terminated for this reason as a result of an alternative proposal made within 30 days after the date of the merger agreement). The Wyeth board of directors, in consultation with Wyeth’s legal and financial advisors, believed that the termination fees payable by Wyeth in such circumstances, as a percentage of the equity value of the transaction, were at levels consistent with or favorable to the fees payable in customary and comparable merger transactions, and that such fees would not unduly impede the ability of third parties from making a superior bid to acquire Wyeth if such third parties were interested in doing so. | |
• | Ability of Pfizer to Make an Unsolicited Offer. The fact that Pfizer could publicly announce an unsolicited offer for Wyeth were Wyeth unwilling to proceed with a negotiated transaction, which could result in a significant disruption to Wyeth’s business, and the risk that Pfizer would be able to consummate such an unsolicited offer at a price lower than the price offered by Pfizer during its negotiations with Wyeth. | |
• | Fixed Stock Portion of Merger Consideration. The fact that because the stock portion of the merger consideration is a fixed number of shares of Pfizer common stock, Wyeth’s stockholders will have the |
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opportunity to benefit from any increase in the trading price of Pfizer common shares between the announcement of the merger agreement and the completion of the merger. |
• | Availability of Appraisal Rights. The fact that appraisal rights would be available to holders of Wyeth common stock under Delaware law and that there was no condition in the merger agreement relating to the number of shares of Wyeth common stock that could dissent from the merger. |
• | Fixed Stock Portion of Merger Consideration. The fact that because the stock portion of the merger consideration is a fixed exchange ratio of shares of Pfizer common stock to Wyeth common stock, Wyeth stockholders could be adversely affected by a decrease in the trading price of Pfizer common stock during the pendency of the merger, and the fact that the merger agreement does not provide Wyeth with a price-based termination right or other similar protection. The Wyeth board of directors determined that this structure was appropriate and the risk acceptable in view of factors such as: |
• | The Wyeth board of directors’ review of the relative intrinsic values and financial performance of Pfizer and Wyeth; and | |
• | The fact that a substantial portion of the merger consideration will be paid in a fixed cash amount which reduces the impact of a decline in the trading price of Pfizer common stock on the value of the merger consideration. |
• | Possible Failure to Achieve Synergies. The risk that the potential benefits and synergies sought in the merger will not be realized or will not be realized within the expected time period, and the risks associated with the integration by Pfizer of Wyeth. | |
• | Smaller Ongoing Equity Participation in the Combined Company by Wyeth Stockholders. The fact that because only a limited portion of the merger consideration will be in the form of Pfizer common stock, Wyeth’s stockholders will have a smaller ongoing equity participation in the combined company (and, as a result, a smaller opportunity to participate in any future earnings or growth of the combined company and future appreciation in the value of Pfizer common stock following the merger) than they have in Wyeth. The Wyeth board of directors considered, however, that Wyeth stockholders would be able to reinvest the cash received in the merger in Pfizer common stock. | |
• | Inclusion of Limited Financing Condition. The fact that the merger agreement provides that Pfizer will not be obligated to consummate the merger if it fails to obtain the financing primarily due to the failure of either or both of the Specified Financing Conditions, in which case Pfizer would be obligated to pay to Wyeth $4.5 billion in liquidated damages. | |
• | Terms of Pfizer’s Financing Commitments. The fact that the financing commitment letters obtained by Pfizer contain closing conditions similar to those found in the merger agreement, including (i) the absence of a material adverse effect on Pfizer, (ii) the absence of a material adverse effect on Wyeth and (iii) the maintenance by Pfizer of certain minimum credit ratings. | |
• | Risk of Non-Completion. The possibility that the merger might not be completed as a result of the failure of Wyeth’s stockholders to adopt the merger agreement, the failure by Pfizer to obtain its financing or otherwise, and the effect the resulting public announcement of termination of the merger agreement may have on: |
• | The trading price of Wyeth’s common stock; and | |
• | Wyeth’s operating results, particularly in light of the costs incurred in connection with the transaction. |
• | Possible Deterrence of Competing Offers. The risk that various provisions of the merger agreement, including the requirement that Wyeth must pay to Pfizer abreak-up fee of either $1.5 billion or $2 billion, depending on when an acquisition proposal is received by Wyeth, if the merger agreement is terminated under certain circumstances, may discourage other parties potentially interested in an acquisition of, or combination with, Wyeth from pursuing that opportunity. See “The Merger Agreement — Expenses and Fees” beginning on page 144. |
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• | Possible Disruption of the Business and Costs and Expenses. The possible disruption to Wyeth’s business that may result from the merger, the resulting distraction of the attention of Wyeth’s management and potential attrition of Wyeth employees, as well as the costs and expenses associated with completing the merger. | |
• | Restrictions on Operation of Wyeth’s Business. The requirement that Wyeth conduct its business only in the ordinary course prior to the completion of the merger and subject to specified restrictions on the conduct of Wyeth’s business without Pfizer’s prior consent (which consent may not be unreasonably withheld, delayed or conditioned), which might delay or prevent Wyeth from undertaking certain business opportunities that might arise pending completion of the merger. | |
• | Merger Consideration Taxable. The fact that any gains arising from the receipt of the merger consideration would be taxable to Wyeth’s stockholders for United States federal income tax purposes. | |
• | Other Risks. The risks described in the section entitled “Risk Factors” beginning on page 47. |
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• | reviewed certain publicly available financial statements and other business and financial information of Wyeth and Pfizer, respectively; | |
• | reviewed certain internal financial statements and other financial and operating data concerning Wyeth prepared by the management of Wyeth; | |
• | reviewed certain financial projections concerning Wyeth prepared by the management of Wyeth; | |
• | discussed the past and current operations and financial condition and the prospects of Wyeth with senior executives of Wyeth; | |
• | reviewed certain internal financial statements and other financial and operating data concerning Pfizer prepared by the management of Pfizer; | |
• | reviewed certain financial projections concerning Pfizer prepared by the management of Pfizer; | |
• | discussed the past and current operations and financial condition and the prospects of Pfizer with senior executives of Pfizer; | |
• | discussed certain information relating to certain strategic, financial and operational benefits and costs anticipated from the merger with senior executives of Wyeth and Pfizer; | |
• | reviewed the pro forma impact of the merger on certain financial ratios of the combined company; | |
• | reviewed certain historical reported prices and trading activity for Wyeth’s common stock and Pfizer’s common stock; | |
• | compared the financial performance of Wyeth and Pfizer and certain historical prices and trading activity of Wyeth’s common stock and Pfizer’s common stock with those of certain other publicly-traded companies comparable with Wyeth and Pfizer, respectively, and their securities; | |
• | reviewed the financial terms, to the extent publicly available, of certain comparable acquisition transactions; | |
• | participated in discussions and negotiations among representatives of Wyeth, Pfizer and their financial and legal advisors; | |
• | reviewed the merger agreement, the executed commitment letter from certain lenders dated January 25, 2009 (the “Debt Financing Commitment Letter”) and certain related documents; and | |
• | considered such other factors and performed such other analyses as Morgan Stanley deemed appropriate. |
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Pfizer Average | Implied | Wyeth Average Price | ||||||||||||||
Price per Share of | Transaction | per Share of Common | Implied Premium to | |||||||||||||
Range | Common Stock | Value | Stock | Wyeth Average Price | ||||||||||||
1 calendar day | $ | 17.39 | $ | 50.13 | $ | 38.38 | 30.6 | % | ||||||||
5 calendar days | $ | 17.40 | $ | 50.13 | $ | 37.82 | 32.6 | % | ||||||||
10 calendar days | $ | 17.50 | $ | 50.23 | $ | 38.04 | 32.1 | % | ||||||||
20 calendar days | $ | 17.63 | $ | 50.36 | $ | 37.83 | 33.1 | % | ||||||||
30 calendar days | $ | 17.46 | $ | 50.19 | $ | 37.41 | 34.2 | % | ||||||||
60 calendar days | $ | 16.82 | $ | 49.57 | $ | 35.87 | 38.2 | % | ||||||||
90 calendar days | $ | 16.89 | $ | 49.64 | $ | 34.94 | 42.1 | % | ||||||||
120 calendar days | $ | 17.10 | $ | 49.85 | $ | 35.09 | 42.0 | % | ||||||||
1 calendar year | $ | 19.08 | $ | 51.79 | $ | 40.63 | 27.5 | % |
Exchange | Implied | |||||||
Time Period | Ratio | Premium | ||||||
3 calendar months | 2.068 | x | 39.1 | % | ||||
6 calendar months | 2.126 | x | 35.3 | % | ||||
1 calendar year | 2.140 | x | 34.4 | % | ||||
2 calendar years | 2.074 | x | 38.7 | % | ||||
3 calendar years | 2.010 | x | 43.1 | % |
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Announcement Date | Acquiror | Target | ||
November 4, 1999 | Pfizer Inc. | Warner-Lambert Company | ||
January 17, 2000 | Glaxo Wellcome PLC | SmithKline Beecham PLC | ||
January 26, 2004 | Sanofi-Synthélabo S.A. | Aventis S.A. | ||
July 15, 2002 | Pfizer Inc. | Pharmacia Corp. | ||
December 9, 1998 | Zeneca Group P.L.C. | Astra A.B. | ||
December 20, 1999 | Monsanto Co. | Pharmacia & Upjohn Inc. | ||
March 23, 2006 | Bayer AG | Schering AG | ||
December 17, 2001 | Amgen Inc. | Immunex Corp. | ||
April 23, 2007 | AstraZeneca PLC | MedImmune, Inc. | ||
December 2, 1998 | Sanofi S.A. | Synthélabo S.A. | ||
March 27, 2001 | Johnson & Johnson | ALZA Corporation | ||
October 10, 2003 | General Electric Company | Amersham plc | ||
July 18, 2008 | Teva Pharmaceutical Industries Ltd. | Barr Pharmaceutical, Inc. | ||
July 25, 2005 | Teva Pharmaceutical Industries Ltd. | IVAX Corporation | ||
April 10, 2008 | Takeda Pharmaceutical Company Limited | Millennium Pharmaceuticals, Inc. | ||
February 24, 2004 | Yamanouchi Pharmaceutical Co. | Fujisawa Pharmaceutical Co., Ltd. | ||
September 1, 2005 | Novartis International AG | Chiron Corporation | ||
June 12, 2008 | Invitrogen Corporation | Applied Biosystems, Inc. | ||
February 25, 2005 | Sankyo Co., Ltd. | Daiichi Pharmaceutical Co., Ltd. | ||
June 20, 2003 | IDEC Pharmaceuticals Corporation | Biogen, Inc. | ||
May 20, 2007 | Hologic, Inc. | Cytyc Corporation | ||
July 7, 2008 | Fresenius SE | APP Pharmaceuticals, Inc. |
Premium to Prior Price | ||||||||||||
1-Day Prior to | 1-Week Prior to | 4-Weeks Prior to | ||||||||||
Precedent Transactions Premia | Announcement | Announcement | Announcement | |||||||||
Mean | 25.1 | % | 26.2 | % | 29.9 | % | ||||||
Median | 23.5 | % | 26.5 | % | 27.7 | % | ||||||
High | 52.9 | % | 59.0 | % | 78.1 | % | ||||||
Low | (1.1 | )% | (5.5 | )% | (5.0 | )% |
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• | Abbott Laboratories | |
• | Bristol-Myers Squibb Company | |
• | Eli Lilly and Company | |
• | Johnson & Johnson | |
• | Merck & Co., Inc. | |
• | Pfizer Inc. | |
• | Schering-Plough Corporation | |
• | Amgen, Inc. |
• | AstraZeneca PLC | |
• | GlaxoSmithKline plc | |
• | Novartis AG | |
• | Roche Holding Ltd. | |
• | sanofi-aventis |
• | the closing stock price divided by the estimated IBES consensus EPS for calendar year 2009, referred to below as the “P/E multiple”; and | |
• | the P/E multiple divided by the estimated IBES consensus long-term growth rate of EPS, referred to below as the “P/E/G ratio”. |
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2009E P/E Multiple | ||||||||||||||||
Pfizer | Blended | Wyeth | DCF | |||||||||||||
Valuation Basis | (7.0x) | (7.8x) | (10.4x) | Value | ||||||||||||
(In billions of dollars) | ||||||||||||||||
Total Value of Synergies | $ | 19.6 | $ | 22.7 | $ | 32.5 | $ | 20.6 | ||||||||
Premium Paid as a Percentage of Total Value of Synergies | 83.0 | % | 71.8 | % | 50.0 | % | 79.0 | % |
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• | reviewed certain publicly available business and financial information relating to Wyeth and Pfizer that Evercore deemed to be relevant, including publicly available research analysts’ estimates; | |
• | reviewed certain non-public historical financial statements and other non-public historical financial and operating data relating to Wyeth and Pfizer prepared and furnished to Evercore by the respective managements of Wyeth and Pfizer; | |
• | reviewed certain non-public projected financial data relating to Wyeth under alternative business assumptions prepared and furnished to Evercore by Wyeth’s management; | |
• | reviewed certain non-public projected financial data relating to Pfizer prepared and furnished to Evercore by Pfizer’s management; | |
• | discussed the past and current operations, financial projections and current financial condition of Wyeth and Pfizer with the managements of Wyeth and Pfizer; | |
• | reviewed the reported prices and the historical trading activity of Wyeth common stock and Pfizer common stock; | |
• | compared the financial performance of Wyeth and Pfizer and their respective stock market trading multiples with those of certain other publicly traded companies that Evercore deemed relevant; |
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• | reviewed Wyeth’s financial performance and compared the valuation multiples for Wyeth implied in the merger with those of certain other transactions that Evercore deemed relevant; | |
• | reviewed the amount and timing of the integration costs and cost savings estimated by the managements of Wyeth and Pfizer to result from the merger, referred to collectively as the synergies; | |
• | considered the potential pro forma financial impact of the merger on Pfizer based on projected financial data relating to Wyeth and Pfizer prepared and furnished to Evercore by the respective managements of Wyeth and Pfizer and other assumptions provided by Wyeth’s management; | |
• | reviewed the merger agreement; and | |
• | performed such other analyses and examinations and considered such other factors that Evercore deemed appropriate. |
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Historical Closing Prices | ||||||||||||
of Wyeth Common Stock | Implied per Share | |||||||||||
Low | High | Merger Consideration | ||||||||||
One-Month | $ | 36.09 | $ | 39.56 | ||||||||
Three-Month | $ | 30.79 | $ | 39.56 | $ | 50.19 | ||||||
52-Week | $ | 29.89 | $ | 49.48 |
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Historical Closing Prices | Premium Based on Implied | |||||||
of Wyeth Common Stock | per Share Merger Consideration | |||||||
January 23, 2009 | $ | 43.74 | 14.7 | % | ||||
January 22, 2009 | $ | 38.83 | 29.3 | % | ||||
One-Week Average | $ | 38.75 | 29.5 | % | ||||
One-Month Average | $ | 37.72 | 33.1 | % | ||||
Three-Month Average | $ | 35.19 | 42.6 | % | ||||
Six-Month Average | $ | 37.50 | 33.8 | % | ||||
One-Year Average | $ | 40.56 | 23.8 | % | ||||
52-Week High | $ | 49.48 | 1.4 | % | ||||
52-Week Low | $ | 29.89 | 67.9 | % | ||||
Three-Year Average | $ | 46.45 | 8.0 | % |
U.S. Pharmaceutical Companies | European Pharmaceutical Companies | |
• Abbott Laboratories | • AstraZeneca PLC | |
• Bristol-Myers Squibb Company | • Bayer AG | |
• Eli Lilly and Company | • GlaxoSmithKline plc | |
• Johnson & Johnson | • Novartis AG | |
• Merck & Co., Inc. | • Roche Holding Ltd. | |
• Pfizer Inc. | • sanofi-aventis | |
• Schering-Plough Corporation |
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Implied per Share Equity | Implied per Share | |||||||
Reference Ranges for Wyeth | Merger Consideration | |||||||
2009E EBITDA | $ | 34.72 - $45.48 | ||||||
2010E EBITDA | $ | 32.77 - $43.87 | $ | 50.19 | ||||
2009E EPS | $ | 30.84 - $41.12 | ||||||
2010E EPS | $ | 26.42 - $36.33 |
Announced Year | Acquiror | Target | ||
• 2006 | • AT&T Inc. | • BellSouth Corporation | ||
• 2005 | • The Procter & Gamble Company | • The Gillette Company | ||
• 2004 | • JPMorgan Chase & Co. | • Bank One Corporation | ||
• 2003 | • Bank of America Corporation | • FleetBoston Financial Corporation | ||
• 2002 | • Pfizer Inc. | • Pharmacia Corporation | ||
• 2000 | • America Online, Inc. | • Time Warner Inc. | ||
• 1999 | • Pfizer Inc. | • Warner-Lambert Company | ||
• 1999 | • Qwest Communications International Inc. | • U S WEST, Inc. | ||
• 1999 | • AT&T Corp. | • MediaOne Group, Inc. | ||
• 1998 | • Exxon Corporation | • Mobil Corporation | ||
• 1998 | • Bell Atlantic Corporation | • GTE Corporation | ||
• 1998 | • AT&T Corp. | • Tele-Communications, Inc. | ||
• 1998 | • SBC Communications Inc. | • Ameritech Corporation | ||
• 1998 | • NationsBank Corporation | • BankAmerica Corporation | ||
• 1998 | • Travelers Group Inc. | • Citicorp |
Announced Year | Acquiror | Target | ||
• 2008 | • Roche Holding Ltd | • Genentech, Inc. | ||
• 2007 | • AstraZeneca PLC | • MedImmune, Inc. | ||
• 2006 | • Merck KGgA | • Serono SA | ||
• 2006 | • Bayer AG | • Schering AG | ||
• 2005 | • Novartis AG | • Chiron Corporation | ||
• 2004 | • Sanofi-Synthelabo | • Aventis | ||
• 2002 | • Pfizer Inc. | • Pharmacia Corporation | ||
• 2001 | • Johnson & Johnson | • ALZA Corporation | ||
• 2000 | • Glaxo Wellcome plc | • SmithKline Beecham plc | ||
• 1999 | • Pfizer Inc. | • Warner-Lambert Company | ||
• 1998 | • Zeneca Group plc | • Astra AB | ||
• 1998 | • Sanofi SA | • Synthelabo SA | ||
• 1996 | • Sandoz AG | • Ciba-Geigy AG | ||
• 1995 | • Glaxo plc | • Wellcome plc | ||
• 1994 | • American Home Products Corporation | • American Cyanamid Company |
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Implied Premiums | Implied Premiums for Selected | |||||||||||||||||||||||||||||||
for Selected U.S. M&A Transactions | Pharmaceutical/Biotechnology Transactions | |||||||||||||||||||||||||||||||
High | Mean | Median | Low | High | Mean | Median | Low | |||||||||||||||||||||||||
One Day Prior | 69.1 | % | 27.1 | % | 25.3 | % | (1.5 | %) | 52.3 | % | 27.6 | % | 23.5 | % | 7.1 | % | ||||||||||||||||
One Week Prior | 61.4 | % | 27.6 | % | 27.7 | % | (1.7 | %) | 56.7 | % | 31.8 | % | 27.6 | % | 9.9 | % | ||||||||||||||||
Four Weeks Prior | 68.5 | % | 28.5 | % | 21.9 | % | (1.3 | %) | 70.8 | % | 35.0 | % | 30.5 | % | 1.4 | % |
Implied per Share Equity | Implied per Share | |||||||
Reference Ranges for Wyeth | Merger Consideration | |||||||
One Day Prior | $ | 46.60 - $52.42 | ||||||
One Week Prior | $ | 46.06 - $51.81 | $ | 50.19 | ||||
Four Weeks Prior | $ | 43.31 - $48.72 |
Implied per Share Equity | Implied per Share | |||||||
Reference Ranges for Wyeth | Merger Consideration | |||||||
2012E EBITDA: | ||||||||
Wyeth Management Base Case | $ | 37.23 - $49.56 | ||||||
Wyeth Management Upside Case | $ | 40.25 - $53.67 | ||||||
Wyeth Management Downside Case | $ | 31.74 - $42.22 | ||||||
Wyeth Wall Street Case | $ | 37.12 - $48.93 | ||||||
2012E EPS: | $ | 50.19 | ||||||
Wyeth Management Base Case | $ | 30.34 - $41.43 | ||||||
Wyeth Management Upside Case | $ | 33.45 - $45.81 | ||||||
Wyeth Management Downside Case | $ | 26.60 - $36.16 | ||||||
Wyeth Wall Street Case | $ | 28.95 - $39.52 |
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Implied per Share Equity | Implied per Share | |||||||
Reference Ranges for Wyeth | Merger Consideration | |||||||
Wyeth Management Base Case | $ | 43.53 - $56.36 | ||||||
Wyeth Management Upside Case | $ | 47.93 - $61.70 | ||||||
Wyeth Management Downside Case | $ | 37.51 - $48.30 | $ | 50.19 | ||||
Wyeth Wall Street Case | $ | 38.70 - $49.87 |
Implied Multiples | Implied Multiples for Wyeth | |||||||||||||||||||
for Selected Transactions | Based on Implied per | |||||||||||||||||||
High | Mean | Median | Low | Share Merger Consideration | ||||||||||||||||
Total Enterprise Value/LTM Revenue | 12.3 | x | 5.4 | x | 4.7 | x | 1.5 | x | 2.9 | x | ||||||||||
Total Enterprise Value/LTM EBITDA | 34.1 | x | 19.4 | x | 18.2 | x | 10.6 | x | 8.3 | x | ||||||||||
Total Enterprise Value/LTM EBIT | 62.5 | x | 24.9 | x | 20.2 | x | 10.3 | x | 9.4 | x | ||||||||||
Purchase Price/LTM Net Income | 51.4 | x | 31.2 | x | 28.4 | x | 13.7 | x | 14.2 | x |
Historical Closing Prices | ||||||||||||
of Pfizer Common Stock | Closing Price of Pfizer Common | |||||||||||
Low | High | Stock on January 23, 2009 | ||||||||||
One-Month | $ | 17.01 | $ | 18.27 | ||||||||
Three-Month | $ | 14.45 | $ | 18.41 | $ | 17.45 | ||||||
52-Week | $ | 14.45 | $ | 23.63 |
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Implied per Share Equity | Closing Price of Pfizer | |||||||
Reference Ranges for Pfizer | Common Stock on January 23, 2009 | |||||||
2009E EBITDA | $ | 14.83 - $20.82 | ||||||
2010E EBITDA | $ | 17.56 - $24.94 | ||||||
2009E EPS | $ | 13.84 - $20.23 | $ | 17.45 | ||||
2010E EPS | $ | 16.95 - $24.77 |
Closing Price of | ||||||||
Implied per Share Equity | Pfizer Common Stock | |||||||
Reference Ranges for Pfizer | on January 23, 2009 | |||||||
2009E EBITDA | $ | 14.90 - $18.18 | ||||||
2010E EBITDA | $ | 17.96 - $22.78 | ||||||
2009E EPS | $ | 12.03 - $15.21 | $ | 17.45 | ||||
2010E EPS | $ | 15.28 - $20.14 |
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Closing Price of | ||||||||
Implied per Share Equity | Pfizer Common Stock | |||||||
Reference Ranges for Pfizer | on January 23, 2009 | |||||||
2013E EBITDA: | ||||||||
Pfizer Management Case | $ | 21.36 - $27.44 | ||||||
Pfizer Wall Street Case | $ | 17.72 - $22.42 | ||||||
$ | 17.45 | |||||||
2013E EPS: | ||||||||
Pfizer Management Case | $ | 17.29 - $23.32 | ||||||
Pfizer Wall Street Case | $ | 15.18 - $20.20 |
Closing Price of | ||||||||
Implied per Share Equity | Pfizer Common Stock | |||||||
Reference Ranges for Pfizer | on January 23, 2009 | |||||||
Pfizer Management Case | $ | 22.04 - $28.15 | $ | 17.45 | ||||
Pfizer Wall Street Case | $ | 18.74 - $23.26 |
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• | Prior to the proposed Wyeth acquisition, Pfizer had developed and publicly articulated a set of strategic objectives. The acquisition of Wyeth provided an opportunity for Pfizer to advance each of these strategic objectives in a single transaction. Pfizer’s strategic objectives and the contributions of the proposed Wyeth acquisition towards them are as follows: |
• | Become a Leader in Biologics: Wyeth bringsEnbrel, manufacturing excellence, and pipeline | |
• | Enter the Vaccines Market: Wyeth bringsPrevnar, and a strong late-stage vaccines pipeline | |
• | Expand Invest to Win Areas: Wyeth augments in-line and pipeline portfolios in inflammation, neuroscience, oncology and infectious disease | |
• | Strengthen Leadership in Emerging Markets: Wyeth solidifies Pfizer’s leading position with new products | |
• | Create New Opportunities for Established Products: Wyeth increases the breadth and depth of portfolio | |
• | Invest in Complementary Business: Wyeth adds Consumer and Nutritionals businesses, and enhances Pfizer’s Animal Health business |
• | Pfizer’s belief that the combined entity will be one of the most diversified in the industry and will benefit from complementary patient-centric business units as well as adding strong consumer health and nutritional businesses; | |
• | Pfizer’s belief that the combination will better enable Pfizer to respond to other key opportunities and challenges, such as pricing and access, intellectual property rights, product competition, the regulatory environment and pipeline productivity and a changing business environment; | |
• | Pfizer’s belief that the combined company will enable Pfizer to deliver consistent and stable earnings growth and strong operating cash flow and will bring Pfizer many new points of product entry across the world to better serve patients, physicians and customers; | |
• | Pfizer’s expectation that it will realize approximately $4 billion in synergies as a result of the merger, all within approximately 36 months from the effective date of the merger. Cost synergies for the Wyeth acquisition were estimated by using a combination of three approaches: (1) benchmarks from comparable transactions, in which Pfizer estimated synergies both on the company level and on the cost line item level, (2) Pfizer’s experience with cost savings achieved in previous large transactions, and (3) an analysis of Wyeth’s assumed and Pfizer’s actual detailed cost structures, in order to identify duplication of resources. The combination of these approaches resulted in estimated synergies of approximately $4.0 billion, with approximately 50 percent from SI&A, and 50 percent from R&D and manufacturing; | |
• | Pfizer’s expectation that the merger will decrease its reliance on primary care medicines and create a leading specialty pharmaceutical company; | |
• | Pfizer’s expectation that the merger will decrease the proportion of Pfizer’s revenue that comes from primary care products by approximately 20% to just over half of revenues, with no drug accounting for more than 10% of the combined company’s revenue, in each case, in 2012; | |
• | the opportunity to address the significant challenge of Lipitor’s loss of exclusivity in 2012; | |
• | the ability to strengthen Pfizer’s position in the animal health sector with Wyeth’s array of vaccines and strong vaccine research capability; and | |
• | the ability to maximize the potential of Wyeth’s product portfolio by using Pfizer’s expansive global infrastructure to better distribute those products into emerging markets. |
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For the Fiscal Year Ending December 31, | ||||||||||||||||||||
2009 | 2010 | 2011 | 2012 | 2013 | ||||||||||||||||
(In billions, except per share data) | ||||||||||||||||||||
Revenue | $ | 22.4 | $ | 22.3 | $ | 22.5 | $ | 24.1 | $ | 25.5 | ||||||||||
Net Income | $ | 4.6 | $ | 4.4 | $ | 4.6 | $ | 5.3 | $ | 5.8 | ||||||||||
Earnings Per Share(1) | $ | 3.43 | $ | 3.30 | $ | 3.44 | $ | 3.92 | $ | 4.31 |
(1) | Earnings per share figures were calculated on a post stock-based compensation expense basis and assume approximately 1.34 billion shares of Wyeth common stock outstanding in each year, except for 2009 where it assumes 1.35 billion shares of Wyeth common stock outstanding. |
• | no legislative changes affecting the U.S. pharmaceutical market; | |
• | no significant economic or regulatory changes to Wyeth’s key product markets; | |
• | no significant impact from pending litigations and patent challenges; | |
• | an increase of generic competition based on industry models or existing contractual arrangements; | |
• | exclusion of merger-related transaction costs and productivity initiatives charges; | |
• | no legislative changes affecting U.S. multinationals; | |
• | a significant decrease in interest on investments; | |
• | December 31, 2008 foreign currency rates were used for all years, accordingly, the impact of foreign currency volatility in 2009 has not been considered; and | |
• | inclusion of Project Impact savings reflecting a 10% reduction in headcount and $1.0 billion to $1.5 billion annualized cost savings when fully implemented. |
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Pfizer Inc. Stand-Alone Data | 2009 | 2010 | 2011 | 2012 | 2013 | ||||||||||||||||||||
(in billions, except per share data) | |||||||||||||||||||||||||
Revenues | $ | 45 | .4 | $ | 49 | .2 | $ | 49 | .5 | $ | 46 | .2 | $ | 45 | .6 | ||||||||||
Adjusted income* | $ | 14 | .4 | $ | 17 | .6 | $ | 17 | .8 | $ | 15 | .0 | $ | 14 | .7 | ||||||||||
Adjusted diluted earnings per share* | $ | 2 | .13 | $ | 2 | .61 | $ | 2 | .63 | $ | 2 | .21 | $ | 2 | .17 |
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Pfizer Inc. Stand-Alone Data | 2009 | 2010 | 2011 | 2012 | 2013 | ||||||||||||||||||||
(in billions, except per share data) | |||||||||||||||||||||||||
Adjusted income* | $ | 14 | .4 | $ | 17 | .6 | $ | 17 | .8 | $ | 15 | .0 | $ | 14 | .7 | ||||||||||
Purchase accounting impacts of transactions completed as of 12/31/08 | (1 | .6) | (1 | .7) | (1 | .7) | (1 | .6) | (1 | .5) | |||||||||||||||
Costs related to cost-reduction initiatives | (1 | .6) | (1 | .5) | (0 | .6) | — | — | |||||||||||||||||
Reported net income | $ | 11 | .2 | $ | 14 | .4 | $ | 15 | .4 | $ | 13 | .4 | $ | 13 | .2 | ||||||||||
Adjusted diluted earnings per share | $ | 2 | .13 | $ | 2 | .61 | $ | 2 | .63 | $ | 2 | .21 | $ | 2 | .17 | ||||||||||
Purchase accounting impacts | ( | .24) | ( | .25) | ( | .25) | ( | .24) | ( | .22) | |||||||||||||||
Costs related to cost-reduction initiatives | ( | .24) | ( | .22) | ( | .09) | — | — | |||||||||||||||||
Reported diluted earnings per share | $ | 1 | .65 | $ | 2 | .14 | $ | 2 | .29 | $ | 1 | .97 | $ | 1 | .95 | ||||||||||
• | product launches of existing and newly developed products in several major markets during the period; | |
• | an increase in generic competition for certain branded pharmaceuticals as a result of expiration or loss of patent protection based on their current patent expiration dates; | |
• | no material changes to Pfizer’s U.S. pharmaceutical pricing and reimbursement practices; | |
• | no significant legislative changes affecting the U.S. pharmaceutical market; | |
• | no significant economic or regulatory changes to Pfizer’s key products or markets; | |
• | no significant impact from pending litigations and patent challenges; | |
• | foreign currency rates as follows: 2009 reflects January 15, 2009 foreign exchange rates; 2010 — 2013 reflects average of 2006, 2007, and 2008 foreign exchange rates; as a result, foreign exchange has less of an impact in 2009 than in 2010 through 2013; | |
• | inclusion of cost reduction initiatives savings reflecting a $2 billion net decrease in Pfizer’s Adjusted total costs** implicit in Adjusted income by the end of 2011; and | |
• | no impacts of the effects of business-development transactions not completed as of December 31, 2008 including, but not limited to, any acquisition related financing strategies or their associated tax impacts. |
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* | “Adjusted income” and “Adjusted diluted earnings per share (EPS)” are defined as reported net income and reported diluted EPS excluding purchase-accounting adjustments, acquisition-related costs, discontinued operations and certain significant items. Adjusted Cost of Sales, Adjusted SI&A expenses and Adjusted R&D expenses are income statement line items prepared on the same basis, and therefore, components of the overall adjusted income measure. As described underAdjusted Incomein the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of Pfizer’sForm 10-K for the year ended December 31, 2008, management uses adjusted income, among other factors, to set performance goals and to measure the performance of the overall company. Pfizer believes that investors’ understanding of Pfizer’s performance is enhanced by disclosing this measure. The adjusted income and its components and adjusted diluted EPS measures are not, and should not be viewed as, substitutes for U.S. GAAP net income and its components and diluted EPS. | |
** | “Adjusted total costs” represents primarily the total of Adjusted Cost of Sales*, Adjusted SI&A expenses* and Adjusted R&D expenses*. |
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• | (x) the cash portion of the merger consideration,plus (y) the market value of the stock portion of the merger consideration (determined based on the volume weighted average of the price of Pfizer common stock for the five consecutive trading days ending two days prior to the effective time of the merger, as such prices are reported on the NYSE Transaction Reporting System);minus | |
