Pfizer Replaces CEO Targeted by Critics

Pfizer Inc. on Friday abruptly replaced Chief Executive Hank McKinnell, selecting its top lawyer, Jeffrey Kindler, to run the world’s largest drug maker.

McKinnell, 63, criticized by investors for the company’s poor stock performance and his large compensation package, will remain chairman until February 2007. He was originally slated to stay on as head of the company until February 2008.

“It became clear now is the right time to initiate a leadership transition,” company spokesman Paul Fitzhenry said. He would not elaborate on the timing other than to say the succession issue had become “a priority.”

Kindler, 51, who left as general counsel of McDonald’s Corp. in 2002 to join Pfizer, beat out two fellow senior executives for the top spot.

In 2005, Kindler and David Shedlarz, who oversees finance and strategic planning, were named vice chairmen and Karen Katen, head of pharmaceutical operations, was named vice chairwoman.

All three were seen as contenders to replace McKinnell. In naming Kindler, the board chose the youngest of the three candidates, and the one with the least experience in the pharmaceutical business.

“Being a relative unknown to Wall Street and the public may be an advantage because it brings a cleaner slate, and maybe potential for more dynamism instead of business as usual,” said David Saks, chairman of Saks Medscience Fund.

Pfizer faces difficulty in growing both profit and revenue as many of its products lose patent protection and become subject to competition from generic copies. Its Lipitor cholesterol treatment, the world’s best-selling drug, also faces stiff competition.

Pfizer’s shares have fallen 40% since McKinnell became chairman in May 2001. Over that same period the American Stock Exchange Pharmaceutical index has dropped 13%.

McKinnell, a 35-year Pfizer employee, became a target of complaints after Pfizer disclosed a retirement package under which he can choose from an annual pension of more than $6.5 million or a lump sum payment of $83 million.

In June, McKinnell defended his compensation, saying the company’s share price performance alone was not enough to evaluate his effectiveness as CEO.

Pfizer shares rose 46 cents to $26.11.