Page 327 - DMGT407Corporate and Business Laws

Corporate and Business Laws

Notes

Case Study LIC Dissents Pfizer AGM

—by Jyothi Datta
t would have been business as usual at multinational drugmaker Pfizer’s annual
shareholder meeting, but for a dissenting LIC representative who opposed two enabling
Iproposals to increase the salary of the managing director and the commission of two
Indian non-executive directors, respectively.
LIC totally holds 14.38 per cent in Pfizer, and the LIC representative told that he was
communicating the decision taken by the corporation. He was, however, unable to give
reasons behind the decision. Market observers indicated that LIC could push for a poll on
the proposal, given its equity holding.

One of the enabling resolutions was regarding Pfizer’s Managing Director in India,
Mr. Kewal Handa’s salary, proposing that it be increased from its 2007-level of ` 1.80 crore
to a maximum of ` 2.50 crore a year.
The other enabling resolution was with reference to resident non-executive directors
Mr. R.A. Shah and Mr. Pradip Shah, seeking to raise their commission, at the rate of one
per cent of the company’s profit, up to ` 50 lakh a year.
The company explained that the commission for non-executive directors was upped to
` 20 lakh a year in 2004, effective for a five-year period starting December 2003.
Shareholders should be part of the good and bad times of the company, said a shareholder
who has been holding a Pfizer share since the beginning, when the multinational sent
letters to shareholders inviting them into their fold.
He, along with some other shareholders, were expressing their unhappiness over the
dividend. The dividend for the year ended 2008 was ` 12.50 per share, as compared with
the previous year’s ` 27.50 per share. However, Pfizer’s Chairman, Mr. R.A. Shah, clarified
that there were no motives behind the company’s actions and dividends were generous
when the circumstances warranted it.
On Pfizer Inc.’s recently announced plan to raise stake in its Indian subsidiary to 75 per
cent, from the present 41 per cent, he said, that there was no intention to delist, “at this
time”.
Unlike info-tech companies, he said, the applicable milestone for Pfizer for reverse book-
building was 75 per cent. Creeping acquisition and buy-back was allowed only till 75 per
cent, he clarified. Also, he said, Pfizer was also evaluating the possibility of merging
Duchem (that has pharma and animal health businesses) with itself.
Detailing Pfizer’s plans to expand its domestic reach, Mr. Handa said that they would
increase the product portfolio and value offerings from the company. The company was
planning to increase its field force by 300 people, including 100 for just retail sales.
Question
Discuss LIC’s role in Pfizer.
Source: thehindubusinesline.com

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