• | the per share exercise price of such Wyeth stock option; multiplied by |
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Weighted | Weighted | ||||||||||||||||||||||||
Average | Average | No. of Shares | |||||||||||||||||||||||
No. of Shares | Exercise | No. of Shares | Exercise | Underlying | |||||||||||||||||||||
Underlying | Price | Underlying | Price | Out-of-the- | |||||||||||||||||||||
Unvested | of Unvested | Vested | of Vested | Total Estimated | Money | ||||||||||||||||||||
In-the-Money | In-the-Money | In-the-Money | In-the-Money | Resulting Option | Options to Be | ||||||||||||||||||||
Options | Options | Options | Options | Consideration | Canceled | ||||||||||||||||||||
(#) | ($) | (#) | ($) | ($) | (#) | ||||||||||||||||||||
Non-Employee Directors: | |||||||||||||||||||||||||
Robert M. Amen | — | — | — | — | — | — | |||||||||||||||||||
Michael J. Critelli | — | — | — | — | — | — | |||||||||||||||||||
Frances D. Fergusson, Ph.D. | — | — | 4,000 | $ | 43.5700 | $ | 17,560 | 7,000 | |||||||||||||||||
Victor F. Ganzi | — | — | — | — | — | 7,000 | |||||||||||||||||||
Robert Langer, Sc.D. | — | — | 8,000 | $ | 41.8950 | $ | 48,520 | 7,000 | |||||||||||||||||
John P. Mascotte | — | — | 12,000 | $ | 41.6133 | $ | 76,160 | 18,000 | |||||||||||||||||
Raymond J. McGuire | — | — | — | — | — | 3,500 | |||||||||||||||||||
Mary Lake Polan, M.D., Ph.D., M.P.H. | — | — | 12,000 | $ | 41.6133 | $ | 76,160 | 18,000 | |||||||||||||||||
Gary L. Rogers | — | — | — | — | — | 7,000 | |||||||||||||||||||
John R. Torell III | — | — | 12,000 | $ | 41.6133 | $ | 76,160 | 18,000 | |||||||||||||||||
Executive Officers: | |||||||||||||||||||||||||
Timothy P. Cost | 57,000 | $ | 43.2905 | — | — | $ | 266,162 | — | |||||||||||||||||
Richard R. DeLuca, Jr. | 13,334 | $ | 44.5600 | 50,626 | $ | 40.7442 | $ | 410,643 | 61,800 | ||||||||||||||||
Mikael Dolsten, M.D., Ph.D. | 52,000 | $ | 43.0800 | — | — | $ | 253,760 | — | |||||||||||||||||
Geno J. Germano | 33,334 | $ | 44.5600 | 102,667 | $ | 42.0650 | $ | 718,558 | 130,000 | ||||||||||||||||
Thomas Hofstaetter, Ph.D. | 22,500 | $ | 44.5600 | 106,250 | $ | 40.7478 | $ | 842,796 | 71,250 | ||||||||||||||||
Michael Kamarck, Ph.D. | 23,334 | $ | 44.5600 | 52,844 | $ | 43.2730 | $ | 327,015 | 137,400 | ||||||||||||||||
John C. Kelly | 26,667 | $ | 44.5600 | 209,833 | $ | 40.3074 | $ | 1,696,436 | 159,520 | ||||||||||||||||
Andreas Krebs | 11,040 | $ | 44.5600 | 25,188 | $ | 42.4848 | $ | 175,445 | 33,260 | ||||||||||||||||
Joseph M. Mahady | 92,000 | $ | 44.5600 | 187,000 | $ | 43.1328 | $ | 1,215,486 | 454,000 | ||||||||||||||||
Gregory Norden | 66,000 | $ | 44.5600 | 108,834 | $ | 42.7538 | $ | 791,012 | 205,010 | ||||||||||||||||
Denise M. Peppard | 34,667 | $ | 44.5600 | 25,931 | $ | 44.2314 | $ | 214,554 | 100,084 | ||||||||||||||||
Charles A. Portwood | 24,767 | $ | 44.5600 | 156,883 | $ | 41.7407 | $ | 1,059,910 | 200,860 | ||||||||||||||||
Bernard Poussot | 246,667 | $ | 44.5600 | 312,667 | $ | 43.4105 | $ | 2,261,146 | 782,300 | ||||||||||||||||
Cavan M. Redmond | 31,334 | $ | 44.5600 | 121,666 | $ | 40.8298 | $ | 974,039 | 115,500 | ||||||||||||||||
Lawrence V. Stein | 58,000 | $ | 44.5600 | 241,000 | $ | 41.4207 | $ | 1,773,171 | 313,200 | ||||||||||||||||
Mary Katherine Wold | 29,634 | $ | 44.5600 | 211,316 | $ | 40.3372 | $ | 1,711,575 | 164,550 |
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No. of Shares of | Estimated | |||||||||||
Optionally Deferred | Total Resulting | |||||||||||
No. of Shares of | Restricted Stock | Consideration | ||||||||||
Restricted Stock | and DSUs | ($) | ||||||||||
Non-Employee Directors: | ||||||||||||
Robert M. Amen | — | 3,050 | $ | 146,278 | ||||||||
Michael J. Critelli | — | 3,050 | $ | 146,278 | ||||||||
Frances D. Fergusson, Ph.D. | 2,400 | 1,635 | $ | 193,519 | ||||||||
Victor F. Ganzi | 800 | 2,481 | $ | 157,357 | ||||||||
Robert Langer, Sc.D. | — | — | — | |||||||||
John P. Mascotte | — | — | — | |||||||||
Raymond J. McGuire | — | — | — | |||||||||
Mary Lake Polan, M.D., Ph.D., M.P.H. | — | — | — | |||||||||
Gary L. Rogers | 3,200 | — | $ | 153,472 | ||||||||
John R. Torell III | — | — | — |
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Estimated Amount of | Estimated Amount of | |||||||||||
Account Balance | Account Balance Payable | Total Estimated | ||||||||||
Payable at Merger | after Merger | Payments | ||||||||||
($) | ($) | ($) | ||||||||||
Non-Employee Directors: | ||||||||||||
Robert M. Amen | — | $ | 173,046 | $ | 173,046 | |||||||
Michael J. Critelli | — | — | — | |||||||||
Frances D. Fergusson, Ph.D. | — | — | — | |||||||||
Victor F. Ganzi | — | $ | 101,007 | $ | 101,007 | |||||||
Robert Langer, Sc.D. | — | — | — | |||||||||
John P. Mascotte | — | $ | 865,929 | $ | 865,929 | |||||||
Raymond J. McGuire | — | — | — | |||||||||
Mary Lake Polan, M.D., Ph.D., M.P.H. | — | $ | 974,519 | $ | 974,519 | |||||||
Gary L. Rogers | — | — | — | |||||||||
John R. Torell III | $ | 877,395 | — | $ | 877,395 |
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Estimated | ||||||||||||||||||||
No. of RSUs and | Total Resulting Merger | |||||||||||||||||||
Performance Share | Consideration to be held in Trust | |||||||||||||||||||
No. of RSUs and | Unit Awards to be | and Payable after the Merger | ||||||||||||||||||
Performance Share | Estimated | Converted into | No. of Shares of | |||||||||||||||||
Unit Awards to be | Total Resulting | Merger | Cash | Pfizer Common | ||||||||||||||||
Cashed Out | Consideration | Consideration | Consideration | Stock | ||||||||||||||||
(#) | ($) | (#) | ($) | (#) | ||||||||||||||||
Executive Officers: | ||||||||||||||||||||
Timothy P. Cost | 17,400 | $ | 834,504 | — | — | — | ||||||||||||||
Richard R. DeLuca, Jr. | 22,210 | $ | 1,065,192 | — | — | — | ||||||||||||||
Mikael Dolsten, M.D., Ph.D. | 82,000 | $ | 3,932,720 | — | — | — | ||||||||||||||
Geno J. Germano | 45,672 | $ | 2,190,429 | — | — | — | ||||||||||||||
Thomas Hofstaetter, Ph.D. | 22,500 | $ | 1,079,100 | — | — | — | ||||||||||||||
Michael Kamarck, Ph.D. | 16,500 | $ | 791,340 | 8,280 | $ | 273,240 | 8,156 | |||||||||||||
John C. Kelly | 12,950 | $ | 621,082 | 9,710 | $ | 320,430 | 9,564 | |||||||||||||
Andreas Krebs | 22,430 | $ | 1,075,743 | — | — | — | ||||||||||||||
Joseph M. Mahady | 89,952 | $ | 4,314,098 | — | — | — | ||||||||||||||
Gregory Norden | 82,333 | $ | 3,948,691 | — | — | — | ||||||||||||||
Denise M. Peppard | 39,520 | $ | 1,895,379 | — | — | — | ||||||||||||||
Charles A. Portwood | 24,770 | $ | 1,187,969 | — | — | — | ||||||||||||||
Bernard Poussot | 363,600 | $ | 17,438,256 | — | — | — | ||||||||||||||
Cavan M. Redmond | 42,750 | $ | 2,050,290 | — | — | — | ||||||||||||||
Lawrence V. Stein | 63,052 | $ | 3,023,974 | — | — | — | ||||||||||||||
Mary Katherine Wold | 14,096 | $ | 676,044 | 10,570 | $ | 348,810 | 10,411 |
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Cash Due from | ||||
2009 LTIP Award | ||||
($) | ||||
Executive Officers: | ||||
Timothy P. Cost | $ | 758,800 | ||
Richard R. DeLuca, Jr. | $ | 416,000 | ||
Mikael Dolsten, M.D., Ph.D. | $ | 3,000,100 | ||
Geno J. Germano | $ | 1,492,500 | ||
Thomas Hofstaetter, Ph.D. | $ | 681,200 | ||
Michael Kamarck, Ph.D. | $ | 1,091,400 | ||
John C. Kelly | $ | 799,800 | ||
Andreas Krebs | $ | 890,200 | ||
Joseph M. Mahady | $ | 3,620,300 | ||
Gregory Norden | $ | 3,035,100 | ||
Denise M. Peppard | $ | 1,350,000 | ||
Charles A. Portwood | $ | 609,200 | ||
Bernard Poussot | $ | 10,250,000 | ||
Cavan M. Redmond | $ | 1,067,500 | ||
Lawrence V. Stein | $ | 2,109,000 | ||
Mary Katherine Wold | $ | 889,200 |
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• | A lump-sum cash severance payment equal to three times the sum of (x) the executive officer’s annual base salary as in effect at the change in control (or if increased thereafter, as in effect at such time) and (y) the average of the executive officer’s three highest bonuses over the prior five years, or if the executive officer has less than three years of bonus history, the average of the actual years (the “Bonus amount”); if however, the executive officer has not been awarded one full-year’s bonus (i.e., in the case of Dr. Dolsten and Mr. Cost), then the executive’s Bonus amount would be equal to 100% of base salary; and | |
• | A lump-sum cash payment equal to the pro rata portion of the Bonus amount for the year in which the executive officer’s employment terminates. |
• | On the date of termination, the executive officer would be given three additional years of credit for age and service for purposes of calculating the pension benefit to which he or she is entitled under the Wyeth Retirement Plan — U.S., Supplemental Executive Retirement Plan and, if applicable, Executive Retirement Plan and assuming, in calculating the benefit, that the executive earned annually during the three additional years of service, the same compensation (base salary and bonus) the executive earned in the 12 months preceding the termination date or, if greater, in the 12 months preceding the change in control. Further, this benefit would be determined without any reduction for the receipt of benefits prior to the normal retirement age of 65 or age 60, as applicable, provided that this eligibility for an unreduced pension payable at age 55 is achieved only if, at the executive’s termination, the sum of the executive officer’s age and years of service equals or exceeds 60, after adding three years to both service and age. Assuming a qualifying termination of employment immediately following completion of the merger, all of the executive officers other than Mr. Cost and Dr. Dolsten would be eligible for the unreduced pension, in all cases commencing not earlier than age 55. | |
• | If, at the time of termination, either (1) the executive officer is age 50 or older on the termination date, or (2) the sum of the executive officer’s age and years of service equals or exceeds 60, after adding three years to both service and age, the executive officer would be entitled to retiree medical coverage. Retiree medical coverage begins after the completion of the executive’s three years of benefit continuation described below. Assuming a qualifying termination of employment immediately following completion of the merger, all of the executive officers would become entitled to retiree medical coverage pursuant to the change in control severance agreements, except Messrs. Poussot, Mahady and Stein, who are already entitled to these benefits on any termination by virtue of their age and years of service. | |
• | For three years from the date of termination, the executive officer would be given continued coverage under Wyeth’s health and welfare benefit plans (but excluding Wyeth’s disability plans) in which the executive officer was participating immediately prior to the termination. However, if welfare benefits are provided by a subsequent employer, Wyeth’s obligation to provide these benefits will terminate. | |
• | The executive officer would be entitled to a one-time cash payment equal to $60,000, in lieu of the continuation of any fringe benefits. | |
• | The executive officer would be provided with outplacement or executive officer recruiting services at a cost to Wyeth of no more than 10% of the executive officer’s base salary (but in no event exceeding $25,000) and payment by Wyeth of all legal fees and expenses reasonably incurred by the executive officer, if any, in enforcing the agreement. Because legal fees are purely speculative, these fees have not been displayed in the table following this discussion. |
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• | the cashout value (as defined in the change in control severance agreements) of all the shares covered by the RSUs forfeited (with units converted to shares based on the target awards); and | |
• | the excess of (x) the cashout value of all the shares subject to stock options that were forfeited over (y) the aggregate exercise price of the shares subject to the forfeited stock options. |
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Cash | Estimated | ||||||||||||||||||||||||||||
Incentive | Incremental | “Gross-up” | |||||||||||||||||||||||||||
Cash | Award | Incremental | Health and | Aggregate | for Excise | ||||||||||||||||||||||||
Severance | (i.e., 2009 | Pension | Welfare | Value | and Related | ||||||||||||||||||||||||
Benefit | Bonus) | Benefits | Benefits | Perquisites | to Executive | Taxes | |||||||||||||||||||||||
Executive Officers: | |||||||||||||||||||||||||||||
Timothy P. Cost | $ | 2,940,000 | $ | 367,500 | $ | 457,606 | $ | 229,383 | $ | 85,000 | $ | 4,079,489 | $ | 2,357,894 | |||||||||||||||
Richard R. DeLuca, Jr. | $ | 1,907,967 | $ | 188,242 | $ | 2,568,839 | $ | 240,524 | $ | 85,000 | $ | 4,990,572 | $ | 2,785,805 | |||||||||||||||
Mikael Dolsten, M.D., Ph.D. | $ | 4,740,000 | $ | 592,500 | $ | 731,897 | $ | 231,461 | $ | 85,000 | $ | 6,380,858 | $ | 5,663,856 | |||||||||||||||
Geno J. Germano | $ | 3,122,924 | $ | 371,231 | $ | 5,433,688 | $ | 236,286 | $ | 85,000 | $ | 9,249,129 | $ | 5,045,724 | |||||||||||||||
Thomas Hofstaetter, Ph.D. | $ | 2,719,710 | $ | 321,300 | $ | 770,479 | $ | 155,484 | $ | 85,000 | $ | 4,051,973 | $ | 2,303,565 | |||||||||||||||
Michael Kamarck, Ph.D. | $ | 2,943,478 | $ | 342,120 | $ | 1,703,211 | $ | 189,214 | $ | 85,000 | $ | 5,263,023 | $ | 2,478,707 | |||||||||||||||
John C. Kelly | $ | 3,171,800 | $ | 395,450 | $ | 783,029 | $ | 103,503 | $ | 85,000 | $ | 4,538,782 | $ | 2,583,188 | |||||||||||||||
Andreas Krebs | $ | 2,968,445 | $ | 325,111 | $ | 1,188,101 | $ | 223,848 | $ | 85,000 | $ | 4,790,505 | $ | 2,506,727 | |||||||||||||||
Joseph M. Mahady | $ | 6,277,000 | $ | 847,750 | $ | 4,495,627 | $ | 6,390 | $ | 85,000 | $ | 11,711,767 | $ | 7,443,829 | |||||||||||||||
Gregory Norden | $ | 4,820,100 | $ | 567,525 | $ | 8,685,499 | $ | 231,356 | $ | 85,000 | $ | 14,389,480 | $ | 10,029,613 | |||||||||||||||
Denise M. Peppard | $ | 2,486,800 | $ | 284,200 | $ | 2,761,542 | $ | 211,910 | $ | 85,000 | $ | 5,829,452 | $ | 3,571,503 | |||||||||||||||
Charles A. Portwood | $ | 3,077,640 | $ | 375,660 | $ | 1,180,001 | $ | 178,387 | $ | 85,000 | $ | 4,896,688 | $ | 2,268,266 | |||||||||||||||
Bernard Poussot | $ | 11,100,000 | $ | 1,612,500 | $ | 11,501,498 | $ | 7,872 | $ | 85,000 | $ | 24,306,870 | $ | 18,114,398 | |||||||||||||||
Cavan M. Redmond | $ | 2,817,830 | $ | 321,958 | $ | 2,940,350 | $ | 236,195 | $ | 85,000 | $ | 6,401,333 | $ | 3,584,017 | |||||||||||||||
Lawrence V. Stein | $ | 5,052,000 | $ | 698,250 | $ | 2,179,692 | $ | 4,284 | $ | 85,000 | $ | 8,019,226 | $ | 4,999,619 | |||||||||||||||
Mary Katherine Wold | $ | 3,540,960 | $ | 410,490 | $ | 2,356,034 | $ | 179,475 | $ | 85,000 | $ | 6,571,959 | $ | 3,599,580 |
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• | a bank or other financial institution; | |
• | a tax-exempt organization; | |
• | an S corporation or other pass-through entity; | |
• | an insurance company; | |
• | a mutual fund; | |
• | a regulated investment company or real estate investment trust; | |
• | a dealer or broker in stocks and securities, or currencies; | |
• | a trader in securities that elects mark-to-market treatment; | |
• | a holder of Wyeth stock subject to the alternative minimum tax provisions of the Internal Revenue Code; | |
• | a holder of Wyeth stock that received such Wyeth shares through the exercise of an employee stock option, pursuant to a tax qualified retirement plan or otherwise as compensation; | |
• | a person that is not a U.S. holder (as defined below); | |
• | a person that has a functional currency other than the U.S. dollar; | |
• | a holder of Wyeth stock that holds such Wyeth shares as part of a hedge, straddle, constructive sale, conversion or other integrated transaction; or | |
• | a U.S. expatriate. |
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• | regular quarterly cash dividends on Wyeth common stock at a rate not to exceed $0.30 per share of Wyeth common stock with record dates and payment dates consistent with the prior dividend practice; and | |
• | regular quarterly cash dividends on Wyeth $2 Convertible Preferred Stock at a rate not to exceed $0.50 per share of Wyeth $2 Convertible Preferred Stock with record dates and payment dates consistent with the prior dividend practice. |
• | corporate matters, including due organization, good standing and qualification; | |
• | capitalization; | |
• | corporate authority to enter into and perform the obligations contemplated by the merger agreement, enforceability of the merger agreement, approval of the merger agreement by the parties’ boards of directors and stockholder voting requirements to consummate the merger and the other transactions contemplated by the merger agreement; | |
• | required governmental filings and consents; | |
• | the absence of conflicts with, or violations of, organizational documents, other contracts and applicable laws, in each case, as a result of the merger; | |
• | the timely filing and accuracy of periodic reports and other filings with the SEC since January 1, 2006, as well as with respect to financial statements contained therein, internal controls and compliance with the Sarbanes-Oxley Act of 2002; | |
• | conduct of business in the ordinary course since September 30, 2008 and absence of any event, occurrence, development or state of circumstances or facts or condition that has had or would reasonably be expected to have, a material adverse effect on either party since December 31, 2007; | |
• | absence of certain legal proceedings (pending or threatened) and orders; | |
• | compliance with applicable laws; | |
• | tax matters; | |
• | intellectual property matters; | |
• | regulatory compliance; | |
• | broker’s fees payable in connection with the merger; and |
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• | the absence of any representation or warranty by either party except for those expressly set forth in the merger agreement and the acknowledgement by each party of certain investigations made of the other party and such party’s businesses. |
• | title to, or leasehold interest in, certain properties; | |
• | matters with respect to certain material contracts; | |
• | employee matters, including employee benefit plans; | |
• | labor matters; | |
• | environmental matters; | |
• | matters with respect to insurance policies; and | |
• | absence of transactions with affiliates. |
• | the activities of Merger Sub; | |
• | matters with respect to financing of the acquisition; and | |
• | ownership of Wyeth capital stock by Pfizer and its subsidiaries. |
• | changes generally affecting the economy, financial or securities markets or political or regulatory conditions, to the extent such changes do not adversely affect such party and its subsidiaries in a disproportionate manner relative to other participants in the pharmaceutical or biotechnology industry; | |
• | changes in the pharmaceutical or biotechnology industry, to the extent such changes do not adversely affect such party and its subsidiaries in a disproportionate manner relative to other participants in the pharmaceutical or biotechnology industry; | |
• | any change in law or the interpretation thereof or GAAP or the interpretation thereof, to the extent such changes do not adversely affect such party and its subsidiaries in a disproportionate manner relative to other participants in the pharmaceutical or biotechnology industry; | |
• | acts of war, armed hostility or terrorism to the extent such changes do not adversely affect such party and its subsidiaries in a disproportionate manner relative to other participants in the pharmaceutical or biotechnology industry; | |
• | any change attributable to the negotiation, execution or announcement of the merger, including any litigation resulting therefrom, and any adverse change in customer, distributor, employee, supplier, financing source, licensor, licensee, sub-licensee, stockholder, co-promotion or joint venture partner or similar relationships, including, in the case of Wyeth and its subsidiaries, as a result of the identity of Pfizer; | |
• | any failure by such party to meet any internal or published industry analyst projections or forecasts or estimates of revenues or earnings for any period (although facts and circumstances giving rise to such |
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failure that are not otherwise excluded from the definition of material adverse effect may be taken into account in determining whether there has been a material adverse effect); |
• | any change in the price or trading volume of such party’s common stock on the NYSE (although facts and circumstances giving rise to such change that are not otherwise excluded from the definition of material adverse effect may be taken into account in determining whether there has been a material adverse effect); and | |
• | compliance with the terms of, or the taking of any action required by, the merger agreement. |
• | preserve their assets; | |
• | keep available the services of current officers, key employees and consultants of Wyeth and its subsidiaries; | |
• | preserve Wyeth’s business organization intact and maintain its existing relations and goodwill with customers, suppliers, distributors, creditors, lessors, clinical trial investigators or managers of its clinical trials; and | |
• | comply in all material respects with all applicable laws. |
• | amend or propose to amend the organizational documents of Wyeth or its significant subsidiaries; | |
• | issue, sell, pledge, dispose of, grant, transfer or encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer or encumbrance of any shares of, or securities convertible into or exchangeable or exercisable for, or options, warrants, calls, commitments or rights of any kind to acquire, or based on the value of, any shares of its capital stock of any class or any equity interest, voting debt of Wyeth or any of its subsidiaries (other than issuances upon the exercise or conversion, as the case may be, of Wyeth stock options or Wyeth $2 Convertible Preferred Stock, or the settlement of other equity awards); | |
• | other than pursuant to cash management or investment portfolio activities in the ordinary course of business, acquire (including by merger, consolidation, or acquisition of stock or assets or intellectual property or any other business combination) any ownership interest in any corporation or other business organization or any assets or any interest in any assets from any other person for consideration valued in excess of $50 million individually or $200 million in the aggregate; | |
• | enter into any strategic licensing, joint venture, collaboration, alliance, co-promotion or similar agreement for consideration valued in excess of $50 million individually or $200 million in the aggregate for all such contracts or enter into any agreement that would (1) constitute a material contract of Wyeth, (2) limit or restrict Wyeth or its subsidiaries or Pfizer or any of its affiliates or any successor of such entities, in each case, after the effective time of the merger, from engaging or competing in, or require any of them to work exclusively with the party to such agreement in, any material line of business or in any material geographic area or, in the case of the pharmaceutical or animal health business, in the research, development, manufacture and commercialization of any antibody or |
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therapeutic agent directed at a specific antigen or other target or product or in any therapeutic area, class of drugs or mechanism of action or modality (other than any limitation or restriction which Wyeth would have the right to terminate upon a change of control at no cost and with no such continuing material restrictions or obligations to Wyeth or Pfizer or any of their respective subsidiaries) or (3) be reasonably expected to interfere with the parties’ ability to consummate the merger; |
• | (1) purchase financial instruments that at the time of purchase qualify as Level III assets (as defined in FASB Statement No. 157); (2) change in a material manner the average duration of Wyeth’s investment portfolio or the average credit quality of such portfolio, except for changes that would reduce investment risk in such portfolio; (3) materially change investment guidelines with respect to Wyeth’s investment portfolio except for changes that would reduce investment risk of Wyeth’s investment portfolio; (4) hypothecate, repo, encumber or otherwise pledge assets in Wyeth’s investment portfolio; or (5) invest new surplus cash from operations in securities other than short-term liquid securities permitted by Pfizer’s investment guidelines (which are required to be implemented by Wyeth with respect to such new surplus cash as soon as practicable after the date of the merger agreement); | |
• | enter into interest rate swaps, foreign exchange or commodity agreements and other similar hedging arrangements (other than for purposes of offsetting a bona fide exposure); | |
• | merge or consolidate Wyeth or any of its subsidiaries with any person or adopt a plan of complete or partial liquidation or resolutions providing for a complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of Wyeth or any of its subsidiaries (other than any such transaction between direct or indirect wholly-owned subsidiaries of Wyeth that would not result in material adverse tax consequences or material loss of tax benefits or loss of any material asset); | |
• | sell, pledge, dispose of, transfer, lease, license, guarantee or encumber, or authorize the sale, pledge, disposition, transfer, lease, license, guarantee or encumbrance of any material property or assets (including intellectual property) of Wyeth or any of its subsidiaries, except (1) pursuant to existing contracts or commitments, (2) for the sale of goods and services in the ordinary course of business consistent with past practice, (3) transactions involving property or assets of Wyeth or any of its subsidiaries having a value no greater than $120 million in the aggregate for all such transfers, (4) in connection with any waiver, release, assignment, settlement or compromise of litigation otherwise permitted under the merger agreement, or (5) in connection with cash management or investment portfolio activities in the ordinary course of business; | |
• | split, combine, reclassify, subdivide or amend the terms of its outstanding capital stock or any other securities of Wyeth or enter into any agreement with respect to voting of any of its capital stock or any securities convertible into or exchangeable for such shares; | |
• | declare, set aside, make or pay any dividend or other distribution on any shares of capital stock of Wyeth or its subsidiaries, except (1) for regular quarterly cash dividends not in excess of $0.30 per share of Wyeth common stock, (2) for regular quarterly cash dividends not in excess of $0.50 per share of Wyeth $2 Convertible Preferred Stock, in each case, with usual record and payment dates for such dividends in accordance with past dividend practice and (3) between or among wholly-owned subsidiaries of Wyeth; | |
• | purchase, redeem or otherwise acquire any shares of its capital stock, any securities convertible or exchangeable or exercisable for any shares of capital stock or any other securities, including the convertible debentures and Wyeth $2 Convertible Preferred Stock, except for purchases, redemptions or other acquisitions of capital stock or other securities (1) required by the terms of Wyeth stock incentive plans or the indenture for the convertible debentures, (2) in order to pay taxes or satisfy withholding obligations in respect of such taxes in connection with the exercise of Wyeth stock options or vesting of RSUs or DSUs or the lapse of restrictions in respect of any other equity interests in Wyeth, in each case pursuant to the terms of the applicable Wyeth stock incentive plans, (3) required by the terms of any plans, arrangements or agreements existing on the date of the merger agreement and between Wyeth or any of its subsidiaries and any director or employee of Wyeth or any of its subsidiaries, or |
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(4) prepayment, repurchase or redemption of all or any portion of the convertible debentures for an amount less than or equal to par, plus any accrued and unpaid interest incurred up to the date on which such convertible debentures are prepaid, repurchased or redeemed; |
• | incur any indebtedness for borrowed money or issue any debt securities, warrants or other rights to acquire debt securities of Wyeth or any of its subsidiaries or assume, guarantee or endorse, as an accommodation or otherwise, the obligations of any other person for borrowed money (other than under existing working capital facilities and letter of credit facilities in the ordinary course); |
• | make any loans, capital contributions to, or investments in, any person in amounts in excess of $50 million in the aggregate except for (1) cash management or investment portfolio activities in the ordinary course of business and consistent with the restrictions on Wyeth investment portfolio set forth in the merger agreement or (2) in connection with certain transactions permitted by the merger agreement; |
• | make or agree to make any capital expenditures in excess of $1.2 billion in the aggregate for all such capital expenditures or commit to any new capital projects in excess of $50 million individually and $100 million in the aggregate for all such capital expenditures that are not contemplated by Wyeth’s 2009 operating plan; | |
• | terminate, cancel, renew, or request or agree to any material amendment or material modification to, material change in, or material waiver under, any material contract of Wyeth, or enter into or materially amend any contract that, if existing on the date of the merger agreement, would be a material contract of Wyeth; | |
• | subject to limited exceptions, (1) increase the number of employees of Wyeth and its subsidiaries, or (2) enter into an employment agreement or relationship with any person who earns a base salary of more than or equal to $215,000; | |
• | enter into, modify, amend or terminate any contract or waive, release or assign any rights or claims under any contract, which would be reasonably likely to (1) impair the ability of Wyeth to perform its obligations under the merger agreement in any material respect or (2) prevent or materially delay or impair the consummation of the merger and the other transactions contemplated by the merger agreement; | |
• | except as required pursuant to any Wyeth benefit plans, foreign benefit plans, collective bargaining agreements, the terms of the merger agreement or any applicable law, and subject to limited exceptions, (1) grant or provide or adopt a plan or agreement to grant or provide any retention, change in control, severance or termination payments or benefits to any current or former director, officer, employee or consultant of Wyeth or any of its subsidiaries, (2) subject to certain limited exceptions, increase the compensation, bonus or pension, welfare, severance or other benefits of, pay any bonus to, or make any new equity awards to any current or former director, officer, employee or consultant of Wyeth or any of its subsidiaries, (3) establish, adopt, amend or terminate any Wyeth benefit plan or amend the terms of any outstanding equity-based awards, (4) take any action to accelerate the vesting or payment, or fund or in any other way secure the payment, of compensation or benefits under any Wyeth benefit plan, (5) change any actuarial or other assumptions used to calculate funding obligations with respect to any Wyeth benefit plan or to change the manner in which contributions to such plans are made or the basis on which such contributions are determined, or (6) issue or forgive any loans to directors, officers, employees, contractors or any of their respective affiliates except for any such issuance that would not violate the Sarbanes-Oxley Act and is consistent with past practice and policy; | |
• | pre-pay any long-term indebtedness for borrowed money or change the terms or extend the maturity of any long-term indebtedness (other than under existing working capital facilities and in respect of the convertible debentures for an amount less than or equal to par, plus any accrued and unpaid interest); | |
