Supersized

26 April 2006 By Robert Cyran Follow @rob_cyran

Executive pay in the US may be as oversized as the food portions, but investors have been reluctant to tackle abuses. But two battles at Pfizer and UnitedHealth show how difficult it will be to reign in excess pay.

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Shareholder dissidents are trying to remove directors at both Pfizer and UnitedHealth over the issue of executive pay.

Pfizer estimates the total compensation for chief executive Hank McKinnell in 2005 was $15.9m. Pfizer's stock has declined 44% since McKinnell became CEO in 2001. UnitedHealth's chief executive William McGuire is under SEC investigation for the possible backdating of option grant awards. The value of his in the money options is $1.6bn.

ISS, a proxy advisory service, recommended that shareholders withhold support from two directors at both Pfizer and UnitedHealth. Both sets of directors serve on the compensation committees for the two companies.

Pfizer directors must receive a majority of votes to be elected. United Health directors do not need a majority due to the fact they are nominated by the company. More than 400 of Fortune 500 companies elect directors on a plurality system – under which directors need to receive only one vote to be elected in uncontested elections.

Pfizer's annual meeting is April 27. UnitedHealth has its meeting on May 2.

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