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AGREEMENT
THIS
AGREEMENT (this "Agreement"), dated as of December 18, 2006, is by
and between Pfizer Inc., a Delaware corporation (the "Company"),
and Henry A. McKinnell (the "Executive").
WHEREAS,
Executive serves on the Board of Directors of the Company ("Board")
and served as Chief Executive Officer of the Company pursuant to an
Employment Agreement by and between the Company and Executive dated
as of January 1, 2001 (the "Employment Agreement");
WHEREAS,
in connection with the succession plan of the Company, Executive
has resigned from his position as Chief Executive Officer of the
Company and from all other officer positions, if any, held by
Executive in the Company and each of its subsidiaries and from his
position on the Executive Committee of the Board all effective as
of July 31, 2006 (the "Resignation Date");
WHEREAS,
during his tenure as Chief Executive Officer, Executive made
distinct and valuable contributions to the Company and the Company
wishes to obtain his commitment to provide his knowledge and
experience for its benefit beyond the Resignation Date;
WHEREAS,
Executive has agreed to continue to serve on the Board until
February 28, 2007 and, by agreement with the Company, to remain as
an employee of the Company through such date (the "Termination
Date"); and
WHEREAS,
the Company and Executive desire to set forth the terms and
conditions of his continued employment by the Company from the
Resignation Date through the Termination Date and their respective
rights and obligations in respect of Executive’s resignation,
termination of his employment and retirement.
NOW,
THEREFORE, in consideration of the covenants and conditions set
forth herein and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties,
intending to be legally bound, agree as follows:
1.
Resignations . On the Resignation Date, Executive resigned
from his position as Chief Executive Officer of the Company and
from all other officer positions, if any, held by Executive in the
Company and each of its subsidiaries and from his position on the
Executive Committee of the Board. On the Termination Date,
Executive shall step down from his position on the Board and retire
from his employment with the Company and any and all other
positions with the Company, its subsidiaries and any other of its
affiliated entities (including, the Pfizer Foundation) that may be
held by Executive. On the date hereof, Executive has executed and
delivered to the Company a letter of resignation in the form of
Exhibit A hereto. On the Termination Date,
Executive shall execute and deliver to the Company a letter of
resignation in the form of Exhibit B hereto and a
release in the form of Exhibit C hereto (the
"Release").
2.
Terms of Continued Employment during Transition Period .
During the period from the Resignation Date through the Termination
Date (the "Transition Period"), Executive shall remain an employee
of the Company under the terms of this Agreement and, in such
capacity, shall perform duties during normal business hours
relating reasonably to the transition of his positions, shall
participate in external corporate activities for the benefit of the
Company and shall provide advice on such other matters,
commensurate with Executive’s position and seniority, as
reasonably requested by the Chief Executive Officer and the members
of the Board. During the Transition Period, the Company will (a)
continue to pay Executive his regular base salary in accordance
with the Company’s normal payroll practices and (b) Executive
will continue to be eligible to participate in the Company’s
employee benefit plans in which he participated immediately prior
to the Resignation Date (except that Executive shall not receive a
bonus in respect of the 2007 calendar year) and to receive the
protective services which were provided immediately prior to the
Resignation Date. During the Transition Period, Executive’s
principal office shall be located at a Company facility in New
York, New York and the Company shall provide reasonable secretarial
and facilities support.
3.
Continued Service on the Board . Executive shall continue to
serve on the Board, without additional compensation or
participation in any Board benefit or equity plan, until the
Termination Date.
4.
Compensation and Benefits payable after the Termination Date
. In satisfaction of the Company’s obligations under the
Employment Agreement (other than with respect to Section 10
thereof), Executive is entitled to the compensation and benefits
set forth in this Section 4, which shall be paid as provided in
this Section 4 and calculated as of the Resignation Date, except as
otherwise indicated. For purposes of this Section 4, the
"Termination Payment Date" shall be March 15, 2007.
a.
Termination Payments . On the Termination Payment Date, the
Company shall pay to Executive $11,941,000, as a lump sum
representing the sum of two times the sum of his Base Salary on the
Resignation Date and his 2005 bonus paid in 2006, as provided for
in Section 3(d)(ii) of the Employment Agreement.
b.
Incentive Bonus for 2006 . In lieu of the bonus provided in
Section 3(d)(i) of the Employment Agreement, on the Termination
Payment Date, the Company will pay Executive a bonus in respect of
the 2006 fiscal year equal to $2,158,300, as a lump sum
representing the amount of Executive’s 2005 bonus prorated
through the Resignation Date.
c.
Accrued Vacation . On the Termination Payment Date, the
Company shall pay to Executive $305,644 for accrued but unused
vacation time through the Termination Date pursuant to the
Company’s policies.
d.
Employee Benefits .
i.
Benefits Continuation Amount . The Company shall continue to
provide the benefits provided for in the plans specified on
Schedule 4(d)(i) hereto (the "Plans"), or pay to Executive the
nominal value of the benefits specified on Schedule 4(d)(i) hereto,
that Executive would receive if Executive’s employment
continued for two (2) years after the Termination Date, assuming
for this purpose that Executive’s compensation is the
aggregate amount payable pursuant to Section 4(a) above,
annualized.
ii.
Retirement Plan and Related Benefits . Any benefits payable
to Executive under the Company’s tax-qualified and
non-qualified retirement plans shall be paid in accordance with the
terms of such plans. The Executive’s account balance and all
other benefits due under the retirement plans will be reviewed and
verified by Executive and the Company as correct, as of the
Termination Date, and are estimated as set forth on the schedule
provided to Executive.
iii.