• | make any material change in its method of accounting or its accounting practices, policies or principles, unless required by law, a governmental entity or GAAP, or (1) change its fiscal year, (2) make, change or revoke any material United States tax election, (3) settle or compromise the U.S. federal income tax |
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examination for the 2002 through 2005 tax years, or (4) settle or compromise any other tax claim where the amount of cash to be paid to the relevant taxing authority upon such settlement or compromise of such claim exceeds $25 million; |
• | waive, release, assign, settle or compromise: (1) any product liability claim asserted against Wyeth or its subsidiaries concerning hormone therapy products; (2) any other product liability claims asserted against Wyeth or its subsidiaries, except any compromises or settlements involving the payment of monetary damages in an amount less than $5 million individually or $50 million in the aggregate; or (3) any claim which upon resolution would be material to Wyeth and its subsidiaries taken as a whole, would involve the payment by Wyeth of an amount in excess of $25 million individually and $100 million in the aggregate (excluding from such aggregate amount individual claims involving payment of less than $1 million) or would involve the imposition of injunctive relief against Wyeth that would materially limit or restrict the business of Pfizer and its subsidiaries following the effective time of the merger; or | |
• | authorize or enter into an agreement to do any of the actions described in the preceding bullets. |
• | preserve their assets; | |
• | preserve Pfizer’s business organization intact and maintain its existing relations and goodwill with customers, suppliers, distributors, creditors, lessors, clinical trial investigators or managers of its clinical trials; and | |
• | comply in all material respects with all applicable laws. |
• | acquire (including, by merger, consolidation, or acquisition of stock, assets or any acquisition or license of intellectual property or any other business combination or collaboration) any interest in any corporation, partnership, other business organization or any division thereof or any assets or interest in any assets from any other person for consideration (other than acquisitions or licenses for which the cash consideration paid prior to the effective time of the merger, together with the cash consideration paid prior to the effective time of the merger for any other such acquisitions or licenses does not exceed $750 million in the aggregate); | |
• | merge or consolidate Pfizer with any person or adopt a plan of complete or partial liquidation or resolutions providing for a complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of Pfizer; | |
• | purchase, redeem or otherwise acquire any shares of its capital stock, any securities convertible or exchangeable or exercisable for any shares of capital stock or any other securities for consideration in excess of $500 million in the aggregate, except any purchase, redemption or other acquisition (1) of such securities made in connection with the financing of the merger subject to Wyeth’s prior written consent, which consent will not be unreasonably withheld, conditioned or delayed, (2) required by the terms of Pfizer benefit plans or Pfizer’s Series A Convertible Perpetual Preferred Stock, (3) in order to pay taxes or satisfy withholding obligations in respect of such taxes in connection with the exercise of Pfizer stock options, the lapse of restrictions or settlement of awards granted pursuant to the applicable Pfizer benefit plans or (4) required by the terms of any plans, arrangements or agreements existing on |
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the date of the merger agreement between Pfizer or any of its subsidiaries and any director or employee of Pfizer or any of its subsidiaries; |
• | declare, set aside, make or pay any dividend or other distribution on any shares of its capital stock, except for regular quarterly cash dividends not in excess of $0.16 per share of Pfizer common stock with usual record and payment dates for such dividends in accordance with past dividend practice; | |
• | enter into, modify, amend or terminate any contract or waive, release or assign any rights or claims under any contract, which would be reasonably likely to (1) impair the ability of Pfizer to perform its obligations under the merger agreement in any material respect or (2) prevent or materially delay or impair the consummation of the merger and the other transactions contemplated by the merger agreement; or | |
• | authorize or enter into an agreement to do any of the actions described in the preceding bullets. |
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• | initiate, solicit or knowingly encourage any inquiries or the making of any proposal or offer from any third party relating to any acquisition proposal (as defined below) with respect to Wyeth; | |
• | enter into or participate in any substantive discussion or negotiation with respect to, or provide any confidential information or data to any person relating to, an acquisition proposal; | |
• | enter into any merger agreement, letter of intent, agreement in principle, share purchase agreement, asset purchase agreement, share exchange agreement, option agreement or other similar contract relating to an acquisition proposal or enter into any contract or agreement in principle requiring Wyeth to abandon, terminate or breach its obligations under the merger agreement or fail to consummate the transactions contemplated by the merger agreement; | |
• | take any action to make the provisions of any “fair price,” “moratorium,” “control share acquisition,” “business combination” or other similar anti-takeover statute or regulation (including any transaction under, or a third party becoming an “interested stockholder” under, Section 203 of the DGCL), or any restrictive provision of any applicable anti-takeover provision in Wyeth’s certificate of incorporation or bylaws, inapplicable to any transactions contemplated by an acquisition proposal; or | |
• | resolve, propose or agree to undertake any of the actions listed above. |
• | to immediately cease and cause to be terminated any solicitation, discussion or negotiation with any persons conducted prior to the execution of the merger agreement by Wyeth, its subsidiaries or any of their representatives with respect to any acquisition proposal and to promptly request the return or destruction of all confidential information provided by or on behalf of Wyeth or any of its subsidiaries to such person in connection with the consideration of any acquisition proposal to the extent that Wyeth is entitled to have such documents returned or destroyed; | |
• | to notify Pfizer in writing promptly (but no later than 24 hours) after it receives any acquisition proposal or inquiry of the type described above and to provide Pfizer with certain information regarding such acquisition proposal or inquiry; | |
• | to keep Pfizer reasonably informed, on a reasonably current basis, of the status of any material developments with respect to, any such acquisition proposal and to provide Pfizer with copies of all written inquiries and correspondence with respect to such acquisition proposal or inquiry no later than 24 hours following receipt thereof; | |
• | not to, and to cause its subsidiaries not to, (i) enter into any contract subsequent to the date of the merger agreement that prohibits Wyeth from providing information concerning any acquisition proposal |
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or inquiry to Pfizer, or (ii) terminate, waive, amend or modify, or grant permission under, the standstill provisions of any agreement to which it or any of its subsidiaries is a party which prohibits the counterparty from making, effecting, entering into, making or participating in any solicitation of proxies in respect of, seeking, proposing or otherwise acting alone or in concert with others, to influence the management or the Wyeth board of directors with respect to, or advising, assisting, knowingly encouraging or acting as a financing source for, an acquisition proposal; and |
• | to enforce the standstill provisions of any agreements which prohibit the counterparty from making, effecting, entering into, making or participating in any solicitation of proxies in respect of, seeking, proposing or otherwise acting alone or in concert with others, to influence the management or the Wyeth board of the directors with respect to, or advising, assisting, knowingly encouraging or acting as a financing source for, an acquisition proposal to, and to cause subsidiaries of Wyeth to, take all steps necessary to terminate any waiver of any such standstill provision that may have been previously granted unless the Wyeth board of directors concludes in good faith, after consultation with outside counsel, that taking such action could reasonably be determined to be inconsistent with its fiduciary duties under applicable law, and to, and to cause its subsidiaries to, otherwise enforce any such standstill provisions. |
• | a merger, consolidation, other business combination or similar transaction involving Wyeth or any of its subsidiaries, pursuant to which such person would own 15% or more of the consolidated assets, revenues or net income of Wyeth and its subsidiaries, taken as a whole; | |
• | a sale, lease, license or other disposition directly or indirectly by merger, consolidation, business combination, share exchange, joint venture or otherwise, of assets of Wyeth (including equity interests of any of its subsidiaries) or any subsidiary of Wyeth representing 15% or more of the consolidated assets, revenues or net income of Wyeth and its subsidiaries, taken as a whole; | |
• | the issuance or sale or other disposition (including by way of merger, consolidation, business combination, share exchange, joint venture or similar transaction) of equity interests representing 15% or more of the voting power of Wyeth; | |
• | a transaction or series of transactions in which any person will acquire beneficial ownership or the right to acquire beneficial ownership of equity interests representing 15% or more of the voting power of Wyeth; or | |
• | any combination of any of the transactions described in the four immediately preceding bullets. |
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• | in response to an intervening event (as defined below) if the Wyeth board of directors concludes in good faith, after consultation with outside counsel, that the failure to take such action could reasonably be determined to be inconsistent with its fiduciary duties under applicable law; or | |
• | in response to an acquisition proposal if the Wyeth board of directors concludes in good faith, after consultation with outside counsel, that the failure to take such action could reasonably be determined to be inconsistent with its fiduciary duties under applicable law. |
• | the same annual base salary or wage rate in effect as of the date of the merger agreement and the same annual incentive and bonus opportunities provided by Wyeth in respect of 2008 as set forth under the applicable Wyeth benefit plan; and | |
• | employee benefits which are substantially comparable, in the aggregate, to those provided to similarly situated employees (as a group), in each case by Wyeth and its subsidiaries immediately prior to the effective time of the merger; |
• | the obligations in the prior two bullet points will not take into account any change in control- or transaction-based retention, transition, stay or similar bonus arrangements for purposes of defining either annual incentive and bonus opportunities or employee benefits; | |
• | with respect to employees who are subject to collective bargaining agreements, compensation and benefits will be provided in accordance with the applicable collective bargaining agreements; | |
• | so long as Pfizer honors, or causes the surviving corporation to honor, the provisions of the merger agreement relating to 2009 annual bonuses with respect to a particular employee (other than any |
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employee who participates in a Wyeth benefit plan that is a sales force incentive or integrated metrics reports bonus program), Pfizer will be deemed to have satisfied its obligations with respect to annual cash incentive or bonus opportunities to be provided to such employee in respect of 2009; |
• | so long as Pfizer honors, or causes the surviving corporation to honor, the provisions of the merger agreement concerning the Company Special Transaction Severance Plan or CIC Severance Agreements (each as defined in the merger agreement), as applicable to a given employee, Pfizer will be deemed to have satisfied its obligations to provide severance paymentsand/or benefits to any such employee as may otherwise be required to be provided in the merger agreement; and | |
• | with respect to any employees based outside the United States, Pfizer’s obligations under these provisions of the merger agreement are to be modified to the extent necessary to comply with applicable laws of the foreign countries and political subdivisions thereof in which such employees are based. |
• | waive any pre-existing condition exclusions and waiting periods with respect to participation and coverage requirements otherwise applicable to former Wyeth employees under any such Pfizer benefit plans providing medical, dental or vision benefits to the same extent such limitation would have been waived or satisfied under the analogous Wyeth benefit plan in which such former Wyeth employee participated immediately prior to the effective time of the merger; | |
• | provide each former Wyeth employee with credit for any co-payments and deductibles paid prior to the effective time of the merger during the calendar year in which such effective time occurs (or if later, paid in the year in which such employee is first eligible to participate), to the same extent such credit was given under the analogous Wyeth benefit plan prior to the effective time of the merger, in satisfying any applicable deductible or out-of-pocket requirements under any such Pfizer benefit plan in which the employee participates during the calendar year in which such effective time occurs (or if later, the year in which such employee is first eligible to participate); and | |
• | recognize all service of each former Wyeth employee prior to the effective time of the merger to Wyeth, its subsidiaries and any predecessor entities of Wyeth or any of its subsidiaries (as well as service to Pfizer and its affiliates (including the surviving corporation) after the effective time of the merger), for all purposes (including, but not limited to, eligibility to participate, vesting credit, entitlement to benefits and benefit accrual) of any Pfizer benefit plans (including those providing for vacation and paid time-off) in which any such employee participates after the effective time of the merger except that Pfizer will not recognize such service to the extent it would result in any duplication of benefits for the same period of service. |
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• | providing information relating to Wyeth and its subsidiaries to the financing parties (including information to be used in the preparation of an information package regarding the business, operations, financial projections and prospects of Pfizer and Wyeth customary for such financing or reasonably necessary for the completion of the financing by the financing parties) to the extent reasonably requested by Pfizer to assist in preparation of customary offering or information documents to be used for the completion of the financing as contemplated by the commitment letter; | |
• | participating in a reasonable number of meetings (including customaryone-on-one meetings with the parties acting as lead arrangers for the financing and senior management and representatives, with appropriate seniority and expertise, of Wyeth), presentations, road shows, drafting sessions, due diligence sessions (including accounting due diligence sessions) and sessions with the rating agencies; |
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• | assisting in the preparation of (1) any customary offering documents, bank information memoranda, prospectuses and similar documents (including historical and pro forma financial statements and information) for any of the financing, and (2) materials for rating agency presentations; | |
• | cooperating with the marketing efforts for any of the financing (including consenting to the use of Wyeth’s and its subsidiaries’ logos; provided that such logos are used solely in a manner that is not intended to or reasonably likely to harm or disparage Wyeth or its subsidiaries or the reputation or goodwill of Wyeth or any of its subsidiaries); | |
• | executing and delivering (or using reasonable best efforts to obtain from its advisors), and causing its subsidiaries to execute and deliver (or use reasonable best efforts to obtain from its advisors), customary certificates (including a certificate of the principal financial officer of Wyeth or any subsidiary with respect to solvency matters), accounting comfort letters (including consents of accountants for use of their reports in any materials relating to the financing), legal opinions or other documents and instruments relating to guarantees and other matters ancillary to the financing as may be reasonably requested by Pfizer as necessary and customary in connection with the financing; | |
• | assisting in (1) the preparation of and entering into one or more credit agreements, currency or interest hedging agreements, or other agreements or (2) the amendment of any of Wyeth’s or its subsidiaries’ existing credit agreements, currency or interest hedging agreements, or other agreements, in each case, on terms satisfactory to Pfizer and that are reasonably requested by Pfizer in connection with the financing provided that no obligation of Wyeth or any of its subsidiaries under any such agreements or amendments will be effective until the effective time of the merger; | |
• | as promptly as practicable, furnishing Pfizer and the financing parties with all financial and other information regarding Wyeth and its subsidiaries as may be reasonably requested by Pfizer to assist in preparation of customary offering or information documents to be used for the completion of the financing as contemplated by the commitment letter; | |
• | using its reasonable best efforts, as appropriate, to have its independent accountants provide their reasonable cooperation and assistance; | |
• | using its reasonable best efforts to permit any cash and marketable securities of Wyeth and its subsidiaries to be made available to the Pfizerand/or Merger Sub at the closing; | |
• | providing authorization letters to the financing parties authorizing the distribution of information to prospective lenders and containing a representation to the financing parties that the public side versions of such documents, if any, do not include material non-public information about Wyeth or its affiliates or securities; | |
• | using its reasonable best efforts to ensure that the financing parties benefit from the existing lending relationships of Wyeth and its subsidiaries; | |
• | providing audited consolidated financial statements of Wyeth covering the three fiscal years immediately preceding the closing for which audited consolidated financial statements are currently available and unaudited financial statements of Wyeth (excluding footnotes) for any interim period or periods ended after the date of the most recent audited financial statements and at least 45 days prior to the effective time of the merger; | |
• | cooperating reasonably with Pfizer’s financing sources’ due diligence, to the extent customary and reasonable and to the extent not unreasonably interfering with the business of Wyeth; and | |
• | terminating and repaying in full the commitments under the Credit Agreement, dated as of August 2, 2007, among Wyeth, the lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative agent, on or prior to the closing date. |
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• | adoption of the merger agreement by Wyeth’s stockholders; | |
• | absence of any statute, law, ordinance, rule, regulation, judgment, order, injunction (whether temporary, preliminary or permanent), decision, opinion or decree issued by a court or other governmental entity in the United States or the European Union that makes the merger illegal or prohibits the consummation of the merger; | |
• | the applicable waiting period (and any extension thereof) under the HSR Act will have expired or been terminated, and competition approvals and authorizations required from the European Commission and China’s Ministry of Commerce and the applicable antitrust governmental authorities in Australia and Canada will have been obtained; | |
• | approval for the listing on the NYSE of the Pfizer common stock and, if necessary, the Pfizer $2 Convertible Preferred Stock, if any, to be issued to the Wyeth stockholders in the merger, subject to official notice of issuance; and | |
• | the registration statement onForm S-4, of which this proxy statement/prospectus forms a part, having been declared effective by the SEC and the absence of an effective stop order suspending the effectiveness of the Form S-4 or proceedings pending before the SEC for that purpose. |
• | (i) the representations and warranties of Wyeth regarding the organization, good standing and qualification, capitalization, and corporate authority of Wyeth will be true and correct (other than in de minimis respects), (ii) the representations and warranties of Wyeth related to the absence of any event or occurrence having a material adverse effect on Wyeth since December 31, 2007 will be true and correct in all respects, and (iii) all other representations and warranties of Wyeth will be true and correct (without giving effect to any materiality or material adverse effect qualifications contained in such representations and warranties), in each case, when made and as of the date of closing of the merger (other than those representations and warranties that were made only as of a specified date, which need only be true and correct as of such specified date), except in the case of representations and warranties described in clause (iii) above, where the failure to be true and correct has not had and would not reasonably be expected to have a material adverse effect on Wyeth; | |
• | Wyeth shall have performed or complied with, in all material respects, all of its material agreements and covenants under the merger agreement at or prior to the consummation of the merger; | |
• | receipt of a certificate executed by Wyeth’s chief executive officer or chief financial officer as to the satisfaction of the conditions described in the preceding two bullets; and | |
• | the lenders who are parties to the commitment letter (or, in the event that alternative financing has been arranged, the lenders or other financing sources who have committed to such alternative financing) not having declined to make the financing (or such alternative financing) available to Pfizer on the date that would otherwise have been the date of consummation of the merger, primarily by reason of the failure of either or both of the following conditions: |
• | Pfizer having on the closing date, and taking into account the merger, (a) an unsecured long-term obligations rating of at least “A2” (with stable, or better, outlook) and a commercial paper credit rating of at least“P-1” (which rating will be affirmed) from Moody’s Investors Services, Inc. and (b) a long-term issuer credit rating of at least “A” (with stable, or better, outlook) and a short-term |
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issuer credit rating of at least“A-1” (which rating will be affirmed) from Standard & Poor’s Ratings Group (it being understood that an unsecured long-term obligations rating of higher than “A2” and a long-term issuer credit rating of higher than “A” will satisfy the foregoing, as applicable, irrespective of whether or not such ratings are subject to “negative watch” or “negative outlook”); or |
• | since December 31, 2007, there not having been any event, occurrence, development or state of circumstances or facts or condition that has had or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on Pfizer, except (a) as disclosed in Pfizer’s SEC filings filed since January 1, 2008 but prior to the execution date of the merger agreement (other than certain risk-related disclosures made in such filings) or (b) as set forth in Pfizer’s disclosure letter to the merger agreement. |
• | (i) the representations and warranties of Pfizer and Merger Sub regarding the organization, good standing and qualification, capitalization, and corporate authority of Pfizer and Merger Sub will be true and correct (other than in de minimis respects), (ii) the representations and warranties of Pfizer and Merger Sub related to the absence of any event or occurrence having a material adverse effect on Pfizer since December 31, 2007 will be true and correct in all respects, and (iii) all other representations and warranties of Pfizer and Merger Sub will be true and correct (without giving effect to any materiality or material adverse effect qualifications contained in such representations and warranties), in each case, when made and as of the date of closing of the merger (other than those representations and warranties that were made only as of a specified date, which need only be true and correct as of such specified date), except in the case of representations and warranties described in clause (iii) above, where the failure of such representations and warranties to be true and correct has not had and would not reasonably be expected to have a material adverse effect on Pfizer; | |
• | Pfizer and Merger Sub will have performed or complied with, in all material respects, all of its material agreements and covenants under the merger agreement at or prior to the closing date of the merger; and | |
• | receipt of a certificate executed by Pfizer’s and Merger Sub’s chief executive officer or chief financial officer as to the satisfaction of the conditions described in the preceding two bullets. |
• | the merger has not been consummated by the termination date; | |
• | a governmental entity in the United States or European Union has issued a final and non-appealable order, judgment, decision, opinion, decree or ruling or taken any other action permanently enjoining or otherwise prohibiting the consummation of the transactions contemplated by the merger agreement; or | |
• | Wyeth’s stockholders have failed to vote for adoption of the merger agreement. |
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• | Wyeth breaches its representations and warranties, covenants or agreements under the merger agreement such that the applicable closing conditions will not have been satisfied (and such breach is incapable of being cured prior to the termination date); or | |
• | (1) the Wyeth board of directors effects a Change of Recommendation in response to an acquisition proposal from a third party and following its good faith determination that failure to take such action could reasonably be determined to be inconsistent with its fiduciary duties, (2) the Wyeth board of directors approves or recommends, or enters into or allows Wyeth or any of its subsidiaries to enter into, a merger agreement, letter of intent, agreement in principle, share purchase agreement, asset purchase agreement, share exchange agreement, option agreement or other similar contract relating to an acquisition proposal, (3) following the date any bona fide acquisition proposal or any material modification thereto is first published, sent or given to the stockholders of Wyeth, Wyeth fails to issue a press release that expressly reaffirms its recommendation of the merger agreement within ten business days following Pfizer’s written request to do so (which request may be made by Pfizer one time following any such acquisition proposal or any material modifications thereto), (4) if any tender offer or exchange offer is commenced with respect to the outstanding Wyeth common stock prior to stockholder adoption of the merger agreement, and the Wyeth board of directors shall not have recommended that Wyeth’s stockholders reject such tender offer or exchange offer and not tender their Wyeth common stock into such tender offer or exchange offer within ten business days after commencement of such tender offer or exchange offer, unless Wyeth has issued a press release that expressly reaffirms the recommendation of the merger agreement within such ten business day period, (5) Wyeth shall have failed to include its recommendation in the proxy statement or (6) Wyeth or the Wyeth board of directors publicly announces its intentions to do any of actions listed above (any and all of the above, a “Change of Recommendation Termination Event”); or | |
• | the Wyeth board of directors effects a Change of Recommendation specifically due to the occurrence of an intervening event. |
• | Pfizer breaches its representations and warranties, covenants or agreements under the merger agreement such that certain applicable closing conditions will not have been satisfied (and such breach is incapable of being cured prior to the termination date); or | |
• | at any time prior to Wyeth’s stockholders’ adoption of the merger agreement, if the Wyeth board of directors determines to accept a superior proposal, but only if Wyeth (1) is not in material breach of its agreement not to solicit alternative proposals and (2) the applicable termination fee is paid substantially concurrently with such termination. |
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• | Pfizer had terminated the merger agreement due to the occurrence of a Change of Recommendation Termination Event; or | |
• | Wyeth had terminated the merger agreement to enter into a transaction with the same third party providing such acquisition proposal. |
• | Pfizer terminates the merger agreement due to the occurrence of a Change of Recommendation Termination Event; or | |
• | Wyeth terminates the merger agreement in order to enter into a superior proposal; or | |
• | Pfizer terminates the merger agreement (1) because Wyeth has breached its representations and warranties, covenants or agreements under the merger agreement and such breach has resulted in the failure of certain closing conditions, and such breach is incapable of being cured prior to the termination date, (2) prior to the time of such breach a third party acquisition proposal had been known to the senior management or board of directors of Wyeth and shall not have been withdrawn prior to the breach giving rise to termination and (3) Wyeth enters into a definitive agreement, or consummates a transaction, with respect to an acquisition proposal within 12 months of the termination; or | |
• | either Pfizer or Wyeth terminates the merger agreement (1) due to the Wyeth stockholders’ failure to adopt the merger agreement, (2) prior to the time of the stockholder vote a third party acquisition proposal had been publicly announced or publicly made known to Wyeth’s stockholders and (3) Wyeth enters into a definitive agreement or consummates a transaction with respect to such acquisition proposal within 12 months of the termination of the merger agreement. |
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• | extend the time for the performance of any of the obligations or other acts of the other party; | |
• | waive any breach of or inaccuracies in the representations and warranties of the other party; or | |
• | waive compliance by the other party with any of the other agreements or conditions contained in the merger agreement. |
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AND WYETH STOCKHOLDERS
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Authorized Capital Stock | Pfizer is authorized under its certificate of incorporation to issue 12,027,000,000 shares, consisting of 12,000,000,000 shares of common stock, par value $0.05 per share, and 27,000,000 shares of preferred stock, without par value. | The authorized capital stock of Wyeth consists of 2,400,000,000 shares of common stock, $0.331/3 par value per share, and 5,000,000 shares of preferred stock, $2.50 par value per share. | ||
