My years with the Pfizer board.

• Author: Ellig, Bruce R.
• Position: Personal narrative

Heading the HR function offered a superb opportunity to observe and support the evolution of an exceptional board.

Before retiring at the end of last year, I worked for Pfizer for over 36 years, the last 12 as corporate vice president and worldwide head of the human resources (HR) function reporting to the chairman and CEO of Pfizer. We called it employee resources, as human resources was a little too impersonal for us. During the span of my career there were four chairmen/CEOs: John E. McKeen (1948-65), John Powers (1965-71), Edmund T. Pratt Jr. (1972-92), and William C. Steere Jr. (1992-present). I served for eight years under Pratt and four under Steere. Although different in style, each is an outstanding leader and great boss.

My interactions with the Pfizer board began in the mid-'70s when I served as vice president of compensation and benefits reporting to Donald C. Lum, corporate vice president-personnel and a member of the Pfizer board. Typically I'd appear before the board a couple of times a year either to give an overview of compensation and benefit programs or to request approval on plan changes.

One of the major proposals was an omnibus stock plan (one of the first created) in 1973, starting after the Accounting Principles Board put in place APB 25, which set guidelines for measuring compensation expense of shares that executives received. My objective was to have in place a plan that would permit the board to approve the design of virtually any type program using Pfizer stock. After extensive questioning and much discussion it was adopted by the board and later approved by shareholders. It is virtually the same plan still in place. After the board vote, one of the directors suggested I receive the chutzpah award for bravado. That was representative of the Pfizer boards I've worked with. They ask the tough questions that need to be addressed but they also have a sense of humor.

Much of the credit for Pfizer's current success goes to Pratt, who served an incredible span of over two decades as chairman and CEO. He aggressively moved a large portion of profits into pharmaceutical research, with expenditures reaching 11% of sales at the time of his retirement. In retrospect, who can argue with his actions? Pfizer is not only very successful but is recognized as having one of the best product pipelines in the industry.

When Pratt turned over the reins of the company in 1992, it was superbly positioned for Steere's strong marketing skills. It was not an easy time. The health care industry was going through major reform. The move from fee for service to capitated (charge per covered person) providers raised the awareness of the purchase of access, cost, and quality. A major issue for the industry in general, and Pfizer in particular, was to put the emphasis on the more important issue of cost of therapy, not simply price per pill. This shift to cost/benefit effectiveness has been a major inroad with significant upside potential for an industry (pharmaceuticals) that accounts for less than 10% of the cost of health care.

During my career Pfizer grew from a $250 million company focused on "science for the world's well being" - its early mission statement - to today, where it stands as a recognized worldwide leader as a research-based health care company with over $11 billion in revenue. This rapid growth was led by Pratt and Steere in conjunction with an evolving board of directors.

Board composition

Today's Pfizer board of directors is almost totally an outside board. Only Steere sits as member and chairman. This is a complete reversal of what was in place some 25 years ago. Pratt smoothly orchestrated most of this transition, with Steere completing the process. As insiders retired, their successors in the management ranks...