Corporate Secretary Magazine Awards 2008 'Most effective shareholder communication' winner Pfizer
Pfizer has long been heralded for its visibility at shareholder events and the highly effective channels that the company has successfully provided for contacting directors, so it comes as no surprise that it should win the award for ‘Most effective shareholder communication’, which was sponsored by Broadridge. Honorable mentions went to BorgWarner, Phillips-Van Heusen and Tenet Healthcare.
Discussing this achievement, it’s hard not to mention Pfizer’s former corporate secretary, Peggy Foran. She was with the company from 1997 through 2008, and her presence at corporate governance meetings around the globe enlivened attention on shareholder communication and other crucial corporate governance issues. Jeffrey Morgan, president and CEO of the National Investor Relations Institute, says, ‘To some degree, she was synonymous with Pfizer. She’s certainly been very instrumental in raising the entire profession.’
Admitting both Foran and her team are ‘just top notch,’ Morgan thinks Pfizer has done a great job in making shareholder communication a key focus point for companies. Regarding specific instances that established Pfizer as a bright star in the shareholder communications sphere, Morgan points to their efforts in plain English writing: ‘They were one of the early ones to really look at their shareholder communications and make it really more readable to the investor.’
A-team
Pfizer’s corporate governance team will continue to evolve and expand on Foran’s success, fueled by members like Rosemary Kenney, director of corporate governance. The main achievement in board and shareholder communications over the last two years, according to Kenney: ‘Having a face-to-face meeting with our largest investors.’ Additionally, the company has had ‘a very robust communication process with the board for several years starting with the implementation of director email boxes. We were one of the first companies to actually stick our neck out and do that. It’s a tough thing to do because once you open that portal, you get a lot of material unrelated to the board’s oversight and it’s a huge process to try to filter through what is board-related.’ Susan Rolan who has oversight of the board’s email boxes, does a great job in helping to prepare correspondence, says Kenney.
‘We have email boxes for each committee chair as well as the lead independent director and those letters are reviewed and responded to and then the board gets quarterly reports on all of the correspondence that’s come in. … It really gives the board an opportunity to get a heads up of what’s on shareholders’ minds.’ The letters tend to come from average investors, she says, who are looking to make sure the board is doing its job.
In terms of getting institutional investors engaged, Kenney adds, directors asked themselves, ‘What can we do next?’ Kenney and her colleagues were concerned that with the informational overload and many opinions that tend to circulate around governance issues, ‘it becomes difficult to get the true picture of what’s going on.’ By way of a solution, Kenney explains, ‘The board thought the best way to do that is to invite our largest investors to face-to-face meetings. And it proved to be very successful. Both sides came away feeling that it was a very good process and a positive and productive process.’
As for whether pressure was coming from shareholders, Kenney says that shareholders were already satisfied with the response to letters. The board felt strongly about ‘giving the investors the opportunity to tell the board what was on their minds,’ says Kenney, in order to facilitate the understanding on both sides.
Pfizer is also big on public appearances at investor conferences. ‘We also reach out to our institutional investors by going to meetings of the Council of Institutional Investors and the International Corporate Governance Network.’ Connie Horner, lead independent director, and Dana Mead, chair of the compensation committee, have both attended these events at various times, attests Kenney. ‘With several members of the corporate governance department attending these meetings as well, the message is that we are making ourselves available to listen to their concerns and answer questions in an informal setting,’ she says.
Building on past success
Since the company’s communication is already so well received, Kenney says Pfizer is confident in the usability of its communication channels between investors and the board. ‘We’re always looking for new ways to communicate with investors. ... The board would like to have another meeting with investors, similar to the one we had in 2007,’ notes Kenney. ‘We did in fact reach out to our largest investors again in the summer of 2008 to ask if there was an interest in having another face-to-face meeting with the board. And most of the investors said not really. We know that if we do have something to discuss, we know how to reach them, which to me is a very, very positive reaction from our institutional investors.’
Of course, should shareholders wish for more frequent meetings, Pfizer would be happy to accommodate. ‘We will go back to them in the summer of this year and ask them if they want to set up another fall meeting,’ says Kenney. ‘The fall seems to be the right time, before proxy season begins and people get very very busy. … The board really stressed to us they would like to do it again. If not annually, then bi-annually. … They found it to be very beneficial.’