Special Meetings of Stockholders | Pfizer’s bylaws provide that a special meeting of stockholders may be called by the board of directors and shall be called by the Chair of the Pfizer Board or the Secretary at the request in writing of a majority of the board of directors or one or more record holders of shares of stock of Pfizer representing in the aggregate not less than twenty-five percent (25%) of the total number of shares of stock entitled to vote on the matter or matters to be brought before the proposed special meeting. | Wyeth’s bylaws provide that, subject to the rights of preferred stockholders, and unless otherwise provided by law, a special meeting of stockholders may be called only by the Chairman or Vice Chairman of the board of directors or the President or by the Secretary on the written request of a majority of all the directors. | ||
Stockholder Proposals | Pfizer’s bylaws allow for business to be properly brought before an annual meeting of Pfizer by a stockholder (other than the nomination of a person for election as a director, which is discussed below), if the stockholder intending to propose the business (the “Proponent”) gives timely notice thereof in writing to the Secretary of Pfizer. | Wyeth’s bylaws provide that for matters to be properly brought before an annual meeting by a stockholder (other than nominations for the election of directors, which are discussed below), the stockholder must give written notice of the proposed matter, either by personal delivery or by United States mail, postage prepaid, to the Secretary of Wyeth, not later than 90 days prior to the anniversary date of the immediately preceding annual meeting or not later than 10 days after notice or public disclosure of the date of the annual meeting shall be given or made to stockholders, whichever date shall be earlier. | ||
To be timely, a Proponent’s notice must be delivered to or mailed and received at the principal executive offices of Pfizer: (1) by the close of business 60 days in advance of the anniversary of the previous year’s annual meeting if such meeting is to be held on a day which is within 30 days preceding the anniversary of the previous year’s annual meeting or 90 days in advance of the anniversary of the previous years annual meeting if such meeting is to be held on or after the anniversary of the previous year’s annual meeting; and (2) with respect to any other annual meeting of stockholders, the close | Any such notice shall set forth as to each item of business the stockholder shall propose to bring before the meeting (i) the name and address of the stockholder proposing such item of business, (ii) a description of such item of business and the reasons for conducting it at such meeting and, in the event that such item of business shall include a proposal to amend either the certificate of incorporation or the bylaws, the text of the proposed amendment, (iii) a representation that the stockholder is a holder of record of stock of Wyeth entitled to vote at such meeting and |
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of business on the tenth day following the date of public disclosure of the date of such meeting. | intends to appear in person or by proxy at the meeting to propose such item of business and (iv) any material interest of the stockholder in such item of business. | |||
A Proponent’s notice to the Secretary of Pfizer shall set forth as to each matter the Proponent proposes to bring before the annual meeting: (a) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (b) the name and address of the Proponent, and of any holder of record of the Proponent’s shares as they appear on Pfizer’s books, (c) the class and number of shares of Pfizer which are owned by the Proponent (beneficially and of record) and owned by any holder of record of the Proponent’s shares, as of the date of the Proponent’s notice, and a representation that the Proponent will notify Pfizer in writing of the class and number of such shares owned of record and beneficially as of the record date for the meeting promptly following the later of the record date or the date notice of the record date is first publicly disclosed, (d) any material interest of the Proponent in such business, (e) a description of any agreement, arrangement or understanding with respect to such business between or among the Proponent and any of its affiliates or associates, and any others (including their names) acting in concert with any of the foregoing, and a representation that the Proponent will notify Pfizer in writing of any such agreement, arrangement or understanding in effect as of the record date for the meeting promptly following the later of the record date or the date notice of the record date is first publicly disclosed, (f) a description of any agreement, arrangement or understanding (including any derivative or short positions, profit interests, options, hedging transactions, and borrowed or loaned shares) that has been entered into as of the date of the Proponent’s notice by, or on behalf of, the Proponent or any of its affiliates or associates, the effect or intent of which is to mitigate loss to, manage risk or benefit of share price changes for, or increase or decrease the voting power of the Proponent or any of its affiliates or associates with respect to shares of stock | Wyeth’s bylaws state that only matters which have been properly brought before an annual meeting of stockholders in accordance with its bylaws shall be conducted at such meeting, and the presiding officer may refuse to permit any matters to be brought before such meeting which shall not have been properly brought before it in accordance with the foregoing procedure. | |||
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of Pfizer, and a representation that the Proponent will notify Pfizer in writing of any such agreement, arrangement or understanding in effect as of the record date for the meeting promptly following the later of the record date or the date notice of the record date is first publicly disclosed, (g) a representation that the Proponent is a holder of record or beneficial owner of shares of Pfizer entitled to vote at the annual meeting and intends to appear in person or by proxy at the meeting to propose such business, and (h) a representation whether the Proponent intends to deliver a proxy statement and/or form of proxy to holders of at least the percentage of Pfizer’s outstanding shares required to approve the proposal and/or otherwise to solicit proxies from stockholders in support of the proposal. | ||||
Nominations of Candidates for Election to the Board of Directors | Pfizer’s bylaws state that any stockholder entitled to vote at the election of directors at an annual meeting of stockholders or a special meeting of stockholders at which directors are to be elected pursuant to Pfizer’s notice of meeting may nominate one or more persons for such election only if written notice of such stockholder’s intent to make such nomination is delivered to or mailed and received by the Secretary of Pfizer. Any such notice must be received by the Secretary not later than the following dates: (1) with respect to an annual meeting of stockholders, by the close of business 60 days in advance of the anniversary of the previous year’s annual meeting if such meeting is to be held on a day which is within 30 days preceding the anniversary of the previous year’s annual meeting or 90 days in advance of the anniversary of the previous year’s annual meeting if such meeting is to be held on or after the anniversary of the previous year’s annual meeting; and (2) with respect to any other annual meeting of stockholders or a special meeting of stockholders at which directors are to be elected pursuant to Pfizer’s notice of meeting, by the close of business on the tenth day following the date of public disclosure of the date of such meeting. | Wyeth’s bylaws state that nominations for the election of directors may be made by the board of directors or a committee appointed by the board of directors or by any stockholder entitled to vote in the election of directors generally. However, any stockholder entitled to vote in the election of directors may nominate one or more persons for election as directors only if written notice of such stockholder’s intent to make such nomination or nominations has been given, either by personal delivery or by United States mail, postage prepaid, to the Secretary of Wyeth not later than (i) with respect to an election to be held at an annual meeting of stockholders, 90 days prior to the anniversary date of the immediately preceding annual meeting, and (ii) with respect to an election to be held at a special meeting of stockholders for the election of directors, the close of business on the tenth day following the date on which notice of such meeting is first given to stockholders. Each such notice shall set forth: (a) the name and address of the stockholder who intends to make the nomination and of the person or persons to be nominated; (b) a representation that the stockholder is a holder of record (or beneficial holder, which must be verified by proper documentation) of Wyeth stock entitled to |
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vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (c) a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder; (d) such other information regarding each nominee proposed by such stockholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the SEC; and (e) the consent of each nominee to serve as a director of the corporation if so elected. | ||||
The written notice of the stockholder intending to make the nomination, also known as the Proponent, shall set forth: (i) the name, age, business address and residence address of each nominee proposed in such notice, (ii) the principal occupation or employment of each such nominee, (iii) the number of shares of capital stock of Pfizer which are owned of record and beneficially by each such nominee, (iv) a statement whether each such nominee, if elected, intends to tender, promptly following such person’s failure to receive the required vote for election or reelection at the next meeting at which such person would face election or reelection, an irrevocable resignation effective upon acceptance of such resignation by the board of directors, in accordance with Pfizer’s Corporate Governance Principles, (v) with respect to each nominee for election or reelection to the board of directors, include a completed and signed questionnaire, representation and agreement required by paragraph 15 of Article II of the Pfizer bylaws, (vi) such other information concerning each such nominee as would be required to be disclosed in a proxy statement soliciting proxies for the election of such nominee as a director in an election contest (even if an election contest is not involved), or that is otherwise required to be disclosed, under the rules of the SEC. |
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The following information must be included in the notice as to the Proponent: (a) the name and address of the Proponent, and of any holder of record of the Proponent’s shares as they appear on Pfizer’s books, (b) the class and number of shares of Pfizer which are owned by the Proponent (beneficially and of record) and owned by any holder of record of the Proponent’s shares, as of the date of the Proponent’s notice, and a representation that the Proponent will notify Pfizer in writing of the class and number of such shares owned of record and beneficially as of the record date for the meeting promptly following the later of the record date or the date notice of the record date is first publicly disclosed, (c) a description of any agreement, arrangement or understanding with respect to such nomination between or among the Proponent and any of its affiliates or associates, and any others (including their names) acting in concert with any of the foregoing, and a representation that the Proponent will notify Pfizer in writing of any such agreement, arrangement or understanding in effect as of the record date for the meeting promptly following the later of the record date or the date notice of the record date is first publicly disclosed, (d) a description of any agreement, arrangement or understanding (including any derivative or short positions, profit interests, options, hedging transactions, and borrowed or loaned shares) that has been entered into as of the date of the Proponent’s notice by, or on behalf of, the Proponent or any of its affiliates or associates, the effect or intent of which is to mitigate loss to, manage risk or benefit of share price changes for, or increase or decrease the voting power of the Proponent or any of its affiliates or associates with respect to shares of stock of Pfizer, and a representation that the Proponent will notify Pfizer in writing of any such agreement, arrangement or understanding in effect as of the record date for the meeting promptly following the later of the record date or the date notice of the record date is first publicly disclosed, (e) a representation that the Proponent is a holder of record or beneficial owner of shares of Pfizer entitled to vote at the meeting and intends | ||||
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to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice, and (f) a representation whether the Proponent intends to deliver a proxy statement and/or form of proxy to holders of at least the percentage of Pfizer’s outstanding capital stock required to approve the nomination and/or otherwise to solicit proxies from stockholders in support of the nomination. | ||||
In addition, Pfizer may require any proposed nominee to furnish such other information as it may reasonably require to determine the eligibility of such proposed nominee to serve as an independent director of Pfizer or that could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of such nominee. | ||||
To be eligible to be a nominee for election or reelection as a director of Pfizer, a person must deliver to the Secretary of Pfizer at the principal executive offices of Pfizer a written questionnaire with respect to the background and qualification of such person and the background of any other person or entity on whose behalf the nomination is being made (which questionnaire shall be provided by the Secretary of Pfizer upon written request) and a written representation and agreement (in the form provided by the Secretary upon written request) that such person (i) is not and will not become a party to (A) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a director of Pfizer, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to Pfizer or (B) any Voting Commitment that could limit or interfere with such person’s ability to comply, if elected as a director of Pfizer, with such person’s fiduciary duties under applicable law, (ii) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than Pfizer with respect to any direct or indirect compensation, reimbursement or indemnification in connection with | ||||
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service or action as a director that has not been disclosed therein, and (iii) in such person’s individual capacity and on behalf of any person or entity on whose behalf the nomination is being made, would be in compliance, if elected as a director of Pfizer, and will comply with, applicable law and all applicable publicly disclosed corporate governance, conflict of interest, corporate opportunities, confidentiality and stock ownership and trading policies and guidelines of Pfizer. | ||||
Notice of Stockholder Meetings | The DGCL requires notice to stockholders of the place (if any), date, and hour, and means of remote communication, if any, of each annual and special stockholders’ meeting at least 10 days, but no more than 60 days, before the meeting date unless other provisions of the DGCL require a different notice. In the case of a special meeting, the notice must also state the purpose or purposes for which the meeting is called. Pursuant to the DGCL, notice of a stockholders’ meeting to vote upon a merger or a sale of all or substantially all of the corporation’s assets must be delivered at least 20 days before the meeting date. | |||
Pfizer’s bylaws provide that written notice of an annual or special meeting shall be given to each stockholder entitled to vote thereat, not less than ten nor more than sixty days prior to the meeting. | Wyeth’s bylaws provide that written notice of each meeting of stockholders must be mailed, not less than ten days prior to the meeting, to each stockholder entitled to vote at such address as appears on the stock books of Wyeth. The notice must specify the time and place of the meeting and, with respect to special meetings, the matter or matters to be acted upon at such meeting. | |||
Number of Directors | The DGCL provides that the board of directors of a Delaware corporation must consist of one or more directors as fixed by the corporation’s certificate of incorporation or bylaws. | |||
Pfizer’s certificate of incorporation and bylaws provide that the Pfizer board of directors shall not be less than ten, nor more than twenty- four members, the exact number within said limits to be fixed from time to time solely by resolution of the board of directors, acting by the vote of not less than a majority of the directors then in office. Pfizer’s bylaws further provide that a majority of the directors shall consist of persons who are not employees of Pfizer or of any subsidiary of Pfizer. Should the death, resignation or other removal of any non- employee director result in the failure of the requirement set forth in the preceding sentence to be met, such requirement shall not apply during the time of the vacancy caused by the death, resignation | Wyeth’s certificate of incorporation provides that the board of directors shall be fixed and may be altered in accordance with the bylaws. Wyeth’s bylaws provide that the Wyeth board of directors shall be not less than eight nor more than fifteen in number as determined from time to time by the board of directors, except in certain preferred stock dividend default situations as provided in Wyeth’s certificate of incorporation, pursuant to which holders of Wyeth $2 Convertible Preferred Stock shall be entitled to elect two additional directors. | |||
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or removal of any such non-employee director. | ||||
Election of Directors | Pfizer’s bylaws provide that a nominee for director shall be elected to the board of directors if the votes cast for such nominee’s election exceed the votes cast against such nominee’s election; provided, however, that directors shall be elected by a plurality of the votes cast at any meeting of stockholders for which (i) the Secretary of Pfizer receives a notice that a stockholder has nominated a person for election to the board of directors in compliance with the advance notice requirements for stockholder nominees for director and (ii) such nomination has not been withdrawn by such stockholder on or prior to the day next preceding the date Pfizer first mails its notice of meeting for such meeting to the stockholders. If directors are to be elected by a plurality of the votes cast, stockholders shall not be permitted to vote against a nominee. | Wyeth’s bylaws provide that except with respect to the filling of vacancies in the membership of the board of directors, each director will be elected to the Wyeth board of directors by the vote of the majority of the votes cast with respect to that director’s election at any meeting for the election of directors at which a quorum is present, provided, however, that if the number of nominees exceeds the number of directors to be elected, the directors shall be elected by the vote of a plurality of the votes cast at any such meeting and entitled to vote on the election of directors. Under Wyeth’s bylaws, a majority of the votes cast means that the number of votes cast “for” a director must exceed the number of votes cast “against” that director. If an incumbent director is not elected by a majority of the votes cast (unless the director election standard is a plurality of the votes cast as discussed above), the incumbent director shall offer to tender his or her resignation to the board of directors. Wyeth’s Nominating and Governance Committee will make a recommendation to the board of directors on whether to accept or reject the director’s offer to tender his or her resignation, or whether other action should be taken. The board of directors will act on such committee’s recommendation and publicly disclose its decision within 90 days from the date of the certification of the election results. An incumbent director who offers to tender his or her resignation may not participate in the committee’s recommendation or in the board of directors’ decision. An incumbent director who has offered to tender his or her resignation must promptly tender such resignation upon the board of directors’ acceptance of such offer. If a director’s offer to tender his or her resignation is accepted by the board of directors, or if a nominee for director is not elected and the nominee is not an incumbent director, then the board of directors may fill the resulting vacancy as set forth in the bylaws or may decrease |
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the size of the board of directors accordingly. | ||||
Wyeth’s certificate of incorporation provides that if and when dividends payable on the Wyeth $2 Convertible Preferred Stock are in default in an amount equivalent to six full quarter-yearly dividends on all shares of such series of preferred stock at the time outstanding, the number of directors of Wyeth shall thereupon, and until all dividends in default on such series shall have been paid or declared and set apart for payment, be two more than the full number constituting the board of directors immediately prior to such default. The holders of all shares of $2 Convertible Preferred Stock, voting separately as one class, will be entitled to elect directors to fill the vacancies resulting from such increase in the number of directors of Wyeth. Such holders will elect such two directors to hold office until the next annual meeting of stockholders; provided, however, that the terms of office of all such directors shall terminate upon the curing of all defaults in dividends on such series, unless dividend defaults shall still exist on other series of preferred stock. | ||||
Removal of Directors | Under the DGCL, directors may be removed from office, with or without cause, by a majority stockholder vote. | |||
Pfizer’ certificate of incorporation and bylaws are silent with respect to the removal of directors and such removal is therefore governed by the applicable provisions of the DGCL. | Wyeth’s certificate of incorporation provides that a director may (except directors elected by shares of preferred stock voting separately as a class), by vote of a majority of the entire board of directors for any cause deemed by them sufficient, be removed as a director. | |||
Limitation on Liability of Directors | Pfizer’s certificate of incorporation provides that, the liability of Pfizer’s directors to Pfizer or its stockholders shall be eliminated to the fullest extent permitted by the DGCL as amended from time to time. | Wyeth’s certificate of incorporation provides that no director shall be personally liable to Wyeth or its stockholders for monetary damages for any breach of fiduciary duty by such director as a director, except (i) for breach of the director’s duty of loyalty to Wyeth or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) pursuant to section 174 of the DGCL, or (iv) for any transaction from which the director derived an improper personal benefit. | ||
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Indemnification and Advancement of Expenses of Directors and Officers | Pfizer’s bylaws provides that Pfizer shall indemnify and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any person who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “proceeding”) by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a director, officer, employee or agent of Pfizer or is or was serving at the request of Pfizer as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, nonprofit entity, or other enterprise, including service with respect to employee benefit plans, against all liability and loss suffered and expenses (including attorneys’ fees) reasonably incurred by such person. Pfizer shall be required to indemnify a person in connection with a proceeding (or part thereof) initiated by such person only if the proceeding (or part thereof) was authorized by the board of directors of Pfizer. | Wyeth’s bylaws provides that Wyeth shall indemnify and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended (but, in the case of any such amendment, only to the extent such amendment permits Wyeth to provide broader indemnification rights than such law permitted Wyeth to provide prior to such amendment), any person who was or is made or threatened to be made a party, or is otherwise involved in, any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (a “proceeding”), by reason of the fact that such person is or was a director, officer or employee of Wyeth or is or was serving at the request of Wyeth as a director, officer or employee of a related entity, against all expense, liability and loss (including attorneys’ fees, judgments, fines and amounts paid in settlement) actually and reasonably incurred by such person in connection therewith; provided, however, that, except as otherwise expressly provided in the bylaws, Wyeth shall be required to indemnify such person in connection with a proceeding (or part thereof) commenced by such person only if the commencement of such proceeding (or part thereof) by such person was authorized in the specific case by the Wyeth board of directors. | ||
Pfizer shall pay the expenses (including attorneys’ fees) incurred by an officer or director of Pfizer in defending any proceeding in advance of its final disposition, provided, however, that the payment of such expenses shall be made only upon receipt of an undertaking by the director or officer to repay all amounts advanced if it shall ultimately be determined that the director or officer is not entitled to be indemnified. Payment of such expenses incurred by other employees and agents of Pfizer may be made by the board of directors in its discretion upon such terms and conditions, if any, as it deems appropriate. | Wyeth shall, to the fullest extent not prohibited by applicable law, pay the expenses (including attorneys’ fees) reasonably incurred by any person who is or was a director or officer of Wyeth or is or was serving at the request of Wyeth as a director or officer of a related entity, in defending any proceeding referred to in the preceding paragraph in advance of its final disposition upon receipt of an undertaking acceptable to Wyeth by or on behalf of such person to repay all such amounts if it shall ultimately be determined that such person is not entitled to be indemnified under the bylaws, such undertaking to include a certification by such person that he or she acted in good faith and in a manner he or she reasonably believed to be in the best interests of Wyeth and, in the case of a criminal proceeding, had no reason to | |||
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believe his or her conduct was unlawful. Such expenses reasonably incurred by other persons may be so paid by Wyeth upon such terms and conditions, if any, as Wyeth deems appropriate. The bylaws provide that Wyeth has the authority, to the extent and in the manner permitted by law, to indemnify and to advance expenses to any person, whether or not such person has any rights to indemnification or advancement of expenses under Wyeth’s bylaws, when and as authorized by appropriate corporate action. | ||||
Transactions With Related Parties | The DGCL generally provides that no transaction between a corporation and one or more of its directors or officers, or between a corporation and any other corporation or other organization in which one or more of its directors or officers, are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the board or committee which authorizes the transaction, or solely because any such director’s or officer’s votes are counted for such purpose, if: (1) the material facts as to the director’s or officer’s interest and as to the transaction are known to the board of directors or the committee, and the board or committee in good faith authorizes the transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; (2) the material facts as to the director’s or officer’s interest and as to the transaction are disclosed or are known to the stockholders entitled to vote thereon, and the transaction is specifically approved in good faith by vote of the stockholders; or (3) the transaction is fair as to the corporation as of the time it is authorized, approved or ratified, by the board of directors, a committee or the stockholders. | |||
Wyeth’s certificate of incorporation provides that a director shall not, in the absence of fraud, be disqualified by his office from dealing or contracting with Wyeth either as a vendor, purchaser or otherwise, nor in the absence of fraud shall any transaction or contract of Wyeth’s be void or voidable by reason of the fact that any director or any firm of which any director is a member, or any corporation of which any director is a stockholder or director is in any way interested in such transaction or contract, provided that such transaction or contract is or shall be authorized, ratified or approved either: | ||||
(i) by vote of a majority of a quorum of the board of directors or of the executive committee without counting in such majority or quorum any director so interested or a member of a firm so interested or a stockholder or a director of a corporation so interested, or | ||||
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(ii) by vote at a stockholders’ meeting of the holders of record of a majority of all the outstanding shares of stock of Wyeth, or by writing or writings signed by a majority of such holders; nor shall any director be liable to account to Wyeth for any profit realized by him from or through any such transaction or contract of Wyeth ratified or approved as aforesaid by reason of the fact that he or any firm of which he is a member or any corporation of which he is a stockholder or director was interested in such transaction or contract. Nothing in the certificate of incorporation creates any liability in the events above described or prevents the authorization, ratification or approval of such contracts or transactions in any other manner permitted by law. | ||||
Dividends | Pfizer’s certificate of incorporation provides that after the requirements with respect to preferential dividends, if any, on the preferred stock shall have been met and after Pfizer shall have complied with all the requirements, if any, with respect to the setting aside of sums as purchase, retirement or sinking funds, then and not otherwise the holders of common stock shall be entitled to receive such dividends as may be declared from time to time by the board of directors. Currently, Pfizer’s Series A Convertible Perpetual Preferred Stock, which provides dividends at the rate of 6.25%, ranks senior to Pfizer’s common stock with respect to receiving dividends. | Wyeth’s certificate of incorporation provides that the dividend rate on Wyeth’s $2 Convertible Preferred Stock shall be $2.00 per annum, payable in cash quarterly on January 1, April 1, July 1 and October 1 in each year. Holders of Wyeth $2 Convertible Preferred Stock will be entitled to receive, when and as declared by the board of directors, out of funds legally available for the payment of dividends, dividends at the annual rates fixed by the board of directors, in preference to dividends on any other class of stock of Wyeth including to holders of the common stock. |
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Robert M. Amen | Mr. Amen is 59 years old and has been a Director of Wyeth since October 2007. Since July 2006, he has been the Chairman and Chief Executive Officer of International Flavors & Fragrances Inc., a leading creator and manufacturer of flavors and fragrances used in a wide variety of consumer products and packaged goods. He was previously with International Paper Company, a paper and packaging company, where he was President from 2003 until 2006 and previously Executive Vice President. | |
