Orchestrating a smooth transition between top managers is Job One for corporate directors, and the larger the company, the more scripted the process. Not so at Pfizer (PFE), the world's largest drugmaker, where Chief Executive Officer Jeffrey B. Kindler resigned on Dec. 5 only hours before a special board meeting to discuss his future, according to a person familiar with the situation. Directors were upset over Kindler's failure to name an operations chief, said this person.
Ian Read, who ran the drug operations that account for 85 percent of Pfizer revenue, was named to replace Kindler. Senior executives in September had agreed that Read should be named chief operating officer and considered as a candidate to succeed Kindler, said a person who asked not to be named because deliberations were private. Kindler never made the appointment.
Some executives had become frustrated with Kindler's management style in recent months, the person said. While Pfizer faces big challenges on health reform and the expiration of key patents, Kindler focused on smaller matters and micromanaged executives, the person said. Pfizer shares fell 35 percent since Kindler, formerly general counsel, became CEO in July 2006. "Investors have not been happy about the stock price," says Les Funtleyder, a portfolio manager at Miller Tabak. Kindler, whose retirement was effective immediately, didn't return calls to his home. Pfizer spokesman Ray Kerins declined to comment on the board's deliberations.
Read has his work cut out for him. Over the next five years, Pfizer faces competition from generics on products, including Lipitor, that account for a third of its sales.
The bottom line: Pfizer CEO Jeffrey Kindler resigned abruptly as directors prepared to consider his future. His successor will get no honeymoon.