Pfizer Pfires Up Say on Pay

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It took six months from when shareholders asked for it, but Pfizer's (NYSE: PFE) board has finally given shareholders a voice on executive compensation.

Well, an advisory vote, anyway, which is slightly better than nothing, I guess. Shareholders' first vote will be at the annual meeting next year -- sorry, you'll have to wait another six months to act. And then they'll get to vote every year after that.

Unlike some fellow Fools, I'm not convinced that say on pay is worth the effort. While companies including Blockbuster (NYSE: BBI), Verizon (NYSE: VZ), and Aflac (NYSE: AFL) have instituted shareholder advisory votes, many shareholders have the same kind of apathy for the process that I have. Shareholders of Johnson & Johnson (NYSE: JNJ) and Abbott Labs (NYSE: ABT) both voted down proposals at their annual meeting this year, and Pfizer's proposal passed by the slimmest of margins.

Here's my take: If you don't like it that Pfizer gave its chief financial officer a $1.2 million bonus for getting the Wyeth merger completed while cutting about 20,000 lower-level positions, sell your shares, 'cause that's pretty scary. Some will say that you could try to work from the inside to change things, but I think there are too many potential investments to bother. Most people -- Carl Icahn excluded -- wouldn't buy shares in a poorly run company and then try to turn it around. Why is changing executive pay any different?

And I'm not sure how easy it would be to change even if you wanted to. As Whole Foods' (Nasdaq: WFMI) CEO John Mackey pointed out in Motley Fool Conversations, the problem is that companies hire compensation consultants to find out what other executives are making, and then boards want their executives in the top 25% because otherwise it's like saying you have inferior management. As everyone tries to move their executives near the top, there's an inflationary pressure that moves the price up.

I guess the secret to finding good companies with lower-paid executives is to find companies and executives who don't care as much about that part of their status. There are some out there -- Mackey is paid just $1 a year. Please share others that you know and love in the comments box below.

An earlier version of this article gave an incorrect bonus size for Pfizer's CFO. The Fool regrets this error.