Michael J. Critelli | Mr. Critelli is 60 years old and has been a Director of Wyeth since April 2008. Mr. Critelli was Executive Chairman of Pitney Bowes Inc., a provider of mailstream solutions, from May 2007 to December 2008 and a Director from 1994 to December 2008. Mr. Critelli previously was the Chairman and Chief Executive Officer of Pitney Bowes Inc. from January 1997 through May 2007. Mr. Critelli is also a Director of Eaton Corporation. | |
Frances D. Fergusson, Ph.D. | Dr. Fergusson is 64 years old and has been a Director of Wyeth since January 2005. She is a Professor at Vassar College and is President Emeritus of the College, a position she held from 1986 to July 2006. She is also a Director of Mattel, Inc. |
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Victor F. Ganzi | Mr. Ganzi is 62 years old and has been a Director of Wyeth since December 2005. Mr. Ganzi was the President and Chief Executive Officer from 2002 to 2008 and a Director from 1990 to 2008 of The Hearst Corporation, a diversified communications company. He is also a Director of Gentiva Health Services, Inc. | |
Robert Langer, Sc.D | Dr. Langer is 60 years old and has been a Director of Wyeth since January 2004. He was named an Institute Professor at Massachusetts Institute of Technology in 2006 and has been on the faculty of Massachusetts Institute of Technology since 1977. He is also a Director of Alseres Pharmaceuticals, Inc., Echo Therapeutics, Inc. and Momenta Pharmaceuticals, Inc. | |
John P. Mascotte | Mr. Mascotte is 70 years old and has been a Director of Wyeth since 1995. He is the retired President and Chief Executive Officer of Blue Cross and Blue Shield of Kansas City, Inc., a position he held from 1997 through 2001. He is also the former Chairman of Johnson & Higgins of Missouri, Inc. and former Chairman and Chief Executive Officer of The Continental Corporation. | |
Raymond J. McGuire | Mr. McGuire is 52 years old and has been a Director of Wyeth since October 2006. Mr. McGuire has been Co-Head, Global Investment Banking at Citi since 2005. Prior to that, Mr. McGuire was the Global Co-Head of Mergers & Acquisitions at Morgan Stanley from 2003 to May 2005; a Managing Director at Morgan Stanley from 2000 to 2003; a Managing Director in the Mergers and Acquisitions Group of Merrill Lynch & Co., Inc. from 1994 to 2000; and one of the original members of Wasserstein Perella & Co., Inc. where he became a Partner/Managing Director in 1991. |
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Mary Lake Polan, M.D., Ph.D., M.P.H. | Dr. Polan is 65 years old and has been a Director of Wyeth since 1995. She joined Stanford University School of Medicine in 1990 and is currently Professor and Chair Emeritus of the Department of Obstetrics and Gynecology at Stanford, as well as Adjunct Professor of Obstetrics and Gynecology at Columbia University School of Medicine. She is also a Director of Quidel Corporation. | |
Bernard Poussot | Mr. Poussot is 57 years old and has been a Director of Wyeth since January 2007. Mr. Poussot is Chairman of the Wyeth board of directors, a position he has held since June 2008, our Chief Executive Officer, a position he has held since January 2008, and our President, a position he has held since April 2006. He was our Chief Operating Officer from January 2007 through December 2007 and our Vice Chairman from April 2006 through December 2007. From June 2002 to April 2006, he was Executive Vice President of Wyeth and President, Wyeth Pharmaceuticals. From January 2001 to June 2002, he served as Senior Vice President of Wyeth and President, Wyeth Pharmaceuticals. Prior to that, Mr. Poussot held positions of increasing responsibility since joining Wyeth in 1986. | |
Gary L. Rogers | Mr. Rogers is 64 years old and has been a Director of Wyeth since October 2005. He is former Vice Chairman of General Electric Company, a position he held from 2001 through 2003. Prior to that, Mr. Rogers held various executive positions during his long tenure at General Electric. He is also a Director of Rohm and Haas Company and W.W. Grainger, Inc. | |
John R. Torell III | Mr. Torell is 69 years old and has been a Director of Wyeth since 1982. He is Partner at Core Capital Group, LLC, a position he has held since 2000. He is also Chairman of Indecomm Global Services Corporation and International Executive Services Corps. He is the former President of Manufacturers Hanover Corporation and Manufacturers Hanover Trust Company, former Chairman of the Board, President and Chief Executive Officer of CalFed Inc. and former Chairman and Chief Executive Officer of Fortune Bancorp. |
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• | the director is, or has been within the last three years, an employee of Wyeth, or an immediate family member of the director is, or has been within the last three years, an executive officer of Wyeth; | |
• | the director, or an immediate family member of the director, has received more than $120,000 in any12-month period in the last three years in direct compensation from Wyeth, other than director fees and pension or other forms of deferred compensation for prior service; | |
• | the director is a current partner or employee of our internal or external auditor, the director has an immediate family member who is a current partner of such a firm, the director has an immediate family member who is a current employee of such a firm and personally works on our audit, or the director or an immediate family member of the director was within the last three years (but is no longer) a partner or employee of such a firm and personally worked on our audit within that time; | |
• | the director or an immediate family member of the director is, or in the last three years has been, employed as an executive officer of another company where any of Wyeth’s current executives serve on that company’s compensation committee; or | |
• | the director is employed by another company (other than a charitable organization), or an immediate family member of the director is employed as an executive officer of a company, that has made payments to, or received payments from, Wyeth for property or services in an amount which, in any of the last three years, exceeds the greater of $1 million and 2% of such other company’s consolidated gross revenue. |
• | if a director of Wyeth is an executive officer or an employee, or the director’s immediate family member is an executive officer, of another company that makes payments to, or receives payments from, Wyeth for property or services in an amount which, in any single fiscal year, does not exceed the greater of (i) $1 million and (ii) 2% of such other company’s consolidated gross revenues; | |
• | if a director of Wyeth is an executive officer or employee of another company that is indebted to Wyeth, or to which Wyeth is indebted, and the total amount of the indebtedness is less than 2% of the consolidated assets of the company wherein the director serves as an executive officer or employee; | |
• | if a director of Wyeth is an executive officer of another company in which Wyeth owns an equity interest and the amount of the equity interest held by Wyeth is less than 10% of the total shareholders’ equity of the company at which the director serves as an executive officer; or |
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• | if a director of Wyeth serves as a director, officer or trustee of a charitable organization and Wyeth’s contributions to the organization in the most recently completed fiscal year are less than the greater of (i) $1 million and (ii) 2% of that organization’s gross revenue. |
• | With respect to Mr. Ganzi, who previously served as a director and the President and Chief Executive Officer of The Hearst Corporation, and Dr. Polan, whose spouse serves as the current Chief Executive Officer and Vice Chairman of the Board and Chairman of the Executive Committee of Hearst, certain arm’s-length, ordinary course commercial transactions between Wyeth and Hearst; | |
• | With respect to Mr. Mascotte, a pledge of cash donations and product supplies by Wyeth to the Ghana Essential Medicines Initiative, a charitable initiative to support the availability of pharmaceutical supplies in Ghana supported by The Population Council, leading pharmaceutical companies and The Mascotte Family Fund of the Aspen Community Foundation; and | |
• | With respect to Mr. McGuire, who serves as Co-Head, Global Investment Banking at Citi, certain arm’s-length, ordinary course commercial banking, financial advisory, underwriting and other financial services arrangements and transactions between Wyeth and Citi. |
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• | a determination every two years by the Nominating and Governance Committee of a total fixed annual dollar amount of compensation to be provided to each non-employee director (set at $220,000 for 2008 and 2009); | |
• | the delivery of that total fixed annual compensation 40% in cash and 60% in equity, with an annual cash retainer fee representing the cash portion and DSUs representing the equity portion; and | |
• | a separate annual cash committee chairman fee of $15,000, but no other meeting or committee service fees. |
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Fees Earned or Paid | Stock | Option | All Other | |||||||||||||||||
in Cash(1) | Awards(2) | Awards(2) | Compensation(3) | Total | ||||||||||||||||
Name | ($) | ($) | ($) | ($) | ($) | |||||||||||||||
Robert M. Amen | $ | 88,000 | $ | 63,124 | — | $ | 7,500 | $ | 158,624 | |||||||||||
Michael J. Critelli | $ | 60,440 | $ | 45,397 | — | — | $ | 105,837 | ||||||||||||
John D. Feerick | $ | 81,000 | $ | 152,822 | $ | 13,395 | $ | 18,500 | $ | 265,717 | ||||||||||
Frances D. Fergusson, Ph.D. | $ | 103,000 | $ | 159,413 | $ | 13,395 | $ | 10,159 | $ | 285,967 | ||||||||||
Victor F. Ganzi | $ | 103,000 | $ | 142,528 | $ | 13,395 | $ | 2,102 | $ | 261,025 | ||||||||||
Robert Langer, Sc.D. | $ | 88,000 | $ | 195,451 | $ | 13,395 | $ | 21,418 | $ | 318,264 | ||||||||||
John P. Mascotte | $ | 103,000 | $ | 112,085 | $ | 13,395 | $ | 26,448 | $ | 254,928 | ||||||||||
Raymond J. McGuire | $ | 88,000 | $ | 126,310 | $ | 22,159 | — | $ | 236,469 | |||||||||||
Mary Lake Polan, M.D., Ph.D., M.P.H. | $ | 103,000 | $ | 112,085 | $ | 13,395 | $ | 12,638 | $ | 241,118 | ||||||||||
Gary L. Rogers | $ | 88,000 | $ | 145,699 | $ | 13,395 | — | $ | 247,094 | |||||||||||
Ivan G. Seidenberg | $ | 22,000 | $ | (46,410 | ) | $ | (29,130 | ) | $ | 12,500 | $ | (41,040 | ) | |||||||
John R. Torell III | $ | 103,000 | $ | 112,085 | $ | 13,395 | $ | 5,761 | $ | 234,241 |
(1) | Reflects the aggregate dollar amount of annual retainer and committee chairman fees earned and payable in cash. Non-employee directors are permitted to defer director fees and, for 2008, under the Directors’ Deferral Plan, directors deferred the following amounts: $88,000 for Mr. Amen, $103,000 for Mr. Ganzi and $22,000 for Mr. Seidenberg. |
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(2) | The column entitled “Stock Awards” represents the compensation cost recognized for financial statement reporting purposes in 2008 in accordance with Statement of Financial Accounting Standards No. 123R, “Share-Based Payment” (SFAS No. 123R), disregarding the estimate of forfeitures related to service-based vesting conditions, for restricted stock granted in 2008 and prior years under the 1994 Restricted Stock Plan for Non-Employee Directors and DSUs granted in 2007 and 2008 under both our prior and new non-employee director compensation frameworks. The column entitled “Option Awards” represents the compensation cost recognized for financial statement reporting purposes in 2008 in accordance with SFAS No. 123R, disregarding the estimate of forfeitures related to service-based vesting conditions, for stock options granted in 2007 under our prior non-employee director compensation framework. DSUs were granted under our 2006 Non-Employee Director Stock Incentive Plan and our 2008 Non-Employee Director Stock Incentive Plan, and stock options were granted under our 2006 Non-Employee Director Stock Incentive Plan. Amounts shown for Mr. Seidenberg reflect the reversal of compensation cost in accordance with SFAS No. 123R, resulting from his forfeiture of unvested DSUs and unvested stock option awards upon his resignation from the Wyeth board of directors. The expense for restricted stock and DSUs is based upon the share price of our common stock on the grant date of the award and is recognized pro rata over the vesting period. Stock option expense is determined based upon the Black-Scholes option pricing model based on the following assumptions and is recognized pro rata over the vesting period: |
2007 Grant | ||||
Expected Life of Options | 5.5 Years | * | ||
Expected Volatility | 19.91% | * | ||
Expected Dividend Yield | 2.11% | |||
Risk-Free Rate | 4.58% | * |
* | Due to the mandatory retirement age of 72 set forth in theWyeth Corporate Governance Guidelines, for Professor Feerick, assumptions for the 2007 grant were an expected life of the options of 4.0 years, expected volatility of 19.24% and a risk free rate of 4.55%. |
1994 Restricted Stock Plan | 2008 Non-Employee | |||||||||||||||||||||||||||
for Non-Employee Directors | Director Stock Incentive Plan | Total Grant Date | ||||||||||||||||||||||||||
Grant | Number of | Grant Date | Grant | Number of | Grant Date | Fair Value of Stock | ||||||||||||||||||||||
Name | Date | Shares | Fair Value* | Date | Units | Fair Value* | Awards* | |||||||||||||||||||||
Mr. Amen | — | — | — | 4/24/2008 | 2,963 | $ | 132,031 | $ | 132,031 | |||||||||||||||||||
Mr. Critelli | — | — | — | 4/24/2008 | 2,963 | $ | 132,031 | $ | 132,031 | |||||||||||||||||||
Prof. Feerick | — | — | — | 4/24/2008 | 2,963 | $ | 132,031 | $ | 132,031 | |||||||||||||||||||
Dr. Fergusson | 01/02/2008 | 800 | $ | 35,112 | 4/24/2008 | 2,963 | $ | 132,031 | $ | 167,143 | ||||||||||||||||||
Mr. Ganzi | 12/01/2008 | 800 | $ | 25,720 | 4/24/2008 | 2,963 | $ | 132,031 | $ | 157,751 | ||||||||||||||||||
Dr. Langer | 01/02/2008 | 800 | $ | 35,112 | 4/24/2008 | 2,963 | $ | 132,031 | $ | 167,143 | ||||||||||||||||||
Mr. Mascotte | — | — | — | 4/24/2008 | 2,963 | $ | 132,031 | $ | 132,031 | |||||||||||||||||||
Mr. McGuire | — | — | — | 4/24/2008 | 2,963 | $ | 132,031 | $ | 132,031 | |||||||||||||||||||
Dr. Polan | — | — | — | 4/24/2008 | 2,963 | $ | 132,031 | $ | 132,031 | |||||||||||||||||||
Mr. Rogers | 10/01/2008 | 800 | $ | 30,456 | 4/24/2008 | 2,963 | $ | 132,031 | $ | 162,487 | ||||||||||||||||||
Mr. Seidenberg | — | — | — | — | — | — | — | |||||||||||||||||||||
Mr. Torell | — | — | — | 4/24/2008 | 2,963 | $ | 132,031 | $ | 132,031 |
* | Grant date fair value for restricted stock and DSUs was computed by multiplying the number of shares by the market value of our common stock on the grant date. The grant date fair values were developed solely for the purpose of comparative disclosure in accordance with SEC rules using the same valuation model and assumptions, disregarding the estimate of forfeitures relating to service-based vesting conditions, as applied for purposes of our consolidated financial statements for the year ended December 31, 2008 and are not intended to predict future prices of our common stock or our future dividend distributions. The ultimate values of these equity awards will depend on the future market price of our common stock and |
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cannot be forecasted with reasonable accuracy. The actual value, if any, a holder will realize upon sale of restricted stock and the stock received upon conversion of DSUs will depend on the market value of our common stock on the date of sale. |
Number of | ||||||||||||
Securities Underlying | ||||||||||||
Unexercised Options | Option Exercise | |||||||||||
(#) | Price | Option | ||||||||||
Name | Exercisable* | ($) | Expiration Date | |||||||||
Mr. Amen | — | — | — | |||||||||
Mr. Critelli | — | — | — | |||||||||
Prof. Feerick | 3,000 | $ | 65.1875 | 4/22/2009 | ||||||||
3,000 | $ | 56.5938 | 4/27/2010 | |||||||||
4,000 | $ | 56.5250 | 4/26/2011 | |||||||||
4,000 | $ | 60.7050 | 4/25/2012 | |||||||||
4,000 | $ | 41.0500 | 4/24/2013 | |||||||||
4,000 | $ | 40.2200 | 4/22/2014 | |||||||||
4,000 | $ | 43.5700 | 4/21/2015 | |||||||||
3,500 | $ | 48.2200 | 7/31/2011 | |||||||||
3,500 | $ | 56.0000 | 7/31/2011 | |||||||||
Total: | 33,000 | |||||||||||
Dr. Fergusson | 4,000 | $ | 43.5700 | 4/21/2015 | ||||||||
3,500 | $ | 48.2200 | 4/27/2016 | |||||||||
3,500 | $ | 56.0000 | 4/26/2017 | |||||||||
Total: | 11,000 | |||||||||||
Mr. Ganzi | 3,500 | $ | 48.2200 | 4/27/2016 | ||||||||
3,500 | $ | 56.0000 | 4/26/2017 | |||||||||
Total: | 7,000 | |||||||||||
Dr. Langer | 4,000 | $ | 40.2200 | 4/22/2014 | ||||||||
4,000 | $ | 43.5700 | 4/21/2015 | |||||||||
3,500 | $ | 48.2200 | 4/27/2016 | |||||||||
3,500 | $ | 56.0000 | 4/26/2017 | |||||||||
Total: | 15,000 | |||||||||||
Mr. Mascotte | 3,000 | $ | 65.1875 | 4/22/2009 | ||||||||
3,000 | $ | 56.5938 | 4/27/2010 | |||||||||
4,000 | $ | 56.5250 | 4/26/2011 | |||||||||
4,000 | $ | 60.7050 | 4/25/2012 | |||||||||
4,000 | $ | 41.0500 | 4/24/2013 | |||||||||
4,000 | $ | 40.2200 | 4/22/2014 | |||||||||
4,000 | $ | 43.5700 | 4/21/2015 | |||||||||
3,500 | $ | 48.2200 | 4/27/2016 | |||||||||
3,500 | $ | 56.0000 | 4/26/2017 | |||||||||
Total: | 33,000 | |||||||||||
Mr. McGuire | 3,500 | $ | 56.0000 | 4/26/2017 |
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Number of | ||||||||||||
Securities Underlying | ||||||||||||
Unexercised Options | Option Exercise | |||||||||||
(#) | Price | Option | ||||||||||
Name | Exercisable* | ($) | Expiration Date | |||||||||
Dr. Polan | 3,000 | $ | 65.1875 | 4/22/2009 | ||||||||
3,000 | $ | 56.5938 | 4/27/2010 | |||||||||
4,000 | $ | 56.5250 | 4/26/2011 | |||||||||
4,000 | $ | 60.7050 | 4/25/2012 | |||||||||
4,000 | $ | 41.0500 | 4/24/2013 | |||||||||
4,000 | $ | 40.2200 | 4/22/2014 | |||||||||
4,000 | $ | 43.5700 | 4/21/2015 | |||||||||
3,500 | $ | 48.2200 | 4/27/2016 | |||||||||
3,500 | $ | 56.0000 | 4/26/2017 | |||||||||
Total: | 33,000 | |||||||||||
Mr. Rogers | 3,500 | $ | 48.2200 | 4/27/2016 | ||||||||
3,500 | $ | 56.0000 | 4/26/2017 | |||||||||
Total: | 7,000 | |||||||||||
Mr. Seidenberg | 3,000 | $ | 65.1875 | 4/22/2009 | ||||||||
3,000 | $ | 56.5938 | 4/27/2010 | |||||||||
4,000 | $ | 56.5250 | 4/26/2011 | |||||||||
4,000 | $ | 60.7050 | 4/25/2012 | |||||||||
4,000 | $ | 41.0500 | 4/24/2013 | |||||||||
4,000 | $ | 40.2200 | 4/22/2014 | |||||||||
4,000 | $ | 43.5700 | 4/21/2015 | |||||||||
3,500 | $ | 48.2200 | 2/28/2011 | |||||||||
Total: | 29,500 | |||||||||||
Mr. Torell | 3,000 | $ | 65.1875 | 4/22/2009 | ||||||||
3,000 | $ | 56.5938 | 4/27/2010 | |||||||||
4,000 | $ | 56.5250 | 4/26/2011 | |||||||||
4,000 | $ | 60.7050 | 4/25/2012 | |||||||||
4,000 | $ | 41.0500 | 4/24/2013 | |||||||||
4,000 | $ | 40.2200 | 4/22/2014 | |||||||||
4,000 | $ | 43.5700 | 4/21/2015 | |||||||||
3,500 | $ | 48.2200 | 4/27/2016 | |||||||||
3,500 | $ | 56.0000 | 4/26/2017 | |||||||||
Total: | 33,000 |
In addition, at December 31, 2008, each current non-employee director had 2,963 DSUs granted in 2008 that had not yet vested; Dr. Fergusson, Mr. Ganzi and Mr. Rogers had 3,200 shares of restricted stock that had not yet vested; and Dr. Langer had 4,000 shares of restricted stock that had not yet vested, but which subsequently vested in January 2009. | ||
(3) | Represents Wyeth’s matching contributions under our charitable matching gift program, the aggregate incremental cost to us of non-business activities in connection with the offsite meeting of the Wyeth board |
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of directors in 2008 and the reimbursement by us of taxes incurred by the director as a result of such attendance as follows: |
Non-Business | ||||||||||||||||
Matching | Activities at | |||||||||||||||
Charitable | Off-Site Board | Reimbursement | Total All Other | |||||||||||||
Name | Contributions | Meeting | of Taxes | Compensation | ||||||||||||
Mr. Amen | $ | 7,500 | — | — | $ | 7,500 | ||||||||||
Mr. Critelli | — | — | — | — | ||||||||||||
Prof. Feerick | $ | 18,500 | * | — | — | $ | 18,500 | |||||||||
Dr. Fergusson | $ | 1,500 | * | $ | 1,289 | $ | 7,370 | $ | 10,159 | |||||||
Mr. Ganzi | — | $ | 1,117 | $ | 985 | $ | 2,102 | |||||||||
Dr. Langer | $ | 10,000 | $ | 985 | $ | 10,433 | $ | 21,418 | ||||||||
Mr. Mascotte | $ | 12,500 | $ | 1,170 | $ | 12,778 | $ | 26,448 | ||||||||
Mr. McGuire | — | — | — | — | ||||||||||||
Dr. Polan | $ | 10,750 | $ | 1,003 | $ | 885 | $ | 12,638 | ||||||||
Mr. Rogers | — | — | — | — | ||||||||||||
Mr. Seidenberg | $ | 12,500 | * | — | — | $ | 12,500 | |||||||||
Mr. Torell | $ | 250 | $ | 985 | $ | 4,526 | $ | 5,761 |
* | Amount for Professor Feerick includes $6,000 in matching contributions paid by Wyeth in 2008 for donations made by Professor Feerick in late 2007; amount for Dr. Fergusson represents matching contributions paid by Wyeth in 2009 for donations made by Dr. Fergusson in late 2008; and amount for Mr. Seidenberg represents matching contributions paid by Wyeth in 2008 for donations made by Mr. Seidenberg in late 2007. | |
We invited directors’ spouses/significant others to attend one off-site meeting of the Wyeth board of directors in 2008, and we paid the costs of this attendance in order to encourage attendance and foster social interaction among the members of the Wyeth board of directors, which we view as a legitimate business purpose, and accordingly, we have not included the costs of travel, lodging and activities that we considered to be business-related. Amounts shown reflect the aggregate incremental cost to us of non-business activities at the meeting. |
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Number | ||||||||
of Meetings in | ||||||||
Committee | Members* | Key Functions of Committee | 2008 | |||||
Audit | John P. Mascotte,Chairman** Robert M. Amen** Victor F. Ganzi** Gary L. Rogers John R. Torell III | Hiring (subject to ratification by the stockholders) and approving the fees of our independent registered public accounting firm. Pre-approving non-audit services and evaluating performance and independence of our independent registered public accounting firm. Reviewing and discussing our periodic financial statements and other disclosure and risk management and control policies and procedures, as appropriate, with management and our independent registered public accounting firm, and seeking to ensure the integrity of the financial reporting process and compliance with applicable laws and accounting initiatives. Reviewing, and approving, ratifying or making recommendations to the Wyeth board of directors regarding, related person transactions as defined under applicable disclosure regulations to the extent not delegated to another committee of the Wyeth board of directors. Issuing an annual report of the Audit Committee for inclusion in the proxy statement. | 9 | |||||
Compensation and Benefits | Victor F. Ganzi,Chairman Robert M. Amen Michael J. Critelli John P. Mascotte Gary L. Rogers | Evaluating performance of, and determining and approving the salary of, our Chief Executive Officer. Evaluating performance of, and recommending to the Wyeth board of directors the salaries of our executive officers (other than our Chief Executive Officer) and other senior executives. Administering our incentive compensation and equity incentive plans, overseeing other benefit plans and approving performance targets related to compensation programs. Establishing and administering performance-based compensation programs under Section 162(m) of the Internal Revenue Code. Periodically evaluating the competitiveness of our compensation programs and incentive, retirement and other plans and programs. | 7 |
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Number | ||||||||
of Meetings in | ||||||||
Committee | Members* | Key Functions of Committee | 2008 | |||||
Nominating and Governance | Frances D. Fergusson, Ph.D.,Chairman Robert Langer, Sc.D. John P. Mascotte Raymond J. McGuire Mary Lake Polan, M.D., Ph.D., M.P.H. | Establishing criteria and procedures for recommending director candidates to the Wyeth board of directors, including those submitted by stockholders. Having sole authority to hire search firms to identify candidates for the Wyeth board of directors. Making recommendations to the Wyeth board of directors on the functions and size of board committees. Screening and nominating board candidates. Overseeing other corporate governance matters, including the evaluation of the functioning of the Wyeth board of directors and its committees, and recommending corporate governance principles. Annually evaluating the charters of each of the committees of the Wyeth board of directors. | 5 | |||||
Corporate Issues | John R. Torell III,Chairman Michael J. Critelli Frances D. Fergusson, Ph.D. Robert Langer, Sc.D. Raymond J. McGuire Mary Lake Polan, M.D., Ph.D., M.P.H. | Reviewing our major public and social policies, practices and programs and making recommendations to the Wyeth board of directors as appropriate on public issues, including environmental, health and safety matters, employment practices, charitable contributions, community outreach and political contributions. Reviewing and making recommendations regarding stockholder proposals relating to public and social issues. | 2 | |||||
Science and Technology | Mary Lake Polan, M.D., Ph.D., M.P.H.,Chairman Frances D. Fergusson, Ph.D. Robert Langer, Sc.D. | Reviewing and reporting to the Wyeth board of directors regarding scientific matters relating to our research and development programs and technology initiatives. Reviewing our ability to acquire and maintain innovative science and technology through mechanisms including, but not limited to, acquisitions, collaborations and alliances. Periodically reviewing our pharmaceutical product pipeline. | 3 | |||||
Executive | Bernard Poussot,Chairman Victor F. Ganzi John P. Mascotte | Authorized, under our bylaws, during the intervals between meetings of the Wyeth board of directors, to perform all duties and exercise all powers of the board except those that are required by law, our Certificate of Incorporation or our bylaws to be performed or exercised by the entire Wyeth board of directors. | 5 | *** |
* | Mr. Michael J. Critelli joined the Compensation Committee and the Corporate Issues Committee upon joining the Wyeth board of directors in April 2008. Mr. Ivan G. Seidenberg served on the Compensation Committee, the Corporate Issues Committee and the Executive Committee through his resignation from |
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the Wyeth board of directors in February 2008. Professor John D. Feerick served on the Audit Committee and the Nominating and Governance Committee through his retirement from the Wyeth board of directors in July 2008. Mr. Robert Essner served on the Executive Committee through his retirement from the Wyeth board of directors in June 2008. | ||
** | Each of Messrs. Amen, Ganzi and Mascotte has been determined by the Wyeth board of directors to be an “audit committee financial expert” as defined under applicable SEC rules. Mr. Amen has served in a variety of finance and other executive roles, including as president and controller of International Paper Company and as chief executive officer of International Flavors & Fragrances Inc., and has a Master’s of Business Administration with a concentration in finance, among many other qualifications. Mr. Ganzi practiced as a Certified Public Accountant (CPA) at a national public accounting firm, was the managing partner of a large law firm and served as chief financial and legal officer of Hearst, among many other qualifications. Mr. Mascotte is a CPA, was a tax specialist at a national public accounting firm and has served as chief executive officer of Blue Cross and Blue Shield of Kansas City, Inc. and The Continental Corporation, among many other qualifications. | |
*** | The Executive Committee acted on one occasion in 2008 between meetings of the Wyeth board of directors by unanimous written consent. This action was specifically delegated in advance and ratified by the full Wyeth board of directors. |
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• | Current and historical data on base salaries, annual cash incentive awards and long-term equity incentive awards for each named executive officer; | |
• | Peer competitiveness data, generally including both a median and a 75th percentile analysis regarding each element of direct compensation and total direct compensation (i.e., base salary, annual cash incentive awards and long-term incentive compensation); | |
• | An estimate of future pension benefits and the effect of base salary increases and annual cash incentive awards on future pension benefits; | |
• | A report of Wyeth’s performance that includes a discussion of financial results, research and development, operational efficiency, talent management, status of litigation, manufacturing performance and other key developments; and | |
• | Information provided by the Compensation Committee’s compensation consultant and by management’s compensation consultant, which may consist in part of the peer competitiveness data referenced above as well as analyses from outside the industry. |
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• | each of our current directors; | |
• | each of our named executive officers; and | |
• | all of our current directors and executive officers as a group. |
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Potentially | ||||||||||||
Name of Beneficial Owner | Wyeth Common Stock | Exercisable Options | Percent of Class | |||||||||
Directors: | ||||||||||||
Robert M. Amen | 3,050 | (1) | — | * | ||||||||
Michael J. Critelli | 4,121 | (1) | — | * | ||||||||
Frances D. Fergusson, Ph.D. | 9,638 | (2) | 11,000 | * | ||||||||
Victor F. Ganzi | 18,885 | (3) | 7,000 | * | ||||||||
Robert Langer, Sc.D. | 9,604 | (2) | 15,000 | * | ||||||||
John P. Mascotte | 14,545 | (4) | 30,000 | * | ||||||||
Raymond J. McGuire | 4,361 | (5) | 3,500 | * | ||||||||
Mary Lake Polan, M.D., Ph.D., M.P.H. | 11,373 | (4) | 30,000 | * | ||||||||
Bernard Poussot | 404,613 | (6) | 1,341,634 | * | ||||||||
Gary L. Rogers | 8,804 | (3) | 7,000 | * | ||||||||
John R. Torell III | 11,245 | (7) | 30,000 | * | ||||||||
Other Named Executive Officers: | ||||||||||||
Gregory Norden | 45,099 | 301,840 | * | |||||||||
Joseph M. Mahady | 271,620 | (8) | 733,000 | * | ||||||||
Lawrence V. Stein | 47,432 | (9) | 432,250 | (9) | * | |||||||
Mikael Dolsten, M.D., Ph.D. | — | — | * | |||||||||
Robert Essner | 672,746 | (10) | 4,399,000 | * | ||||||||
Robert R. Ruffolo, Jr., Ph.D. | — | 555,000 | * | |||||||||
All current executive officers and directors as a group (26 persons) | 1,192,853 | (11) | 5,231,952 | * |
* | Less than one percent (1%). | |
(1) | Includes or, in the case of Mr. Amen, represents 2,963 DSUs awarded under our 2008 Non-Employee Director Stock Incentive Plan (plus accrued dividend equivalents) held in the restricted stock trust. In the case of Mr. Critelli, also includes 71 shares held by, or jointly with, his spouse. | |
(2) | Represents 2,400 DSUs awarded under our 2006 Non-Employee Director Stock Incentive Plan and 2,963 DSUs awarded under our 2008 Non-Employee Director Stock Incentive Plan (in each case, plus accrued dividend equivalents) held in the restricted stock trust and 4,000 shares of restricted stock awarded under our 1994 Restricted Stock Plan for Non-Employee Directors (1,600 shares of which, plus accrued dividend equivalents, are held in the restricted stock trust in the case of Dr. Fergusson). | |
(3) | Includes or, in the case of Mr. Rogers, represents 2,400 DSUs awarded under our 2006 Non-Employee Director Stock Incentive Plan and 2,963 DSUs awarded under our 2008 Non-Employee Director Stock Incentive Plan (in each case, plus accrued dividend equivalents) held in the restricted stock trust and 3,200 shares of restricted stock awarded under our 1994 Restricted Stock Plan for Non-Employee Directors (2,400 shares of which, plus accrued dividend equivalents, are held in the restricted stock trust in the case of Mr. Ganzi). | |