Medical and Dental Coverage . Executive shall be eligible to
continue medical and dental coverage after the Termination Date for
Executive and his partner Joanna Slonecka by electing COBRA
continuation coverage or enrolling in the Pfizer retiree plans.
Executive will be responsible for paying the applicable
contributions for the coverage elected and will be subject to the
same terms and conditions of such plans as all other participants
and retirees.
e.
Stock Options; Performance-Contingent Share Awards and Other
Equity-Based Awards .
i.
All unvested options to acquire stock of the Company held by
Executive shall vest on the Termination Date and all options to
acquire stock of the Company held by Executive shall remain
exercisable in whole or in part in at all times, and from time to
time, following the Termination Date through the expiration date of
such options in accordance with, but subject to, the terms and
conditions specified in the original grant letter, Points of
Interest and other applicable plan documents (including, without
limitation, the restrictions on engaging in activities in
competition with, or inimical, contrary or harmful to the interests
of, the Company specified therein).
ii.
An award shall be provided to Executive with respect to each
outstanding unvested performance-contingent share award held by
Executive in a timely manner following the completion of the
applicable performance period in accordance with, but subject to,
the terms and conditions specified in the original award letter,
Points of Interest and other applicable plan documents (including,
without limitation, the restrictions on engaging in activities in
competition with, or inimical, contrary or harmful to the interests
of, the Company specified therein). The amount of such award shall
be calculated based on the Company’s actual performance
relative to the pharmaceutical peer group during the performance
period, assuming for this purpose that Executive remained employed
by the Company through the date of payment, provided that the
amount of the award for the performance periods that commenced on
January 1, 2003 and January 1, 2005 and the amount of the award
with respect to 198,000 target shares subject to the award for the
performance period that commenced on January 1, 2004 shall be
prorated for the number of days during the applicable performance
period Executive was employed by the Company. The remaining shares
of the January 1, 2004 award are not subject to proration.
iii.
All other unvested equity based awards (including, without
limitation, restricted stock and restricted stock units) held by
Executive or for the benefit of Executive shall vest on the
Termination Date and one hundred percent (100%) of such vested
awards shall be settled by delivery of the shares of common stock
or other property represented by such awards to Executive in
accordance with, but subject to, the terms and conditions as
specified in the original award letter, Points of Interest and
other applicable plan documents (including, without limitation, the
restrictions on engaging in activities in competition with, or
inimical, contrary or harmful to the interests of, the Company
specified therein).
5.
Termination of All Existing Agreements . All rights and
obligations of the Company and Executive under the Employment
Agreement (other than Section 10 thereof), Executive’s Change
in Control Severance Agreement with the Company, as amended, and
any other employment, change in control or severance agreement,
arrangement or understanding and any other agreement (including
agreements, arrangements or understandings with respect to benefits
and compensation) between the Company (or its subsidiaries) and
Executive are hereby canceled and terminated as of the Resignation
Date without liability of either party hereunder, except that this
Agreement, any applicable Stock Option, Restricted Stock,
Restricted Stock Unit and Performance Share Award documents or
materials evidencing equity-based awards or grants outstanding as
of the Resignation Date, Executive’s Indemnification
Agreement with the Company (without prejudice to any other rights
to which Executive is entitled under Section 10 of the Employment
Agreement), and the Plans referenced herein and on Schedule 4(d)(i)
(collectively, the "Surviving Agreements") shall continue in full
force and effect, except as otherwise specifically modified by this
Agreement.
6.
Restrictions and Obligations of Executive .
a.
Consideration for Restrictions and Covenants . The parties
hereto acknowledge and agree that the principal consideration for
the agreement to make the payments provided in Section 2 hereof
from the Company to Executive, in addition to Executive’s
willingness to provide services and advice beyond the Resignation
Date, is Executive’s compliance with the undertakings set
forth in this Section 6, which the parties acknowledge extend
beyond the scope of the related covenants in the Employment
Agreement.
b.
Confidentiality . Executive shall hold all secret or
confidential information, knowledge or data relating to the Company
or any of its affiliated companies and their respective businesses
that Executive obtained during or after Executive’s
employment by the Company or any of its affiliated companies and
that is not public knowledge ("Confidential Information") in strict
confidence. Executive shall not communicate, divulge or disseminate
Confidential Information at any time during or after
Executive’s employment by the Company or any of its
affiliated companies, except with the prior written consent of the
Company or as otherwise required by law, regulation or legal
process. If Executive is requested pursuant to, or required by,
applicable law or regulation or by legal process to disclose any
Confidential Information, Executive will use his reasonable best
efforts to provide the Company, as promptly as the circumstances
reasonably permit, with notice of such request or requirement and,
unless a protective order or other appropriate relief is previously
obtained, the Confidential Information, subject to such request,
may be disclosed pursuant to and in accordance with the terms of
such request or requirement, provided that Executive shall use his
best efforts to limit any such disclosure to the precise terms of
such request or requirement.
c.
Non-Compete . Executive agrees, for the benefit of the
Company, that he will not, from the date hereof through December
31, 2009 (the "Restricted Period"), engage, directly or indirectly,
whether as principal, agent, distributor, representative,
consultant, employee, partner, stockholder, limited partner or
other investor (other than an investment of not more than (i) five
percent (5%) of the stock or equity of any corporation the capital
stock of which is publicly traded or (ii) five percent (5%) of the
ownership interest of any limited partnership or other entity) or
otherwise, in any business which is competitive with the business
now, or at any time during the Restricted Period, conducted by the
Company or its subsidiaries. Without limiting the foregoing, during
the Restricted Period, Executive shall
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