(4) | Includes 4,000 shares of restricted stock awarded under our 1994 Restricted Stock Plan for Non-Employee Directors, 2,400 DSUs awarded under our 2006 Non-Employee Director Stock Incentive Plan and 2,963 DSUs awarded under our 2008 Non-Employee Director Stock Incentive Plan (in each case, plus accrued dividend equivalents) held in the restricted stock trust. | |
(5) | Includes 1,200 DSUs awarded under our 2006 Non-Employee Director Stock Incentive Plan and 2,963 DSUs awarded under our 2008 Non-Employee Director Stock Incentive Plan (in each case, plus accrued dividend equivalents) held in the restricted stock trust. | |
(6) | Includes 7,982 shares owned jointly with Mr. Poussot’s spouse and 260,997 shares held in the restricted stock trust. |
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(7) | Represents 4,000 shares of restricted stock awarded under our 1994 Restricted Stock Plan for Non-Employee Directors, 2,400 DSUs awarded under our 2006 Non-Employee Director Stock Incentive Plan and 2,963 DSUs awarded under our 2008 Non-Employee Director Stock Incentive Plan (in each case, plus accrued dividend equivalents) held in the restricted stock trust and 700 shares owned by Mr. Torell’s spouse. | |
(8) | Includes 201,205 shares held in the restricted stock trust. | |
(9) | Includes 5,479 shares held in the restricted stock trust. Does not include certain securities, including certain securities shown as outstanding under “Executive Compensation — Outstanding Equity Awards at 2008 Year-End” and “Proposal 1: The Merger — Interests of Certain Persons in the Merger,” that are subject to a domestic relations order pursuant to which the economic interest in certain shares held in the restricted stock trust and the economic interest in certain stock options was transferred to Mr. Stein’s former spouse (i.e., such stock options were retained by Mr. Stein due to plan restrictions on transfer, but his former spouse will receive the economic benefit from, and has discretion with respect to, exercises and sales). | |
(10) | Includes 428,709 shares owned jointly with Mr. Essner’s spouse. | |
(11) | Includes 576,853 shares held in the restricted stock trust. |
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• | Attract and retain outstanding executives with long-term industry experience and who deliver superior performance; | |
• | Motivate our executives to achieve our business and strategic goals, both financial and operational; | |
• | Reward our executives for achieving outstanding company and individual performance and developing executive talent; and | |
• | Produce value for our stockholders by continuing to increase the strength and sustainability of Wyeth. |
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• | A portion of the value of an executive’s total direct compensation (i.e., base salary, annual cash incentive awards and annual long-term incentive awards) was discretionary based on the Compensation Committee’s assessment of both Wyeth’s performance and individual executive performance (annual cash incentive awards); | |
• | A portion of the value of an executive’s total direct compensation was based directly on our actual financial performance against pre-set targets and total stockholder return (TSR) versus our peers (performance share unit awards); and | |
• | A portion of the value of an executive’s total direct compensation was tied directly to changes in our stock price (stock options, RSUs and performance share unit awards). |
• | Our successful strategic and financial response to the “at risk” launch of generic versions ofProtonix, including the launch of our own generic version and the deployment of Project Impact initiatives; | |
• | Our strong financial performance, highlighted by Wyeth exceeding its earnings per share (EPS) goals for the year, in the face of a challenging pharmaceutical industry and economic environment, and our successful operating performance; | |
• | New product approvals, includingPristiqfor the treatment of major depressive disorder,Xynthaand subcutaneousRelistor, and delays in the regulatory review of several of our other pipeline products; | |
• | Year-over-year stock price decline and negative total stockholder return performance during 2008, but which compared favorably with total stockholder return performance of the S&P 500 Index and the market-weighted Peer Group Index — performing better than the S&P 500 Index by 24.4 percentage points and the market-weighted Peer Group Index by 10.2 percentage points; | |
• | Executive succession and key business changes that resulted from the establishment of our new executive leadership team, including the promotion and recruitment of important new key executives, who quickly and seamlessly transitioned to full functionality; and | |
• | Outstanding work of our named executive officers with respect to our contemplated merger with Pfizer. |
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Pay Element | What Pay Element Rewards/Reflects | Primary Purpose of Pay Element | ||
Base Salary | Performance of executive responsibilities; reflects experience and tenure in role, skills and level of responsibility. | To provide a fixed amount of compensation commensurate with market norms for similar jobs. | ||
Annual Cash Incentive Awards | Annual company and individual performance and achievement of Wyeth’s financial and other objectives. | To motivate executives to achieve superior company and individual performance through a variable and discretionary award design. | ||
Long-Term Equity Incentives (Stock Options and Performance Share Unit Awards) | Long-term focus, achievement of performance goals (e.g., EPS and total stockholder return ranking), increases in stockholder value, and continued employment during the vesting/holding period of an award: — Three-year period applicable to performance share unit awards, with additional one-year holding period for the 2008 awards. — Three-year phased vesting for stock options. | To motivate long-term performance, align executive compensation with stock price performance and other performance measures and retain key executives. | ||
Restricted Stock Unit Awards | Long-term focus and continued employment during the vesting period. | Awarded upon initial employment and major promotion or for executive retention (not part of annual grant to named executive officers). | ||
Benefits (Primarily Defined Benefit Pension Plans and Defined Contribution Savings Plans) and Perquisites | Long-term service and desire to keep executives focused. | To provide a competitive benefits program that addresses employee health, welfare and retirement needs. Also to provide executives with a meaningful level of post-employment income consistent with their contribution to Wyeth’s success over their careers, as well as to offer competitive perquisites that enable executives to maximize efficiency. | ||
Change in Control Severance Agreements | Need for retention and employment security in a dynamic industry. | To provide for company stability and continuity of management during times of uncertainty (e.g., pending our contemplated merger with Pfizer) and to allow us to attract and retain key executives by providing protections consistent with the market for executive talent. |
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Robert M. Amen
Michael J. Critelli
John P. Mascotte
Gary L. Rogers
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Non-Equity | ||||||||||||||||||||||||||||||||
Incentive | Change in | All | ||||||||||||||||||||||||||||||
Stock | Option | Plan | Pension | Other | ||||||||||||||||||||||||||||
Name and | Salary(1) | Awards(2) | Awards(3) | Compensation(4) | Value(5) | Compensation(6) | Total | |||||||||||||||||||||||||
Principal Position | Year | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ||||||||||||||||||||||||
Bernard Poussot | 2008 | $ | 1,450,000 | $ | 8,041,484 | $ | 3,796,200 | $ | 2,750,000 | $ | 4,662,990 | $ | 656,723 | $ | 21,357,397 | |||||||||||||||||
Chairman, President and | 2007 | $ | 1,050,400 | $ | 4,349,760 | $ | 2,590,040 | $ | 2,000,000 | $ | 2,400,863 | $ | 263,845 | $ | 12,654,908 | |||||||||||||||||
Chief Executive Officer | 2006 | $ | 967,035 | $ | 5,518,110 | $ | 4,060,380 | $ | 1,700,000 | $ | 2,003,211 | $ | 160,112 | $ | 14,408,848 | |||||||||||||||||
Gregory Norden | 2008 | $ | 770,000 | $ | 2,454,967 | $ | 600,310 | $ | 1,078,000 | $ | 2,629,028 | $ | 199,370 | $ | 7,731,675 | |||||||||||||||||
Senior Vice President and Chief Financial Officer | 2007 | $ | 583,033 | $ | 1,027,240 | $ | 468,970 | $ | 750,000 | $ | 167,817 | $ | 75,148 | $ | 3,072,208 | |||||||||||||||||
Joseph M. Mahady | 2008 | $ | 925,000 | $ | 3,012,655 | $ | 2,182,120 | $ | 1,341,000 | $ | 2,276,187 | $ | 34,250 | $ | 9,771,212 | |||||||||||||||||
Senior Vice President and | 2007 | $ | 787,233 | $ | 2,313,180 | $ | 2,118,050 | $ | 1,100,000 | $ | 823,207 | $ | 29,117 | $ | 7,170,787 | |||||||||||||||||
President, Wyeth Pharmaceuticals | 2006 | $ | 695,600 | $ | 3,875,270 | $ | 1,441,860 | $ | 950,000 | $ | 1,390,888 | $ | 26,368 | $ | 8,379,986 | |||||||||||||||||
Lawrence V. Stein | 2008 | $ | 724,220 | $ | 2,168,619 | $ | 892,620 | $ | 978,000 | $ | 1,541,441 | $ | 28,050 | $ | 6,332,950 | |||||||||||||||||
Senior Vice President and General Counsel | ||||||||||||||||||||||||||||||||
Mikael Dolsten, M.D., Ph.D. | 2008 | $ | 406,250 | $ | 1,414,537 | $ | 92,899 | $ | 750,000 | — | $ | 105,771 | $ | 2,769,457 | ||||||||||||||||||
Senior Vice President and President, Wyeth Research | ||||||||||||||||||||||||||||||||
Robert Essner | 2008 | $ | 857,703 | $ | 11,717,960 | $ | 3,796,200 | $ | 1,600,000 | $ | 2,566,308 | $ | 338,660 | $ | 20,876,831 | |||||||||||||||||
Former Chairman | 2007 | $ | 1,728,500 | $ | 10,169,080 | $ | 4,691,600 | $ | 3,200,000 | $ | 4,083,894 | $ | 232,057 | $ | 24,105,131 | |||||||||||||||||
2006 | $ | 1,662,000 | $ | 18,201,380 | $ | 5,305,400 | $ | 3,000,000 | $ | 4,531,044 | $ | 147,138 | $ | 32,846,962 | ||||||||||||||||||
Robert R. Ruffolo, Jr., Ph.D | 2008 | $ | 459,458 | $ | 2,483,198 | — | $ | 645,000 | $ | 1,023,321 | $ | 140,229 | $ | 4,751,206 | ||||||||||||||||||
Former Senior | 2007 | $ | 756,100 | $ | 2,509,610 | $ | 1,394,800 | $ | 1,100,000 | $ | 880,411 | $ | 23,183 | $ | 6,664,104 | |||||||||||||||||
Vice President and President, Wyeth Research | 2006 | $ | 727,000 | $ | 4,345,220 | $ | 1,423,400 | $ | 1,100,000 | $ | 964,881 | $ | 27,310 | $ | 8,587,811 | |||||||||||||||||
(1) | The amount shown in the “Salary” column for Dr. Dolsten reflects payment of base salary at an annual rate of $750,000 from his date of hire, and for Mr. Essner and Dr. Ruffolo reflects payment of base salary at an annual rate of $1,728,500 and $782,500, respectively, through their dates of retirement. Each of our named executive officers deferred a portion of his base salary into the Wyeth Savings Plan, as amended (401(k)). Each of our named executive officers (other than Dr. Dolsten) also deferred a portion of his base salary into the Wyeth Supplemental Employee Savings Plan, as amended (SESP), which is reflected in the “Non-Qualified Deferred Compensation” table below. | |
In November 2008, the Wyeth board of directors set the 2009 base salaries for our active named executive officers at $1,550,000 for Mr. Poussot, $850,000 for Mr. Norden, $962,000 for Mr. Mahady, $753,000 for Mr. Stein and $790,000 for Dr. Dolsten. | ||
(2) | We recognize the expense associated with performance share unit awards ratably from the date of grant through the completion of the applicable performance period, initially assuming achievement at 100% of target and ultimately reflecting actual achievement. |
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• | the compensation cost in accordance with SFAS No. 123R, disregarding the estimate of forfeitures related to service-based vesting conditions, for performance share unit awards granted in 2008 and in prior years, thereby reflecting the pro rata expenses associated with the 2006, 2007 and 2008 grants of performance share unit awards; | |
• | the following incremental amounts reflecting the conversion of the 2006 performance share unit awards, which relate primarily to the 2008 performance year, at 136% of target (rather than 100%): $1,404,288 for Mr. Poussot, $351,072 for Mr. Norden, $667,037 for Mr. Mahady, $482,724 for Mr. Stein, $2,984,112 for Mr. Essner and $719,698 for Dr. Ruffolo, as a result of the determination by the Compensation Committee in early 2009 that we achieved 2008 EPS, as adjusted, of $3.68 per share (i.e., exclusive of equity-based compensation and charges related to our productivity initiatives) and a total stockholder return ranking in the middle tier of our specified peer group of eight companies for the period from January 1, 2006 to December 31, 2008. The 2008 EPS target of $3.58 per share for the 2006 awards was established by the Compensation Committee in early 2008; and | |
• | the compensation cost in accordance with SFAS No. 123R, disregarding the estimate of forfeitures related to service-based vesting conditions, for RSUs as follows: for Mr. Poussot, the pro rata cost of a special award granted to him in 2008 in connection with his promotion to Chief Executive Officer, and for Mr. Norden, the pro rata cost of awards granted to him in 2005, 2006 and 2007 prior to his promotion to Senior Vice President and Chief Financial Officer and a special award granted to him in 2008 related to his promotion to Chief Financial Officer. |
(3) | Represents the compensation cost determined in accordance with SFAS No. 123R, disregarding the estimate of forfeitures related to service-based vesting conditions, for stock option awards based upon the Black-Scholes option-pricing model, which is recognized pro rata over the employee service period. The vesting period for determining compensation cost generally is the shorter of three years or the time period prior to when the individual reaches the age and service required for retirement eligibility. The amounts shown for 2008 represent: |
• | for Messrs. Poussot, Stein and Essner, the full expense for stock options granted in 2008 and do not include any expense for prior year awards, as these executives satisfied the age and service requirements for retirement eligibility prior to 2008; | |
• | for Mr. Norden, who does not become eligible for retirement until October 2012, the pro rata costs of stock options granted in 2005, 2006, 2007 and 2008; | |
• | for Mr. Mahady, who became eligible for retirement in April 2008, the pro rata costs of stock options granted in 2005, 2006 and 2007 and the full expense for stock options granted in 2008; | |
• | for Dr. Dolsten, who does not become eligible for retirement until September 2013, the pro rata costs of stock options granted in 2008 upon his date of hire; and | |
• | for Dr. Ruffolo, no expense because he did not receive a grant of stock options in 2008 and he satisfied the age and service requirements for retirement eligibility prior to 2008. |
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(4) | Reflects the annual cash incentive awards (i.e., cash bonuses) earned for 2008, 2007 and 2006 under our stockholder-approved Executive Incentive Plan, as amended, or, in the case of Mr. Norden in 2007 and Dr. Dolsten and Mr. Essner in 2008, under our Performance Incentive Award program, and paid in the first quarter of 2009, 2008 and 2007, respectively. These awards were determined and finalized by our Compensation Committee in the February following the applicable completed performance year and were paid shortly thereafter. The terms of our Executive Incentive Plan, which is designed to preserve the tax deductibility to Wyeth of annual cash incentive award payments, provide that the maximum annual cash incentive award that may be paid to any one participant in any one year is two-tenths of one percent of our consolidated earnings, if any, for the applicable year (adjusted to omit the effects of unusual and infrequent items). As discussed in more detail under “— Compensation Discussion and Analysis” beginning on page 185, the Compensation Committee applies negative discretion to determine the actual cash incentive award made to each individual for the given fiscal year. None of the named executive officers elected to defer his 2008, 2007 or 2006 annual cash incentive award. | |
(5) | Represents the aggregate change in actuarial present value of each named executive officer’s accumulated benefits under our defined benefit pension plans from December 31, 2007 to December 31, 2008, December 31, 2006 to December 31, 2007 and December 31, 2005 to December 31, 2006, respectively, which are the measurement dates used for financial statement reporting purposes for our consolidated financial statements, based on the following assumptions: |
• | For valuing lump-sum payments, a discount rate of 4.0% for the December 31, 2008 measurement date, 4.0% for the December 31, 2007 measurement date, 4.0% for the December 31, 2006 measurement date and 4.4% for the December 31, 2005 measurement date. | |
• | For valuing annuity payments, a discount rate of 6.25% for the December 31, 2008 measurement date, 6.45% for the December 31, 2007 measurement date, 5.90% for the December 31, 2006 measurement date and 5.65% for the December 31, 2005 measurement date. | |
• | For the December 31, 2008 measurement date, eighty-five percent (85%) of all retirees were expected to elect lump-sum payments, and for the December 31, 2007 and the December 31, 2006 measurement dates, seventy percent (70%) of all retirees were expected to elect lump-sum payments; the remainder were assumed to elect payments in an annuity form. |
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(6) | For 2008, reflects amounts for personal use of company aircraft, aircraft commuting, personal use of automobiles, company-provided housing/relocation, reimbursement of taxes, Wyeth’s matching contributions to the Wyeth Savings Plan (401(k)) and the Supplemental Employee Savings Plan (SESP), and other benefits, as follows: |
Personal | Company- | |||||||||||||||||||||||||||||||||||
Use of | Provided | |||||||||||||||||||||||||||||||||||
Company | Aircraft | Personal Use of | Housing/ | Reimbursement | 401(k) | SESP | Total | |||||||||||||||||||||||||||||
Aircraft | Commuting | Automobiles | Relocation | of Taxes | Match | Match | Other | All Other | ||||||||||||||||||||||||||||
Name | (a) | (a) | (b) | (c) | (d) | (e) | (e) | (f) | Compensation | |||||||||||||||||||||||||||
Mr. Poussot | $ | 189,986 | $ | 18,235 | $ | 10,504 | $ | 132,000 | $ | 147,876 | $ | 6,900 | $ | 37,913 | $ | 113,309 | $ | 656,723 | ||||||||||||||||||
Mr. Norden | — | $ | 5,757 | $ | 11,369 | $ | 72,504 | $ | 77,076 | $ | 6,900 | $ | 17,075 | $ | 8,689 | $ | 199,370 | |||||||||||||||||||
Mr. Mahady | — | — | — | — | — | $ | 6,900 | $ | 21,850 | $ | 5,500 | $ | 34,250 | |||||||||||||||||||||||
Mr. Stein | — | — | — | — | — | $ | 6,900 | $ | 15,650 | $ | 5,500 | $ | 28,050 | |||||||||||||||||||||||
Dr. Dolsten | — | $ | 8,742 | $ | 33,706 | $ | 14,904 | $ | 44,332 | $ | 4,087 | — | — | $ | 105,771 | |||||||||||||||||||||
Mr. Essner | $ | 202,076 | — | $ | 26,436 | — | $ | 17,586 | $ | 6,900 | $ | 21,188 | $ | 64,474 | $ | 338,660 | ||||||||||||||||||||
Dr. Ruffolo | — | — | — | — | — | $ | 6,900 | $ | 7,829 | $ | 125,500 | $ | 140,229 |
a. | The Wyeth board of directors made it a requirement, for security reasons, that Mr. Poussot and, prior to his retirement, Mr. Essner, use the corporate aircraft for business and personal travel where feasible. The Wyeth board of directors believes that this requirement also enables more efficient use of these executives’ travel time and helps to preserve confidentiality. Mr. Essner is entitled to limited post-employment usage of our corporate aircraft pursuant to his employment agreement. See “— Potential Payments upon Termination or Change in Control” beginning on page 221 for a description of Mr. Essner’s employment agreement. Other executive officers may, on rare occasions, use the corporate aircraft for personal trips with the permission of the Chief Executive Officer. | |
As a result of their respective promotions to President and Chief Executive Officer (January 2008) and Senior Vice President and Chief Financial Officer (June 2007), Messrs. Poussot and Norden, respectively, changed their principal offices from Collegeville, Pennsylvania to Madison, New Jersey but continue to work frequently in both locations. Beginning with their respective promotions, Messrs. Poussot and Norden use the corporate helicopter for periodic commuting, as does Dr. Dolsten in connection with his relocation to Collegeville, Pennsylvania. | ||
We have valued the aggregate incremental cost of each of Mr. Poussot’s and Mr. Essner’s personal use of our corporate aircraft using a method that takes into account the cost of fuel, trip-related maintenance, crew travel expenses, on-board supplies and catering, landing fees, trip-related expenses, any customs, foreign permit and similar fees, and other variable costs, net of any reimbursements made to Wyeth by the officer for his use of the aircraft in the case of Mr. Essner. The aggregate incremental cost also includes all such costs related to positioning flights. We valued the aggregate incremental cost of aircraft commuting by allocating the estimated total annual variable costs associated with use of the helicopter for all helicopter trips on a per passenger basis (i.e., by calculating the hourly per passenger variable cost for all helicopter trips in 2008 and allocating it to the commuting and/or personal trips made by the officer). Because our aircraft are used primarily for business travel, in calculating incremental cost, we do not include the fixed costs that do not change based on personal usage. Aggregate incremental cost is not the same as the valuation used for calculating taxable income to the executives, which is calculated pursuant to U.S. Treasury regulations. We have not included amounts related to the loss of a tax deduction to Wyeth on account of personal use of corporate aircraft in valuing this benefit. | ||
b. | Costs related to automobile usage for commuting and/or personal purposes by Mr. Poussot, Mr. Norden, Dr. Dolsten and Mr. Essner, including post-employment use by Mr. Essner pursuant to his employment agreement, are shown at estimated aggregate incremental cost to Wyeth based upon the number of miles traveled and the estimated incremental cost per mile, including an estimate of allocable driver overtime costs or, in the case of Dr. Dolsten, the cost of third-party-provided transportation. Costs related to the company-owned automobile provided to Mr. Essner prior to his retirement are shown at full cost to Wyeth although the vehicle was used for business as well as personal transportation. |
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c. | For Messrs. Poussot and Norden, amounts shown represent a monthly housing allowance and payments for company-provided housing, respectively, in lieu of relocation. Beginning with their respective promotions, we provide Mr. Poussot with a monthly housing allowance to be used for housing in proximity to Madison, New Jersey and Mr. Norden with a leased apartment and related expenses in proximity to Madison, New Jersey. For Dr. Dolsten, amount shown represents company-paid living expenses related to his relocation to Collegeville, Pennsylvania in connection with his employment. | |
d. | Amounts shown represent reimbursement by us of taxes incurred by the executive as a result of imputed income as follows: for Mr. Poussot, from helicopter and automobile usage for commuting/personal use, the monthly housing allowance and specified air travel; for Mr. Norden, from helicopter and automobile usage for commuting and company-provided housing; for Dr. Dolsten, from the travel/commuting costs and living expenses related to his relocation to Collegeville, Pennsylvania in accordance with our relocation policy; and for Mr. Essner, from his personal use of corporate aircraft prior to his retirement. See “— Compensation Discussion and Analysis — Determination and Analysis of 2008 Compensation for Named Executive Officers — Perquisites” beginning on page 197. | |
e. | We provide matching contributions of 50% on the first 6% of covered pay that the named executive officer contributes to the Wyeth Savings Plan (401(k)) and the Supplemental Employee Savings Plan. | |
f. | This column reports other benefits provided to named executive officers. These other benefits include: (1) financial planning, (2) home security for Mr. Poussot ($101,302), including installation costs in connection with his promotion to Chief Executive Officer, and Mr. Essner ($14,602), (3) non-business activities for director spouses in connection with our off-site board meeting (see “— Director Compensation” beginning on page 170), and/or (4) an annual physical examination. In the case of Mr. Essner, this column also includes an estimate of the post-employment benefits that he received in 2008 under his employment agreement ($43,000), with the exception of home security, the use of a company-owned automobile and driver and the company aircraft, which are included in the other applicable columns or clauses. In the case of Dr. Ruffolo, these benefits include payments in connection with his post-retirement consulting agreement ($125,000). Please see “— Potential Payments Upon Termination or Change in Control” beginning on page 221 for a description of the post-employment benefits provided to Mr. Essner and Dr. Ruffolo under their employment and consulting agreements. |
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All | ||||||||||||||||||||||||||||||||||||||||||||||||
Other | All Other | |||||||||||||||||||||||||||||||||||||||||||||||
Stock | Option | |||||||||||||||||||||||||||||||||||||||||||||||
Awards: | Awards: | Exercise | Grant Date | |||||||||||||||||||||||||||||||||||||||||||||
Estimated Potential Payouts | Estimated Future Payouts | Number of | Number of | or Base | Fair Value | |||||||||||||||||||||||||||||||||||||||||||
Under Non-Equity Incentive Plan | Under Equity Incentive Plan | Shares | Securities | Price of | of Stock and | |||||||||||||||||||||||||||||||||||||||||||
Awards(1) | Awards | of Stock | Underlying | Options | Options | |||||||||||||||||||||||||||||||||||||||||||
Grant | Action | Threshold | Target | Maximum | Threshold | Target | Maximum | or Units | Options | Award | Awards(2) | |||||||||||||||||||||||||||||||||||||
Name | Date | Date | ($) | ($) | ($) | (#) | (#) | (#) | (#) | (#) | ($/Sh) | ($) | ||||||||||||||||||||||||||||||||||||
Bernard Poussot | — | — | $ | 0 | $ | 2,000,000 | $ | 9,533,500 | ||||||||||||||||||||||||||||||||||||||||
1/2/2008 | 1/2/2008 | 120,000 | $ | 4,573,200 | ||||||||||||||||||||||||||||||||||||||||||||
4/24/2008 | 4/24/2008 | 0 | 192,000 | 384,000 | 7,956,480 | |||||||||||||||||||||||||||||||||||||||||||
4/24/2008 | 4/24/2008 | 370,000 | $ | 44.56 | 3,796,200 | |||||||||||||||||||||||||||||||||||||||||||
$ | 16,325,880 | |||||||||||||||||||||||||||||||||||||||||||||||
Gregory Norden | — | — | $ | 0 | $ | 750,000 | $ | 9,533,500 | ||||||||||||||||||||||||||||||||||||||||
4/24/2008 | 4/24/2008 | 19,250 | $ | 790,598 | ||||||||||||||||||||||||||||||||||||||||||||
4/24/2008 | 4/24/2008 | 0 | 56,250 | 112,500 | 2,331,000 | |||||||||||||||||||||||||||||||||||||||||||
4/24/2008 | 4/24/2008 | 99,000 | $ | 44.56 | 1,015,740 | |||||||||||||||||||||||||||||||||||||||||||
$ | 4,137,338 | |||||||||||||||||||||||||||||||||||||||||||||||
Joseph M. Mahady | — | — | $ | 0 | $ | 1,100,000 | $ | 9,533,500 | ||||||||||||||||||||||||||||||||||||||||
4/24/2008 | 4/24/2008 | 0 | 62,500 | 125,000 | $ | 2,590,000 | ||||||||||||||||||||||||||||||||||||||||||
4/24/2008 | 4/24/2008 | 138,000 | $ | 44.56 | 1,415,880 | |||||||||||||||||||||||||||||||||||||||||||
$ | 4,005,880 | |||||||||||||||||||||||||||||||||||||||||||||||
Lawrence V. Stein | — | — | $ | 0 | $ | 890,000 | $ | 9,533,500 | ||||||||||||||||||||||||||||||||||||||||
4/24/2008 | 4/24/2008 | 0 | 41,000 | 82,000 | $ | 1,699,040 | ||||||||||||||||||||||||||||||||||||||||||
4/24/2008 | 4/24/2008 | 87,000 | $ | 44.56 | 892,620 | |||||||||||||||||||||||||||||||||||||||||||
$ | 2,591,660 | |||||||||||||||||||||||||||||||||||||||||||||||
Mikael Dolsten, M.D., Ph.D. | — | — | (1 | ) | ||||||||||||||||||||||||||||||||||||||||||||
6/16/2008 | * | 4/24/2008 | 0 | 51,250 | 102,500 | $ | 2,733,675 | |||||||||||||||||||||||||||||||||||||||||
6/16/2008 | ** | 4/24/2008 | 0 | 51,250 | 102,500 | 2,123,800 | ||||||||||||||||||||||||||||||||||||||||||
6/16/2008 | 4/24/2008 | 52,000 | $ | 43.08 | 513,760 | |||||||||||||||||||||||||||||||||||||||||||
$ | 5,371,235 | |||||||||||||||||||||||||||||||||||||||||||||||
Robert Essner | — | — | $ | 0 | $ | 1,600,000 | $ | 9,533,500 | ||||||||||||||||||||||||||||||||||||||||
4/24/2008 | 4/24/2008 | 0 | 153,600 | 307,200 | $ | 7,148,544 | ||||||||||||||||||||||||||||||||||||||||||
4/24/2008 | 4/24/2008 | 370,000 | $ | 44.56 | 3,796,200 | |||||||||||||||||||||||||||||||||||||||||||
$ | 10,944,744 | |||||||||||||||||||||||||||||||||||||||||||||||
Robert R. Ruffolo, Jr., Ph.D. | — | — | $ | 0 | $ | 641,700 | $ | 9,533,500 |
* | Represents grant for the 2009 performance year. |
** | Represents grant for the 2010 performance year. |
(1) | Annual cash incentive awards generally are paid to named executive officers under our stockholder-approved Executive Incentive Plan, which, in order to preserve tax deductibility to Wyeth of this compensation, is designed as a so-called “negative discretion” plan. There is no target or maximum under the Executive Incentive Plan, other than a putative maximum amount that may be paid to any one participant in any one year of two-tenths of one percent of consolidated earnings (adjusted to omit the effects of unusual and infrequent items). Pursuant to SEC rules, the “maximum” amounts shown in the table above reflect this putative maximum. The plan permits the Compensation Committee to award any amount that does not exceed the putative maximum. For purposes of presentation, the amounts shown as “target” represent the annual cash incentive awards actually paid to each named executive officer for 2007 (pro-rated for actual months worked in 2008 in the case of Mr. Essner and Dr. Ruffolo). Actual annual cash incentive awards paid for 2008 are reported in the “Non-Equity Incentive Plan Compensation” column of the “— Summary Compensation Table,” and there are no future payouts associated with these awards, which are shown here in accordance with SEC rules. While Dr. Dolsten’s annual cash incentive award was determined in the same manner as awards under the Executive Incentive Plan, Dr. Dolsten was not designated as a participant in the Executive Incentive Plan in 2008 because he became a named executive officer after |
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the date of designation for 2008. In addition, pursuant to the offer letter in connection with his employment, Dr. Dolsten was entitled to receive a minimum bonus of $750,000 for 2008. For each of Mr. Essner and Dr. Dolsten, the actual annual cash incentive award for 2008 was ultimately paid under our Performance Incentive Award program. See “— Compensation Discussion and Analysis” beginning on page 185 for a discussion of the determination of actual awards for 2008 under the Executive Incentive Plan and the Performance Incentive Award program. | ||
(2) | Represents the grant date fair value of performance share unit awards (based on 100% of target achievement), RSUs and stock options granted in 2008 computed in accordance with SFAS No. 123R, disregarding the estimate of forfeitures relating to service-based vesting conditions, using the same valuation model and assumptions as applied for purposes of our consolidated financial statements for the year ended December 31, 2008, included in our 2008 Financial Report, which is incorporated by reference into Wyeth’s Annual Report onForm 10-K for the year ended December 31, 2008, which is incorporated by reference into this proxy statement/prospectus. These values were developed solely for the purpose of comparative disclosure in accordance with SEC rules and are not intended to predict future performance, future prices of our common stock or our future dividend distributions. The ultimate values of these equity awards will depend on our future performance and the future market price of our common stock and cannot be forecasted with reasonable accuracy. The actual value, if any, a holder will realize upon exercise of an option will depend on the excess of the market value of our common stock over the exercise price on the date the option is exercised. The actual value, if any, a holder will realize upon sale of shares received upon conversion of RSUs and performance share unit awards will depend on the number of shares into which such award ultimately converts (in the case of performance share unit awards) and the market value of our common stock on the date of the sale. | |
The value of performance share unit awards granted on April 24, 2008 for the 2010 performance year, based on 100% of target achievement, was calculated to be $41.44 per unit or, in the case of Mr. Essner, who received the form of award granted to other key employees in light of his announced retirement rather than the form of award for continuing named executive officers, $46.54 per unit. The values of Dr. Dolsten’s performance share unit awards granted on June 16, 2008 for the 2009 performance year and the 2010 performance year, based on 100% of target achievement, were calculated to be $53.34 and $41.44, respectively, per unit. The value of Mr. Poussot’s RSUs granted on January 2, 2008 was calculated to be $38.11 per unit; and the value of Mr. Norden’s RSUs granted on April 24, 2008 was calculated to be $41.07 per unit. For a discussion of the assumptions used in determining grant date fair value of our performance share unit awards and RSUs granted in 2008, please see note 13 to our consolidated financial statements for the year ended December 31, 2008, included in our 2008 Financial Report, which is incorporated by reference into Wyeth’s Annual Report onForm 10-K for the year ended December 31, 2008, which is incorporated by reference into this proxy statement/prospectus. | ||
For stock option awards granted on April 24, 2008 and June 16, 2008, the values (equaling $10.26 and $9.88 per option, respectively) were developed using the Black-Scholes option pricing model in accordance with SFAS No. 123R based on the assumptions set forth in note 13 to our consolidated financial statements for the year ended December 31, 2008, included in our 2008 Financial Report, which is incorporated by reference into Wyeth’s Annual Report onForm 10-K for the year ended December 31, 2008, which is incorporated by reference into this proxy statement/prospectus. |
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Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
Equity Incentive | Equity Incentive | |||||||||||||||||||||||||||||||||||
Number | Number of | Number of | Plan Awards: | Plan Awards: Market | ||||||||||||||||||||||||||||||||
of Securities | Securities | Shares or | Number of | or Payout Value of | ||||||||||||||||||||||||||||||||
Underlying | Underlying | Units of | Market Value of | Unearned Shares, | Unearned Shares, | |||||||||||||||||||||||||||||||
Unexercised | Unexercised | Option | Stock That | Shares or Units of | Units or | Units or Other | ||||||||||||||||||||||||||||||
Options | Options | Exercise | Option | Have Not | Stock That | Other Rights | Rights That Have | |||||||||||||||||||||||||||||
(#) | (#) | Price | Expiration | Vested | Have Not Vested | That Have Not Vested (2) | Not Vested (3) | |||||||||||||||||||||||||||||
Name | Exercisable | Unexercisable | ($) | Date(1) | (#) | ($) | (#) | ($) | ||||||||||||||||||||||||||||
Bernard Poussot | 97,800 | $ | 62.3125 | 5/20/2009 | 120,000 | (4) | $ | 4,501,200 | (4) | (2007 | ) | 112,500 | $ | 4,219,875 | ||||||||||||||||||||||
118,800 | $ | 56.5938 | 4/27/2010 | (2008 | ) | 192,000 | 7,201,920 | |||||||||||||||||||||||||||||
126,000 | $ | 56.5250 | 4/26/2011 | 304,500 | $ | 11,421,795 | ||||||||||||||||||||||||||||||
157,500 | $ | 60.7050 | 4/25/2012 | |||||||||||||||||||||||||||||||||
51,334 | $ | 40.2200 | 4/22/2014 | |||||||||||||||||||||||||||||||||
138,000 | $ | 43.5700 | 4/21/2015 | |||||||||||||||||||||||||||||||||
120,000 | 60,000 | $ | 48.2200 | 4/27/2016 | ||||||||||||||||||||||||||||||||
66,666 | 133,334 | $ | 56.0000 | 4/26/2017 | ||||||||||||||||||||||||||||||||
370,000 | $ | 44.5600 | 4/24/2018 | |||||||||||||||||||||||||||||||||
Total: 876,100 | 563,334 | |||||||||||||||||||||||||||||||||||
Gregory Norden | 30,000 | $ | 62.3125 | 5/20/2009 | 28,750 | (4) | $ | 1,078,413 | (4) | (2007 | ) | 25,000 | $ | 937,750 | ||||||||||||||||||||||
34,000 | $ | 56.5938 | 4/27/2010 | (2008 | ) | 56,250 | 2,109,938 | |||||||||||||||||||||||||||||
45,000 | $ | 56.5250 | 4/26/2011 | 81,250 | $ | 3,047,688 | ||||||||||||||||||||||||||||||
50,000 | $ | 60.7050 | 4/25/2012 | |||||||||||||||||||||||||||||||||
8,334 | $ | 41.0500 | 4/24/2013 | |||||||||||||||||||||||||||||||||
30,000 | $ | 40.2200 | 4/22/2014 | |||||||||||||||||||||||||||||||||
37,500 | $ | 43.5700 | 4/21/2015 | |||||||||||||||||||||||||||||||||
26,666 | 13,334 | $ | 48.2200 | 4/27/2016 | ||||||||||||||||||||||||||||||||
12,003 | 24,007 | $ | 56.0000 | 4/26/2017 | ||||||||||||||||||||||||||||||||
99,000 | $ | 44.5600 | 4/24/2018 | |||||||||||||||||||||||||||||||||
Total: 273,503 | 136,341 | |||||||||||||||||||||||||||||||||||
Joseph M. Mahady | 66,600 | $ | 62.3125 | 5/20/2009 | (2007 | ) | 49,940 | $ | 1,873,249 | |||||||||||||||||||||||||||
76,500 | $ | 56.5938 | 4/27/2010 | (2008 | ) | 62,500 | 2,344,375 | |||||||||||||||||||||||||||||
76,500 | $ | 56.5250 | 4/26/2011 | 112,440 | $ | 4,217,624 | ||||||||||||||||||||||||||||||
90,000 | $ | 60.7050 | 4/25/2012 | |||||||||||||||||||||||||||||||||
38,000 | $ | 40.2200 | 4/22/2014 | |||||||||||||||||||||||||||||||||
103,000 | $ | 43.5700 | 4/21/2015 | |||||||||||||||||||||||||||||||||
68,666 | 34,334 | $ | 48.2200 | 4/27/2016 | ||||||||||||||||||||||||||||||||
36,000 | 72,000 | $ | 56.0000 | 4/26/2017 | ||||||||||||||||||||||||||||||||
138,000 | $ | 44.5600 | 4/24/2018 | |||||||||||||||||||||||||||||||||
Total: 555,266 | 244,334 | |||||||||||||||||||||||||||||||||||
Lawrence V. Stein | 45,000 | $ | 62.3125 | 5/20/2009 | — | — | (2007 | ) | 37,815 | $ | 1,418,441 | |||||||||||||||||||||||||
51,000 | $ | 56.5938 | 4/27/2010 | (2008 | ) | 41,000 | 1,537,910 | |||||||||||||||||||||||||||||
55,000 | $ | 56.5250 | 4/26/2011 | 78,815 | $ | 2,956,351 | ||||||||||||||||||||||||||||||
56,000 | $ | 60.7050 | 4/25/2012 | |||||||||||||||||||||||||||||||||
20,000 | $ | 34.6750 | 10/28/2012 | |||||||||||||||||||||||||||||||||
40,000 | $ | 41.0500 | 4/24/2013 | |||||||||||||||||||||||||||||||||
80,000 | $ | 40.2200 | 4/22/2014 | |||||||||||||||||||||||||||||||||
72,000 | $ | 43.5700 | 4/21/2015 | |||||||||||||||||||||||||||||||||
48,000 | 24,000 | $ | 48.2200 | 4/27/2016 | ||||||||||||||||||||||||||||||||
26,400 | 52,800 | $ | 56.0000 | 4/26/2017 | ||||||||||||||||||||||||||||||||
87,000 | $ | 44.5600 | 4/24/2018 | |||||||||||||||||||||||||||||||||
Total: 493,400 | 163,800 |
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Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
Equity Incentive | Equity Incentive | |||||||||||||||||||||||||||||||||||
Number | Number of | Number of | Plan Awards: | Plan Awards: Market | ||||||||||||||||||||||||||||||||
of Securities | Securities | Shares or | Number of | or Payout Value of | ||||||||||||||||||||||||||||||||
Underlying | Underlying | Units of | Market Value of | Unearned Shares, | Unearned Shares, | |||||||||||||||||||||||||||||||
Unexercised | Unexercised | Option | Stock That | Shares or Units of | Units or | Units or Other | ||||||||||||||||||||||||||||||
Options | Options | Exercise | Option | Have Not | Stock That | Other Rights | Rights That Have | |||||||||||||||||||||||||||||
(#) | (#) | Price | Expiration | Vested | Have Not Vested | That Have Not Vested (2) | Not Vested (3) | |||||||||||||||||||||||||||||
Name | Exercisable | Unexercisable | ($) | Date(1) | (#) | ($) | (#) | ($) | ||||||||||||||||||||||||||||
Mikael Dolsten, M.D., Ph.D. | — | 52,000 | $ | 43.0800 | 6/16/2018 | — | — | (2007 | ) | 51,250 | $ | 1,922,388 | ||||||||||||||||||||||||
(2008 | ) | 51,250 | 1,922,388 | |||||||||||||||||||||||||||||||||
102,500 | $ | 3,844,776 | ||||||||||||||||||||||||||||||||||
Robert Essner | 177,800 | — | $ | 62.3125 | 5/20/2009 | — | — | (2007 | ) | 192,000 | $ | 7,201,920 | ||||||||||||||||||||||||
207,000 | $ | 56.5938 | 4/27/2010 | (2008 | ) | 153,600 | 5,761,536 | |||||||||||||||||||||||||||||
360,000 | $ | 56.5250 | 4/26/2011 | 345,600 | $ | 12,963,456 | ||||||||||||||||||||||||||||||
630,000 | $ | 62.4000 | 6/21/2011 | |||||||||||||||||||||||||||||||||
540,000 | $ | 60.7050 | 4/25/2012 | |||||||||||||||||||||||||||||||||
600,000 | $ | 41.0500 | 4/24/2013 | |||||||||||||||||||||||||||||||||
480,000 | $ | 40.2200 | 4/22/2014 | |||||||||||||||||||||||||||||||||
432,000 | $ | 43.5700 | 4/21/2015 | |||||||||||||||||||||||||||||||||
410,000 | $ | 48.2200 | 4/27/2016 | |||||||||||||||||||||||||||||||||
370,000 | $ | 56.0000 | 4/26/2017 | |||||||||||||||||||||||||||||||||
370,000 | $ | 44.5600 | 4/24/2018 | |||||||||||||||||||||||||||||||||
Total: 4,576,800 | ||||||||||||||||||||||||||||||||||||
Robert R. Ruffolo, Jr., Ph.D. | 80,000 | — | $ | 53.8500 | 1/23/2011 | — | — | (2007 | ) | 51,250 | $ | 1,922,388 | ||||||||||||||||||||||||
70,000 | $ | 56.5250 | 4/26/2011 | |||||||||||||||||||||||||||||||||
70,000 | $ | 60.7050 | 4/25/2012 | |||||||||||||||||||||||||||||||||
115,000 | $ | 43.5700 | 4/21/2015 | |||||||||||||||||||||||||||||||||
110,000 | $ | 48.2200 | 4/27/2016 | |||||||||||||||||||||||||||||||||
110,000 | $ | 56.0000 | 4/26/2017 | |||||||||||||||||||||||||||||||||
Total: 555,000 |
(1) | Options expire 10 years from the date of grant and, subject to ongoing service, vest in one-third increments on the first, second and third anniversaries of the date of grant, provided the executive has completed two or more years of service. Options would become fully vested earlier in the case of retirement, death, disability or a change in control, such as our contemplated merger with Pfizer. See “— 2008 Grants of Plan-Based Awards” beginning on page 207 for more information on stock options. | |
(2) | Represents the 2007 and 2008 performance share unit awards, shown at 100% of target, which generally were granted in 2007 and 2008 and which can be earned based on 2009 and 2010 EPS performance among other factors, respectively, and remained outstanding at December 31, 2008. These awards generally were granted in connection with the annual grants under our long-term incentive compensation program, except that a portion of Mr. Norden’s 2007 performance share unit award was granted to him in June 2007 in connection with his promotion to Senior Vice President and Chief Financial Officer, and Dr. Dolsten’s 2007 and 2008 performance share unit awards were granted to him upon his employment in June 2008. The 2007 performance share unit awards may be earned in early 2010 based on 2009 EPS performance. The 2008 performance share unit awards may be earned in early 2011 based on 2010 EPS performance. The Compensation Committee may then apply negative discretion to reduce the amount of the award that may be earned based on EPS by applying other factors as deemed appropriate by the Compensation Committee, including total stockholder return ranking for the years2007-2009 for the 2007 award and for the years2008-2010 for the 2008 award, as more fully described under “— 2008 Grants of Plan-Based Awards” and in the section entitled “— Compensation Discussion and Analysis.” The executives would forfeit these performance share unit awards upon termination of employment prior to conversion for any reason other than death, disability or retirement (in which case the units would be converted if, when and to the extent the performance criteria are satisfied). These units also would vest upon a change in control, such as our contemplated merger with Pfizer (in which case the units generally would convert at 80% of target). |
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The table does not include performance share unit awards granted in 2006, which were earned and vested in February 2009 based on 2008 performance. As these awards vested based on performance completed in 2008, we have included these awards in the table entitled “— Option Exercises and Stock Vested in 2008.” | ||
(3) | Aggregate market or payout value of all performance share unit awards not yet earned was computed by multiplying $37.51, the closing market price of our common stock on the NYSE on December 31, 2008, by the number of shares issuable upon conversion of performance share unit awards at 100% of target. | |
(4) | For Mr. Poussot, represents a special award of 120,000 RSUs granted on January 2, 2008 upon his promotion to Chief Executive Officer, which vest and convert into shares of our common stock in one-third increments on the third, fourth and fifth anniversaries of the date of grant. For Mr. Norden, includes RSUs granted prior to his promotion to Senior Vice President and Chief Financial Officer as follows: 5,000 units on April 27, 2006 and 4,500 units on April 26, 2007. These awards vest and convert into shares of common stock on the third anniversary of the date of grant. For Mr. Norden, also includes a special award of 19,250 units granted on April 24, 2008, which vest and convert into shares of our common stock in one-third increments on the first, second and third anniversaries of the date of grant. All RSUs would vest earlier in the event of a change in control, such as our contemplated merger with Pfizer. Unless otherwise determined by the Compensation Committee, RSUs would be forfeited upon termination of employment prior to vesting (conversion) for any reason other than death, disability or retirement (in which case the units would immediately vest). However, Mr. Poussot’s units do not vest upon retirement and accordingly would be subject to forfeiture to the extent not vested on his retirement date. Recipients of RSUs are not entitled to vote or receive dividends with respect to those units unless and until the units vest and convert to shares of common stock. The market value of these RSUs was computed based on a per unit value of $37.51, the closing market price of our common stock on the NYSE on December 31, 2008. |
Option Awards | Stock Awards | |||||||||||||||
Number | Number | |||||||||||||||
of Shares Acquired | Value Realized on | of Shares Acquired | Value Realized | |||||||||||||
on Exercise | Exercise | on Vesting(1)(2) | on Vesting(2)(3) | |||||||||||||
Name | (#) | ($) | (#) | ($) | ||||||||||||
Bernard Poussot | — | — | 108,800 | $ | 4,476,032 | |||||||||||
Gregory Norden | — | — | 31,890 | $ | 1,329,730 | |||||||||||
Joseph M. Mahady | — | — | 51,680 | $ | 2,126,115 | |||||||||||
Lawrence V. Stein | — | — | 37,400 | $ | 1,538,636 | |||||||||||
Mikael Dolsten, M.D., Ph.D. | — | — | — | — | ||||||||||||
Robert Essner | — | — | 231,200 | $ | 9,511,568 | |||||||||||
Robert R. Ruffolo, Jr., Ph.D. | — | — | 55,760 | $ | 2,293,966 |
(1) | Represents, or in the case of Mr. Norden includes, shares received upon conversion of performance share unit awards based on performance completed in 2008. As described under “— Compensation Discussion and Analysis,” in early 2009, the Compensation Committee determined that Wyeth achieved EPS, as adjusted, of $3.68 per share (exclusive of equity-based compensation and charges related to our productivity initiatives) and a total stockholder return ranking against our peers in the middle tier, such that these units were converted at 136% of the applicable target awards granted in 2006. For Mr. Norden, this |
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column also includes 4,690 RSUs awarded in April 2005, prior to his promotion to Senior Vice President and Chief Financial Officer that converted to shares of common stock on the April 21, 2008 vesting date. | ||
(2) | Does not include shares received at 116.8% of the applicable target award upon conversion of performance share unit awards granted in 2005 based upon the 2007 performance year, which the Compensation Committee approved on February 28, 2008, based on its determination that Wyeth exceeded the EPS target set by the Compensation Committee for the 2007 performance year. These shares are not included because they were earned based on performance completed prior to January 1, 2008 and were reported in the applicable tables in the proxy statement for our 2008 Annual Meeting of Stockholders. | |
(3) | Value realized upon vesting of these awards is based on the closing price of our common stock on the trading day immediately preceding the date of conversion. For the conversion of the 2006 performance share unit awards that was approved by the Compensation Committee on February 26, 2009 and converted into common stock upon filing of Wyeth’s Annual Report onForm 10-K for the year ended December 31, 2008, which was filed with the SEC on February 27, 2009, the closing price of Wyeth’s common stock on February 26, 2009 (the immediately preceding trading day) was $41.14. For conversion of the RSUs that were awarded to Mr. Norden in April 2005 and vested on April 21, 2008, the closing price of our common stock on the trading day immediately preceding the date of conversion was $44.93. |
• | Two percent multiplied by “final average annual pension earnings” multiplied by the number of years of credited service (up to 30 years), minus | |
• | A Social Security offset that is equal to 1/60th of the annual Primary Social Security Benefit multiplied by the number of years of credited service (up to 30 years). |
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• | Two percent multiplied by “final average annual pension earnings” multiplied by the number of years of credited service with three additional years of service added (maximum total credited service cannot exceed 30 years), minus | |
• | A Social Security offset equal to 1/60th of the annual Primary Social Security Benefit multiplied by the number of years of credited service with three additional years added (maximum total credited service cannot exceed 30 years), minus | |
• | Any benefits paid under the Wyeth Retirement Plan — U.S., the Supplemental Executive Retirement Plan and any Wyeth foreign pension plan. |
• | the executive has an annual base salary of $430,000 or greater (in 2008) and $440,000 or greater (beginning in 2009), which threshold may be adjusted upward annually; | |
• | the executive is a member of the Wyeth Management Committee (the Wyeth board of directors approves Wyeth Management Committee members); or |
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• | the executive is selected by the Chief Executive Officer for inclusion in the Executive Retirement Plan and approved by the Wyeth board of directors. |
Present | ||||||||||||||
Value of | Payments | |||||||||||||
Number of Years of | Accumulated | During Last | ||||||||||||
Credited Service(1) | Benefits | Fiscal Year | ||||||||||||
Name | Plan Name | (#) | ($) | ($) | ||||||||||
Bernard Poussot | Wyeth Retirement Plan — U.S. | 17.9 | $ | 700,893 | — | |||||||||
Supplemental Executive Retirement Plan | 17.9 | 7,864,375 | — | |||||||||||
Executive Retirement Plan | 25.3 | 7,823,305 | — | |||||||||||
Total | $ | 16,388,573 | — | |||||||||||
Gregory Norden | Wyeth Retirement Plan — U.S. | 19.5 | $ | 539,973 | — | |||||||||
Supplemental Executive Retirement Plan | 19.5 | 2,087,186 | — | |||||||||||
Executive Retirement Plan | 22.5 | 1,378,286 | — | |||||||||||
Total | $ | 4,005,445 | — | |||||||||||
Joseph M. Mahady | Wyeth Retirement Plan — U.S. | 29.6 | $ | 1,072,845 | — | |||||||||
Supplemental Executive Retirement Plan | 29.6 | 7,608,874 | — | |||||||||||
Executive Retirement Plan | 30.0 | 2,616,324 | — | |||||||||||
Total | $ | 11,298,043 | — | |||||||||||
Lawrence V. Stein | Wyeth Retirement Plan — U.S. | 16.1 | $ | 707,282 | — | |||||||||
Supplemental Executive Retirement Plan | 16.1 | 4,286,784 | — | |||||||||||
Executive Retirement Plan | 19.1 | 2,734,540 | — | |||||||||||
Total | $ | 7,728,606 | — |
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Present | ||||||||||||||
Value of | Payments | |||||||||||||
Number of Years of | Accumulated | During Last | ||||||||||||
Credited Service(1) | Benefits | Fiscal Year | ||||||||||||
Name | Plan Name | (#) | ($) | ($) | ||||||||||
Mikael Dolsten, M.D., Ph.D. | Wyeth Retirement Plan — U.S. | 0.5 | — | — | ||||||||||
Supplemental Executive Retirement Plan | 0.5 | — | — | |||||||||||
Executive Retirement Plan | — | — | — | |||||||||||
Total | — | — | ||||||||||||
Robert Essner | Wyeth Retirement Plan — U.S. | 18.7 | — | $ | 929,298 | |||||||||
Supplemental Executive Retirement Plan | 18.7 | — | * | |||||||||||
Executive Retirement Plan | 21.7 | — | * | |||||||||||
Total | — | * | ||||||||||||
Robert R. Ruffolo, Jr., Ph.D. | Wyeth Retirement Plan — U.S. | 7.7 | — | $ | 253,035 | |||||||||
Supplemental Executive Retirement Plan | 7.7 | $ | 1,736,939 | — | ||||||||||
Executive Retirement Plan | 10.7 | 2,956,882 | — | |||||||||||
Total | $ | 4,693,821 | $ | 253,035 | * |
* | In accordance with the terms of the Supplemental Executive Retirement Plan and the Executive Retirement Plan, Mr. Essner elected to notionally roll over his entire accrued benefits (minus applicable employment taxes) under the Supplemental Executive Retirement Plan ($20,541,437) and the Executive Retirement Plan ($8,907,502) into the Deferred Compensation Plan. As a result of such notional rollover, Mr. Essner did not receive any payments from the Supplemental Executive Retirement Plan or the Executive Retirement Plan in 2008. In addition, Wyeth’s obligations to Mr. Essner under the Supplemental Executive Retirement Plan and the Executive Retirement Plan were extinguished. Based on the notional rollover election and in accordance with tax rules (including 409A), Mr. Essner became eligible to receive the amounts notionally rolled over (plus accrued interest) into the Deferred Compensation Plan as follows: as of the first quarter of 2009, $15,070,659 and as of July 1, 2009, $14,378,280 (minus applicable employment taxes). The amount Mr. Essner became eligible to receive in the first quarter of 2009 includes an increase in his accrued benefits under the Supplemental Executive Retirement Plan and the Executive Retirement Plan after December 31, 2008, as a result of the annual cash incentive award (i.e., cash bonus) he earned for 2008. See “— Non-Qualified Deferred Compensation” beginning on page 218. | |
Dr. Ruffolo, who retired effective August 1, 2008, elected to receive his Supplemental Executive Retirement Plan and Executive Retirement Plan accrued benefits in the form of a lump sum and did not elect to notionally roll over these benefits into any other Wyeth plan. Based on this election and in accordance with tax rules (including 409A), he became eligible to receive these benefits as of the first quarter of 2009 in the amounts of $1,850,802 and $3,058,748 (minus applicable employment taxes) from the Supplemental Executive Retirement Plan and the Executive Retirement Plan, respectively, plus accrued interest. | ||
Each of Mr. Essner and Dr. Ruffolo received a lump-sum payment under the Wyeth Retirement Plan — U.S. in the amounts shown in the column entitled “Payments During Last Fiscal Year” above in connection with his retirement. | ||
(1) | The number of years of credited service in the Executive Retirement Plan for Mr. Poussot includes the time that Mr. Poussot worked for an international affiliate of Wyeth. As discussed in detail in the narrative preceding this table, the Executive Retirement Plan grants each participant three additional years of service to a maximum of 30 years. | |
The present value of the accumulated benefits related to the three additional years of service credited (maximum total credited service cannot exceed 30 years) under the Executive Retirement Plan for Mr. Norden, Mr. Mahady, Mr. Stein and Dr. Ruffolo is $534,059, $156,930, $1,214,980 and $1,387,543, respectively. For Mr. Essner, the present value of the accumulated benefits related to the three additional years of service credited under the Executive Retirement Plan was $3,838,499. For Mr. Poussot, the present value of accumulated benefits related to the additional years of service credited under the Executive Retirement |
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Plan is $4,797,998, of which $1,940,755 is related to the three additional years of service and $2,857,243 is related to his 4.4 years of service with an international affiliate of Wyeth. |
Estimated | ||||
Name | Lump Sum as of January 1, 2009 | |||
Mr. Poussot | $ | 22,208,574 | ||
Mr. Mahady | $ | 14,869,316 | ||
Mr. Stein | $ | 8,279,968 |
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Executive | Registrant | Aggregate | Aggregate | |||||||||||||||||||
Contributions in | Contributions in | Earnings in | Aggregate | Balance at | ||||||||||||||||||
Last Fiscal | Last Fiscal | Last Fiscal | Withdrawals/ | Last Fiscal | ||||||||||||||||||
Year(1) | Year(2) | Year(3) | Distributions | Year-End(4) | ||||||||||||||||||
Name | Plan Name | ($) | ($) | ($) | ($) | ($) | ||||||||||||||||
Bernard Poussot | Deferred Compensation Plan | — | — | — | — | — | ||||||||||||||||
Supplemental Employee Savings Plan | $ | 75,826 | $ | 37,913 | $ | 37,554 | — | $ | 867,982 | |||||||||||||
Total | $ | 75,826 | $ | 37,913 | $ | 37,554 | — | $ | 867,982 | |||||||||||||
Gregory Norden | Deferred Compensation Plan | — | — | — | — | — | ||||||||||||||||
Supplemental Employee Savings Plan | $ | 34,150 | $ | 17,075 | $ | 8,981 | — | $ | 224,845 | |||||||||||||
Total | $ | 34,150 | $ | 17,075 | $ | 8,981 | — | $ | 224,845 | |||||||||||||
Joseph M. Mahady | Deferred Compensation Plan | — | — | $ | 8,946 | — | $ | 1,104,658 | ||||||||||||||
Supplemental Employee Savings Plan | $ | 43,700 | $ | 21,850 | (153,084 | ) | — | 360,214 | ||||||||||||||
Total | $ | 43,700 | $ | 21,850 | $ | (144,138 | ) | — | $ | 1,464,872 | ||||||||||||
Lawrence V. Stein | Deferred Compensation Plan | — | — | — | — | — | ||||||||||||||||
Supplemental Employee Savings Plan | $ | 31,299 | $ | 15,650 | $ | (106,438 | ) | — | $ | 260,675 | ||||||||||||
Total | $ | 31,299 | $ | 15,650 | $ | (106,438 | ) | — | $ | 260,675 | ||||||||||||
Mikael Dolsten, M.D., Ph.D. | Deferred Compensation Plan | — | — | — | — | — | ||||||||||||||||
Supplemental Employee Savings Plan | — | — | — | — | — | |||||||||||||||||
Total | — | — | — | — | — | |||||||||||||||||
Robert Essner | Deferred Compensation Plan | $ | 27,799,775 | (5) | — | $ | 922,393 | $ | 4,773,847 | $ | 28,535,716 | (6) | ||||||||||
Supplemental Employee Savings Plan | 42,376 | $ | 21,188 | 69,675 | — | 1,504,301 | ||||||||||||||||
Total | $ | 27,842,151 | $ | 21,188 | $ | 992,068 | $ | 4,773,847 | $ | 30,040,017 | ||||||||||||
Robert R. Ruffolo, Jr., Ph.D | Deferred Compensation Plan | — | — | — | — | — | ||||||||||||||||
Supplemental Employee Savings Plan | $ | 15,658 | $ | 7,829 | $ | 14,755 | — | $ | 324,304 | |||||||||||||
Total | $ | 15,658 | $ | 7,829 | $ | 14,755 | — | $ | 324,304 |
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(1) | Represents the aggregate amount of each named executive officer’s deferral contributions in 2008 as well as the notional rollover of Mr. Essner’s accrued benefit under certain of our pension plans. See notes 5 and 6 below. All of the Supplemental Employee Savings Plan contributions for 2008 are included as part of salary in the “— Summary Compensation Table.” Other than Mr. Essner’s notional rollover, none of our named executive officers elected to defer compensation into the Deferred Compensation Plan in 2008. See “— Pension Benefits” beginning on page 214. | |
(2) | Represents the aggregate amount of Wyeth’s contributions in 2008 to the Supplemental Employee Savings Plan on behalf of each named executive officer. These amounts are included as part of total compensation in the “— Summary Compensation Table” for 2008 under the column entitled “All Other Compensation.” | |
(3) | Represents the dollar amount of aggregate interest or other earnings/losses credited in 2008. | |
(4) | Represents account balances at December 31, 2008. Supplemental Employee Savings Plan balances as of December 31, 2008 were invested as follows: for Mr. Poussot (invested in Interest Income); for Mr. Norden (invested in Interest Income); for Mr. Mahady (invested in Spartan U.S. Equity Index and Wyeth Common Stock Fund); for Mr. Stein (invested in Interest Income, Fidelity International Discovery, Fidelity Magellan, Morgan Stanley Institutional Fund Trust Value — Advisor Class, Spartan U.S. Equity Index and Wyeth Common Stock Fund); for Mr. Essner (invested in Interest Income) and for Dr. Ruffolo (invested in Interest Income). Deferred Compensation Plan balances as of December 31, 2008 were invested as follows: for Mr. Mahady (invested in the Balanced Portfolio, the International Portfolio, the Small Cap Value Portfolio and the Market Interest Option) and for Mr. Essner (invested in the Market Interest Option). Of these account balances, the following amounts were reported to the named executive officer in the “— Summary Compensation Table” for 2006, 2007 and 2008 as salary and all other compensation: for Mr. Poussot, $255,258, for Mr. Norden, $83,448, for Mr. Mahady, $158,955, for Mr. Essner, $328,659 and for Dr. Ruffolo, $116,916. In addition, of these account balances, $46,949 was reported to Mr. Stein in the “— Summary Compensation Table” for 2008 as salary and all other compensation. See notes 1 and 2 above for additional information regarding amounts reported as compensation in the “— Summary Compensation Table” in 2008 beginning on page 203. | |
(5) | Represents Mr. Essner’s notional rollover of his accrued benefit under the Supplemental Executive Retirement Plan and the Executive Retirement Plan in the aggregate amount of $28,398,149 (minus applicable employment taxes) to the Deferred Compensation Plan in 2008 in connection with his retirement. An additional aggregate amount of $1,050,790 (minus any applicable employment taxes) under the Supplemental Executive Retirement Plan and the Executive Retirement Plan was notionally rolled over in the first quarter of 2009. This additional aggregate amount reflects the increase in Mr. Essner’s accrued benefits under these plans as a result of the annual cash incentive award (i.e., cash bonus) he earned for 2008. | |
(6) | Amounts include the $28,398,149 (exclusive of employment taxes) notionally rolled over from the Supplemental Executive Retirement Plan and the Executive Retirement Plan to the Deferred Compensation Plan, of which $14,019,869 (minus applicable employment taxes) was distributed in January 2009. |
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• | the acquisition of 20% or more of our voting securities by any person or persons acting in concert; | |
• | the consummation of any merger or business combination involving us, the sale or lease of our assets or any combination of the foregoing unless in any case our stockholders retain at least 65% of the resulting entity; or | |
• | the replacement of a majority of our directors (or their designees) during a two-year period. |
• | On the date of termination, the executive would be given three additional years of credit for age and service for purposes of calculating the pension benefit to which he or she is entitled under our Wyeth |
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Retirement Plan — U.S., Supplemental Executive Retirement Plan and, if applicable, Executive Retirement Plan and assuming, in calculating the benefit, that the executive earned annually during the three additional years of service, the same compensation (base salary and bonus) the executive earned in the 12 months preceding the termination date or, if greater, in the 12 months preceding the change in control. Further, this benefit would be determined without any reduction for the receipt of benefits prior to the normal retirement age of 65 or age 60, as applicable, provided that this eligibility for an unreduced pension payable at age 55 is achieved only if, at the executive’s termination, the sum of the executive’s age and years of service equals or exceeds 60, after adding three years to both service and age. All of our named executive officers other than Dr. Dolsten would be eligible for the unreduced pension, in all cases commencing not earlier than age 55. |
• | If, at the time of termination, either (1) the executive is age 50 or older on the termination date, or (2) the sum of the executive’s age and years of service equals or exceeds 60, after adding three years to both service and age, the executive would be entitled to retiree medical coverage. Retiree medical coverage begins after the completion of the executive’s three years of benefit continuation described below. All of our named executive officers are over age 50. | |
• | For three years from the date of termination, the executive would be given continued coverage under our health and welfare benefit plans (but excluding our disability plans) in which the executive was participating immediately prior to the termination. However, if welfare benefits are provided by a subsequent employer, our obligation to provide those benefits would terminate. | |
• | The executive would be entitled to a one-time cash payment equal to $60,000, in lieu of the continuation of any fringe benefits. | |
• | The executive would be provided with outplacement or executive recruiting services at a cost to us of no more than 10% of the executive’s base salary (but in no event exceeding $25,000) and payment by us of all legal fees and expenses reasonably incurred by the executive, if any, in enforcing the agreement. Because legal fees are purely speculative, these fees have not been displayed in the “Estimated Values of Post-Termination Payments and Other Benefits under the 2006 Change in Control Severance Agreements” table following this discussion. |
• | the cashout value (as defined in the agreements) of all the shares covered by the RSUs forfeited (with units converted to shares based on the target awards); and | |
• | the excess of (a) the cashout value of all the shares subject to stock options that were forfeited over (b) the aggregate exercise price of the shares subject to the forfeited stock options. |
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Termination | ||||||||||||||||||||||||
Year Cash | Incremental | |||||||||||||||||||||||
Incentive | Incremental | Health and | ||||||||||||||||||||||
Cash | Award (i.e., | Pension | Welfare | |||||||||||||||||||||
Name | Severance | Bonus) | Benefits | Benefits | Perquisites | Total | ||||||||||||||||||
Bernard Poussot | $ | 9,310,000 | $ | 1,653,333 | $ | 12,932,574 | $ | 7,872 | $ | 85,000 | $ | 23,988,779 | ||||||||||||
Gregory Norden | $ | 3,925,100 | $ | 538,367 | $ | 8,044,659 | $ | 225,322 | $ | 85,000 | $ | 12,818,448 | ||||||||||||
Joseph M. Mahady | $ | 5,690,300 | $ | 971,767 | $ | 5,601,159 | $ | 6,390 | $ | 85,000 | $ | 12,354,616 | ||||||||||||
Lawrence V. Stein | $ | 4,850,160 | $ | 892,500 | $ | 2,312,578 | $ | 4,284 | $ | 85,000 | $ | 8,144,522 | ||||||||||||
Mikael Dolsten, M.D., Ph.D. | $ | 4,500,000 | $ | 750,000 | $ | 496,838 | $ | 225,193 | $ | 85,000 | $ | 6,057,031 |
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Robert M. Amen
Victor F. Ganzi
Gary L. Rogers
John R. Torell III
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CORPORATE GOVERNANCE MATTERS
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Q: | Is the Wyeth board of directors comprised of a majority of independent directors? | |
A: | Yes. The Wyeth board of directors currently consists entirely of non-employee directors, other than Mr. Poussot. In fact, we consider the Wyeth board of directors’ independence to be one of its great strengths. For the past several years, the individual or individuals serving as the Chairman and Chief Executive Officer and/or President have been theonlymember(s) of management on the Wyeth board of directors. | |
TheGovernance Guidelinesadopted by the Wyeth board of directors contain standards of independence that meet or exceed the NYSE Corporate Governance Standards. These independence standards are set out in detail in Section II.b. of theGovernance Guidelinesavailable on the Corporate Governance section of our Internet Web site atwww.wyeth.com. | ||
Pursuant to these Guidelines and the categorical standards of independence that they set forth, the Wyeth board of directors reviewed the independence of each of its directors in February 2009, taking into account potential conflicts of interest, transactions or other relationships that would reasonably be expected to potentially compromise any of the director’s independence. As a result of this review, the Wyeth board of directors, based on the recommendation of the Nominating and Governance Committee, affirmatively determined that all of Wyeth’s directors are independent of Wyeth and its management under the standards set forth in theGovernance Guidelines, with the exception of Mr. Poussot, who is not independent because of his employment as our Chairman, President and Chief Executive Officer. | ||
Q: | What committees of the Wyeth board of directors are comprised of a majority of independent directors? | |
A: | Since their inception, the Audit Committee, the Compensation Committee, the Corporate Issues Committee, and the Science and Technology Committee have been comprised only of independent directors, as determined under applicable NYSE Corporate Governance Standards. The Nominating and Governance Committee also is currently, and has been for the past eleven years, comprised only of independent directors, as determined under applicable NYSE Corporate Governance Standards and theGovernance Guidelines. | |
Q: | Are any of Wyeth’s management directors part of “interlocking” relationships? | |
A: | No. Mr. Poussot is currently the only member of management on the Wyeth board of directors, and he is not on the board of directors of any companies that either employ an executive who sits on the Wyeth board of directors or include on its board another member of the Wyeth board of directors. | |
Q: | What happens when one of Wyeth’s non-employee directors accepts a new directorship or changes professions? | |
A: | Under Wyeth’s protocols and procedures for the review of potential conflicts of interest, any new directorship or other significant affiliation involving another entity and one of our directors is reviewed for its impact on the director’s independence. According to theGovernance Guidelines, a non-employee director must offer not to stand for re-election following a change in primary profession or employment. The Nominating and Governance Committee then makes a recommendation to the Wyeth board of directors whether to accept or reject that offer as appropriate under the circumstances. |
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Q: | Does Wyeth require regular meetings of its non-employee directors and/or have a lead independent director? | |
A: | Yes.Regular executive sessions of the non-employee directors are required under theGovernance Guidelines. Executive sessions of the non-employee directors, who also are all independent directors, were held at every regularly scheduled Wyeth board of directors meeting in 2008. In 2008 and early 2009, the Chairman of each respective standing committee on a rotating basis chaired the executive sessions of the non-employee directors in keeping with prior practice. As indicated above, following the selection of a lead director by the Wyeth board of directors from among the non-management directors at its first meeting following the annual meeting, the lead director will chair these executive sessions. | |
Q: | What sort of financial expertise do the members of Wyeth’s Audit Committee have? | |
A: | All of our Audit Committee members meet the current NYSE listing standards for both independence and financial literacy. The Wyeth board of directors has designated three members of our Audit Committee to be “audit committee financial experts” as defined by the SEC. | |
Q: | On how many audit committees of public companies may a Wyeth director simultaneously serve? | |
A: | Pursuant to theGovernance Guidelines, a member of the Audit Committee may not simultaneously serve on the audit committee of more than three public companies. | |
Q: | Are committees of the Wyeth board of directors authorized to independently engage outside advisors? | |
A: | Yes.The committees of the Wyeth board of directors are authorized to seek outside counsel and expert advice. Two committees, the Compensation Committee and the Nominating and Governance Committee, hired and actively consulted with independent consulting firms in 2008. In addition, the Audit Committee retains the independent registered public accountants of Wyeth, subject to ratification by Wyeth’s stockholders. | |
Q: | Does Wyeth have a director education policy? | |
A: | The Nominating and Governance Committee has identified several director education programs, accredited by a corporate governance rating agency and sponsored by prominent institutions, from which new directors must choose at least one program to attend. Other directors are also invited to attend director education programs to learn about new fields related to board service. | |
Q: | Does Wyeth have a policy regarding director attendance at meetings of the Wyeth board of directors and its committees? | |
A: | Although Wyeth has no formal meeting attendance policy, it is the expectation of the Chairman that all members of the Wyeth board of directors attend every Wyeth board meeting and the meetings of the committees on which they sit, unless special circumstances require that they be excused. Such circumstances are ordinarily discussed with the Chairman in advance of an unattended meeting. | |
Q: | Did all directors attend last year’s Annual Meeting of Stockholders? | |
A: | All directors then serving on the Wyeth board of directors attended last year’s Annual Meeting of Stockholders, with the exception of one director who had been excused due to illness. | |
Q: | What is the procedure for a stockholder to submit the name of a candidate for consideration as a potential nominee to the Wyeth board of directors? | |
A: | In accordance with our bylaws, the name and qualifications of the potential candidate should be submitted to the Corporate Secretary of Wyeth. The Nominating and Governance Committee then considers the qualifications of the potential candidate at its next regularly scheduled meeting in accordance with the Nominating and Governance Committee’sCriteria and Procedures for Board Candidate Selection. When an executive search firm is under contract, potential candidates are reviewed by the search firm under the set of specifications being used for the search. |
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Q: | Are the charters of any of the committees of the Wyeth board of directors publicly available? | |
A: | Yes.The charters of each of the Audit, Compensation, Corporate Issues, Science and Technology and Nominating and Governance Committee are available on the Corporate Governance section of our Internet Web site atwww.wyeth.com. As required by the charters, we evaluate each of these charters on an annual basis. | |
Q: | Does Wyeth have an Ethics Code? | |
A: | Yes.TheWyeth Code of Conduct, which has been in existence for many years, was revised in 2007 in accordance with SEC regulations and the NYSE Corporate Governance Rules, in addition to other considerations, and is available on the Wyeth Internet Web site atwww.wyeth.com.Worldwide training on theWyeth Code of Conduct, and its application to the business lives of all employees, is on-going using custom designed educational tools. TheWyeth Code of Conductapplies to all of our directors and executive officers, as well as all of our employees. TheWyeth Code of Conductincludes a code of ethics that applies to our senior financial officers and our Chief Executive Officer. It is designed to assure honest and ethical conduct, avoidance of conflicts of interest, good public disclosure and full compliance with applicable laws and regulations. | |
Q: | Does Wyeth have a way for stockholders to report concerns they may have regarding accounting matters directly to the Audit Committee? | |
A: | Yes.If any party has concerns about accounting, internal accounting controls or audit matters, he or she can write directly to the Audit Committee of the Wyeth board of directors at a P.O. Box of the Audit Committee located in New York City. The address is available in the Corporate Governance section of our Internet Web site atwww.wyeth.com. The Audit Committee Chairman receives all such communication, unopened, and responds or directs the response as he deems appropriate. The full Audit Committee reviews the treatment and status of all such communications at each Audit Committee meeting. | |
Q: | Does Wyeth have a way for parties to directly contact the Wyeth board of directors or our non-employee directors? | |
A: | Yes.If any party wishes to directly contact the Wyeth board of directors or the non-employee members of the Wyeth board of directors, he or she can write directly to the Wyeth board of directors at a P.O. Box of the Wyeth board of directors located in New York City. The address is available in the Corporate Governance section of our Internet Web site atwww.wyeth.com. All such communication, other than advertising circulars, solicitations and advertisements, is forwarded to the party to whom it is addressed. | |
Q: | Does Wyeth have stock ownership guidelines for its executive officers? | |
A: | Yes.Wyeth has stock ownership guidelines for executive officers and other key U.S. employees in order to promote equity ownership and further align the interests of management with Wyeth’s stockholders. The Chief Executive Officer has a share ownership guideline with a value of at least eight times his base salary, officers who report directly to the Chief Executive Officer have a share ownership guideline with a value of at least six times base salary and other employees who are members of the Management, Law/Regulatory Review, Human Resources, Benefits and Compensation, and Operations Committees have a share ownership guideline with a value of at least four times base salary. Additional information regarding these stock ownership guidelines is included in the section entitled “Executive Compensation — Compensation Discussion and Analysis” in this proxy statement/prospectus. |
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Q: | Does Wyeth have stock ownership guidelines for its non-employee directors? | |
A: | Yes.Each non-employee director is required to hold at least five times the value of the annual cash board service retainer in Wyeth stock and/or equivalent units. Directors are given five years to attain this ownership threshold. |
Robert Langer, Sc.D.
John P. Mascotte
Raymond J. McGuire
Mary Lake Polan, M.D., Ph.D., M.P.H.
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POLITICAL CONTRIBUTIONS AND TRADE ASSOCIATION PAYMENTS
1. | Policies and procedures for political contributions and expenditures (both direct and indirect) made with corporate funds. | |
2. | Monetary and non-monetary political contributions and expenditures not deductible under section 162 (e)(1)(B) of the Internal Revenue Code, including but not limited to contributions to or expenditures on behalf of political candidates, political parties, political committees and other political entities organized and operating under 26 USC Sec. 527 of the Internal Revenue Code and any portion of any dues or similar payments made to any tax exempt organization that is used for an expenditure or contribution if made directly by the corporation would not be deductible under section 162 (e)(1)(B) of the Internal Revenue Code. The report shall include the following: |
a. | An accounting of the Company’s funds that are used for political contributions or expenditures as described above; | |
b. | Identification of the person or persons in the Company who participated in making the decisions to make the political contribution or expenditure; and | |
c. | The internal guidelines or policies, if any, governing the Company’s political contributions and expenditures. |
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Entergy (ETR) | 55% | Emil Rossi (Sponsor) | ||
International Business Machines (IBM) | 56% | Emil Rossi | ||
Merck (MRK) | 57% | William Steiner | ||
Kimberly-Clark (KMB) | 61% | Chris Rossi | ||
Occidental Petroleum (OXY) | 66% | Emil Rossi | ||
FirstEnergy Corp. (FE) | 67% | Chris Rossi | ||
Marathon Oil (MRO) | 69% | Nick Rossi |
• | Gary Rogers was on the W.W. Grainger executive pay committee. Grainger was rated “D” in governance and “High Concern” in executive pay by The Corporate Library. | |
• | Robert Amen was the CEO of a creator and manufacturer of flavors and fragrances. |
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• | Victor Ganzi was designated as an “Accelerated Vesting” director by The Corporate Library due to his involvement with accelerating stock option vesting to avoid recognizing the corresponding expense. |
Frances Daly Fergusson | Mattel, Inc. (MAT) | |
Robert Langer | Momenta Pharmaceuticals (MNTA) | |
Gary Rogers | W. W. Grainger (GWW) | |
Michael Critelli | Eaton (ETN) |
• | We did not have an Independent Chairman or Lead Director — Independence concern. | |
• | No shareholder right to cumulative voting. | |
• | No shareholder right to act by written consent. |
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Pfizer SEC Filings | ||
(SEC File No. 001-3619; CIK No. 0000078003) | Period or Date Filed | |
Annual Report onForm 10-K | Year ended December 31, 2008 | |
Quarterly Report on Form10-Q | Quarter ended March 29, 2009 | |
Current Reports onForm 8-K | Filed January 14, 2009, January 26, 2009, January 29, 2009, February 20, 2009, March 12, 2009, March 13, 2009, April 7, 2009, April 27, 2009, April 28, 2009 and June 3, 2009 | |
The description of Pfizer common stock set forth in a registration statement filed pursuant to Section 12 of the Exchange Act and any amendment or report filed for the purpose of updating those descriptions. |
Wyeth SEC Filings | ||
(SEC File No. 001-1225; CIK No. 0000005187) | Period or Date Filed | |
Annual Report onForm 10-K and Form 10-K/A | Year ended December 31, 2008 | |
Quarterly Report on Form10-Q | Quarter ended March 31, 2009 | |
Current Reports onForm 8-K | Filed January 26, 2009, January 29, 2009 and April 23, 2009 |
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Pfizer Inc. | Wyeth | |
Pfizer Inc. 235 East 42nd Street New York, New York 10017 Attention: Investor Relations Telephone: 1-212-573-2323 | Wyeth Five Giralda Farms Madison, New Jersey 07940 Attention: Investor Relations Telephone: 1-877-552-4744 |
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among
PFIZER INC.,
WAGNER ACQUISITION CORP.
and
WYETH
Dated as of January 25, 2009
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ARTICLE I THE MERGER | ||||||
Section 1.1 | The Merger | A-1 | ||||
Section 1.2 | Closing | A-1 | ||||
Section 1.3 | Effective Time | A-1 | ||||
Section 1.4 | Effects of the Merger | A-1 | ||||
Section 1.5 | Bylaws | A-2 | ||||
Section 1.6 | Certificate of Incorporation | A-2 | ||||
Section 1.7 | Officers and Directors | A-2 | ||||
Section 1.8 | Effect on Capital Stock | A-2 | ||||
Section 1.9 | Company Stock Options and Other Equity-Based Awards | A-3 | ||||
Section 1.10 | Certain Adjustments | A-6 | ||||
Section 1.11 | Appraisal Rights | A-6 | ||||
ARTICLE II EXCHANGE OF SHARES | ||||||
Section 2.1 | Exchange Agent | A-6 | ||||
Section 2.2 | Exchange Procedures | A-6 | ||||
Section 2.3 | Distributions with Respect to Unexchanged Shares | A-7 | ||||
Section 2.4 | No Further Ownership Rights | A-8 | ||||
Section 2.5 | No Fractional Shares of Parent Common Stock | A-8 | ||||
Section 2.6 | Termination of Exchange Fund | A-8 | ||||
Section 2.7 | No Liability | A-8 | ||||
Section 2.8 | Investment of the Exchange Fund | A-8 | ||||
Section 2.9 | Lost Certificates | A-9 | ||||
Section 2.10 | Withholding Rights | A-9 | ||||
Section 2.11 | Further Assurances | A-9 | ||||
Section 2.12 | Stock Transfer Books | A-9 | ||||
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY | ||||||
Section 3.1 | Organization, Good Standing and Qualification | A-10 | ||||
Section 3.2 | Capital Structure | A-10 | ||||
Section 3.3 | Corporate Authority | A-12 | ||||
Section 3.4 | Governmental Filings; No Violations, Etc. | A-12 | ||||
Section 3.5 | Company Reports; Financial Statements | A-13 | ||||
Section 3.6 | Absence of Certain Changes | A-14 | ||||
Section 3.7 | Litigation | A-14 | ||||
Section 3.8 | Compliance with Laws | A-15 | ||||
Section 3.9 | Properties | A-15 | ||||
Section 3.10 | Contracts | A-15 | ||||
Section 3.11 | Employee Benefit Plans | A-16 | ||||
Section 3.12 | Labor Matters | A-18 | ||||
Section 3.13 | Tax | A-18 | ||||
Section 3.14 | Intellectual Property | A-19 |
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Section 3.15 | Environmental Matters | A-19 | ||||
Section 3.16 | Insurance | A-20 | ||||
Section 3.17 | Regulatory Compliance | A-21 | ||||
Section 3.18 | Interested Party Transactions | A-21 | ||||
Section 3.19 | Brokers and Finders | A-21 | ||||
Section 3.20 | No Additional Representations | A-22 | ||||
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB | ||||||
Section 4.1 | Organization, Good Standing and Qualification | A-22 | ||||
Section 4.2 | Capital Structure | A-23 | ||||
Section 4.3 | Corporate Authority | A-24 | ||||
Section 4.4 | Governmental Filings; No Violations; Etc. | A-24 | ||||
Section 4.5 | Parent Reports; Financial Statements | A-25 | ||||
Section 4.6 | Litigation | A-26 | ||||
Section 4.7 | Brokers and Finders | A-26 | ||||
Section 4.8 | No Business Activities | A-26 | ||||
Section 4.9 | Board Approval | A-26 | ||||
Section 4.10 | Vote Required | A-26 | ||||
Section 4.11 | Financing | A-26 | ||||
Section 4.12 | Absence of Certain Changes | A-27 | ||||
Section 4.13 | Compliance with Laws | A-27 | ||||
Section 4.14 | Certain Agreements | A-27 | ||||
Section 4.15 | Tax | A-28 | ||||
Section 4.16 | Intellectual Property | A-28 | ||||
Section 4.17 | Regulatory Compliance | A-28 | ||||
Section 4.18 | No Additional Representations | A-29 | ||||
ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS | ||||||
Section 5.1 | Ordinary Course | A-30 | ||||
Section 5.2 | Governmental Filings | A-34 | ||||
Section 5.3 | Restrictions on Parent | A-34 | ||||
ARTICLE VI ADDITIONAL AGREEMENTS | ||||||
Section 6.1 | Preparation of Proxy Statement; Stockholders Meeting | A-35 | ||||
Section 6.2 | Access to Information/Employees | A-37 | ||||
Section 6.3 | Reasonable Best Efforts | A-37 | ||||
Section 6.4 | Acquisition Proposals | A-39 | ||||
Section 6.5 | Employee Benefits Matters | A-41 | ||||
Section 6.6 | Fees and Expenses | A-43 | ||||
Section 6.7 | Directors’ and Officers’ Indemnification and Insurance | A-43 | ||||
Section 6.8 | Public Announcements | A-45 | ||||
Section 6.9 | Listing of Shares of Parent Common Stock and Parent Convertible Preferred Stock | A-45 | ||||
Section 6.10 | Dividends | A-45 |
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Section 6.11 | Section 16 Matters | A-45 | ||||
Section 6.12 | Company Cooperation on Certain Matters | A-45 | ||||
Section 6.13 | Financing Cooperation | A-46 | ||||
Section 6.14 | Convertible Debentures and Company Convertible Preferred Stock | A-48 | ||||
Section 6.15 | Board Representation | A-48 | ||||
ARTICLE VII CONDITIONS PRECEDENT | ||||||
Section 7.1 | Conditions to Each Party’s Obligation to Effect the Merger | A-48 | ||||
Section 7.2 | Additional Conditions to Obligations of Parent and Merger Sub | A-49 | ||||
Section 7.3 | Additional Conditions to Obligations of the Company | A-50 | ||||
ARTICLE VIII TERMINATION AND AMENDMENT | ||||||
Section 8.1 | General | A-50 | ||||
Section 8.2 | Obligations in Event of Termination | A-52 | ||||
Section 8.3 | Amendment | A-54 | ||||
Section 8.4 | Extension; Waiver | A-54 | ||||
ARTICLE IX GENERAL PROVISIONS | ||||||
Section 9.1 | Non-Survival of Representations, Warranties and Agreements | A-54 | ||||
Section 9.2 | Notices | A-54 | ||||
Section 9.3 | Headings | A-55 | ||||
Section 9.4 | Counterparts | A-55 | ||||
Section 9.5 | Entire Agreement; No Third-Party Beneficiaries | A-56 | ||||
Section 9.6 | Governing Law | A-56 | ||||
Section 9.7 | Severability | A-56 | ||||
Section 9.8 | Assignment | A-56 | ||||
Section 9.9 | Submission to Jurisdiction; Waivers | A-56 | ||||
Section 9.10 | Specific Performance | A-57 | ||||
Section 9.11 | Waiver of Jury Trial | A-57 | ||||
Section 9.12 | Interpretation | A-57 | ||||
Section 9.13 | Definitions | A-57 | ||||
LIST OF EXHIBITS | ||||||
Exhibit | Title | |||||
A | Bylaws of the Surviving Corporation | |||||
B | Certificate of Incorporation of the Surviving Corporation |
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Attention: | Dennis J. Block, Esq. |
Attention: | Casey Cogut |
Attention: | Adam O. Emmerich |
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By: | /s/ Jeffrey B. Kindler |
Title: | Chairman and Chief Executive Officer |
By: | /s/ David R. Reid |
Title: | Senior Vice President and Managing Director |
By: | /s/ Bernard Poussot |
Title: | Chairman, President and Chief Executive Officer |
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1994 Plan | A-5 | |
409A Deferred RSUs | A-4 | |
409A RSU Consideration | A-4 | |
409A RSUs | A-4 | |
Acquisition Proposal | A-41 | |
Actions | A-4 | |
Affiliate | A-57 | |
Agreement | A-1 | |
Alternative Acquisition Agreement | A-40 | |
Bankruptcy and Equity Exception | A-12 | |
Benefits Continuation Period | A-41 | |
Board of Directors | A-57 | |
Book-Entry Shares | A-3 | |
Business Day | A-57 | |
Capitalization Date | A-10 | |
Cash Consideration | A-2 | |
Cash Value of the Stock Consideration | A-57 | |
Certificate of Merger | A-1 | |
Certificates | A-3 | |
Change | A-36 | |
Change in the Company Recommendation | A-36 | |
CIC Severance Agreements | A-43 | |
Closing | A-1 | |
Closing Date | A-1 | |
Code | A-57 | |
Commitment Letter | A-27 | |
Common Book-Entry Shares | A-3 | |
Common Certificates | A-3 | |
Common Stock Merger Consideration | A-2 | |
Company | A-1 | |
Company Benefit Plan | A-16 | |
Company Common Stock | A-2 | |
Company Convertible Preferred Stock | A-2 | |
Company Deferred Equity Unit Plans | A-5 | |
Company Disclosure Letter | A-10 | |
Company Employees | A-32 | |
Company Financial Advisors | A-21 | |
Company Financial Statements | A-13 | |
Company Material Adverse Effect | A-57 | |
Company Material Contracts | A-16 | |
Company Permits | A-21 | |
Company Product | A-58 | |
Company Recommendation | A-36 |
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Company Regulatory Agency | A-21 | |
Company Requisite Vote | A-12 | |
Company SEC Documents | A-13 | |
Company Stock Options | A-3 | |
Company Stock Plan | A-58 | |
Company Stockholder Meeting | A-36 | |
Company Voting Debt | A-11 | |
Confidentiality Agreement | A-58 | |
Contracts | A-58 | |
Convertible Debenture Indenture | A-48 | |
Convertible Debentures | A-2 | |
Covered Employees | A-41 | |
D&O Insurance | A-44 | |
Deferred Equity Unit Amount | A-5 | |
Deferred Payment Terms | A-4 | |
Deferred RSU Shares | A-4 | |
DGCL | A-1 | |
Director Deferral Amount | A-5 | |
Director Deferral Plan | A-4 | |
Director DSU Plans | A-4 | |
DOJ | A-38 | |
DSU | A-4 | |
DSU Consideration | A-4 | |
EC Merger Regulation | A-61 | |
Effective Time | A-1 | |
Election Notice | A-58 | |
Environmental Laws | A-58 | |
Environmental Permit | A-59 | |
Equity Interest | A-59 | |
ERISA | A-16 | |
ERISA Affiliate | A-16 | |
Excess Shares | A-43 | |
Exchange Act | A-12 | |
Exchange Agent | A-6 | |
Exchange Fund | A-6 | |
Exchange Ratio | A-2 | |
Exchange Ratio Reduction Number | A-2 | |
Expenses | A-59 | |
FDA | A-21 | |
FDCA | A-21 | |
Financing | A-27 | |
Foreign Benefit Plans | A-16 | |
Form S-4 | A-35 | |
FTC | A-38 |
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GAAP | A-59 | |
Governmental Entity | A-12 | |
Grandfathered Amounts | A-5 | |
Grantor Trust | A-4 | |
Hazardous Material | A-59 | |
HSR Act | A-12 | |
Indemnified Parties | A-43 | |
Initial Termination Date | A-50 | |
Inquiry | A-40 | |
Insurance Policies | A-20 | |
Intellectual Property | A-19 | |
Intervening Event | A-59 | |
IRS | A-17 | |
Knowledge | A-59 | |
Known | A-59 | |
Law | A-59 | |
Leased Real Property | A-15 | |
Lien | A-59 | |
Market Rate | A-4 | |
Maximum Share Number | A-2 | |
Merger | A-1 | |
Merger Consideration | A-3 | |
Merger Sub | A-1 | |
MIP | A-5 | |
New Benefit Plans | A-42 | |
NYSE | A-12 | |
Option Consideration | A-3 | |
Options | A-3 | |
Order | A-59 | |
other party | A-59 | |
Owned Real Property | A-15 | |
Parent | A-1 | |
Parent Benefit Plans | A-23 | |
Parent Common Stock | A-2 | |
Parent Convertible Preferred Stock | A-2 | |
Parent Disclosure Letter | A-22 | |
Parent Financial Advisors | A-26 | |
Parent Financial Statements | A-25 | |
Parent Material Adverse Effect | A-60 | |
Parent Permits | A-29 | |
Parent Product | A-60 | |
Parent Regulatory Agency | A-29 | |
Parent SEC Documents | A-25 | |
Parent Share Cash Value | A-60 |
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parties | A-1 | |
PBGC | A-17 | |
Per Share Amount | A-60 | |
Permitted Liens | A-60 | |
Person | A-60 | |
PHSA | A-21 | |
Preferred Book-Entry Shares | A-3 | |
Preferred Certificates | A-3 | |
Preferred Stock Merger Consideration | A-3 | |
Proxy Statement | A-35 | |
Qualifying Amendment | A-61 | |
Reacquired Shares | A-43 | |
Regulatory Law | A-61 | |
Related Person | A-61 | |
Representative | A-61 | |
Restricted Stock | A-5 | |
Restricted Stock Consideration | A-5 | |
Reverse Termination Fee | A-53 | |
RSU | A-3 | |
RSU Consideration | A-3 | |
Sarbanes-Oxley Act | A-13 | |
Securities Act | A-11 | |
Significant Subsidiary | A-61 | |
Specified Financing Condition Termination | A-53 | |
Stock Consideration | A-2 | |
Stock Trust | A-4 | |
Subsidiary | A-61 | |
Superior Proposal | A-41 | |
Surviving Corporation | A-1 | |
Takeover Statute | A-12 | |
Tax Return | A-61 | |
Taxes | A-61 | |
Termination Date | A-51 | |
Third Party | A-61 | |
Tier I Termination Fee | A-52 | |
Tier II Termination Fee | A-53 | |
Vested Deferred RSU | A-4 | |
Vested Deferred RSU Consideration | A-4 | |
willful and material breach | A-52 | |
Wyeth 2005 (409A) DCP | A-4 |
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New York, New York 10036
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By: | /s/ Susan S. Huang |
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FOR
BOARD CANDIDATE SELECTION
FOR THE BOARD OF DIRECTORS
I. | Criteria for All Candidates |
• | Integrity and a commitment to ethical behavior. | |
• | Personal maturity and leadership skills in industry, education, the professions, or government. | |
• | Independence of thought and willingness to deal directly with difficult issues. | |
• | Fulfillment of the broadest definition of diversity, seeking diversity of thought. | |
• | Broad businessand/or professional experience, with an understanding of business and financial affairs, and the complexities of business organizations. |
II. | Criteria for a Portion of Candidates |
• | Scientific accomplishment in medicine or pharmaceuticals. | |
• | Management experience and expertise. | |
• | Financialand/or accounting expertise, generally, and as necessary to fulfill the financial requirements of the New York Stock Exchange and the Securities and Exchange Commission. | |
• | Experience in other regulated industries. | |
• | Business and other experience relevant to large public companies. |
• | Evaluate qualifications under Section I, and any specific needs under Section II, prior to commencement of the recruitment process. | |
• | Develop a selection process specific to a candidate search to be led by the Chairman of the Nominating and Governance Committee with the assistance of a search firm, if deemed appropriate by the Committee, to be identified and retained within the sole discretion of the Committee. |
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• | Receive recommendations from other existing members of the Board of Directors and other sources, including self-nominated candidates, and submit such potential candidates for review under the foregoing specific selection process. | |
• | Determine that a prospective candidate fulfills the independence requirements of the New York Stock Exchange, the Securities and Exchange Commission and the Internal Revenue Code, as applicable. | |
• | Review the education of the prospective candidate. | |
• | Evaluate the quality of experience and achievement of the prospective candidate. | |
• | Review the prospective candidate’s current or past membership on other boards. | |
• | Determine that the candidate has the ability, and the willingness, to spend the necessary time required to function effectively as a Director. | |
• | Determine that the candidate has a genuine interest in representing the stockholders and the interests of the Corporation overall. |
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