94228_04_Pfizer_Exec_Comp_Part 1.qxp_04 3/5/20 6:48 PM Page 72
ExEcutivE compEnsation SECTION 2 – HOW WE DETERMINE EXECUTIVE COMPENSATION
This chart explains the Compensation Committee’s process for determining our executive pay targets. Analysis/Tools How We Use This Information Purpose Peer and • We target the median compensation values of our peer and comparator groups to help determine Establishes a competitive pay Comparator Group an appropriate total level and pay mix for our executives. framework using comparator Pay Analysis groups’ median compensation • Each compensation target is assigned a numbered salary grade to simplify our compensation values, to help determine an Data source: publicly administration process. optimum pay mix of base pay, available financial – Each salary grade has a range of salary levels: including minimum, midpoint and maximum. annual short-term and long- and compensation term incentive targets information as – minimum and maximum salary range levels for each grade are set 25% below and above the reported by our salary range midpoint to approximate the bottom and top pay quartiles for positions assigned pharmaceutical peer to that grade. and General industry comparator Groups • We review this framework/salary grade as a guide to determine the preliminary salary recommendation, target annual short-term incentive award opportunity, and target annual long-term (typically from incentive value for each executive position. surveys and public filings) note: the actual total compensation and/or amount of each compensation element for an individual executive may be more or less than this median.
Tally Sheets • We review a “tally sheet” for each ELt member that includes target and actual total compensation provides additional elements, stock ownership as well as benefits information, accumulated deferred compensation, information that assists the Data source: and outstanding equity award values. the committee believes that tally sheets are a useful tool in committee in evaluating total internal evaluating total compensation in relation to market pay and internal pay equity. compensation in relation to compensation and competitive market practice benefits data and performance
Our 2019 Peer Groups – Competitive Pay Positioning We recognize that while some information is available on the performance of our non-U.S.-based peer companies, the compensation data can be limited in terms of comparable benchmarks and other information compared to peers with U.S. pay models. As such, the Committee references both groups as they provide useful compensation data (pharmaceutical industry and complex multi-national businesses) for our annual benchmarking analysis and are also a source of talent for Pfizer.
2019 PhARMACEUTICAL PEER AND GENERAL INDUSTRY COMPARATOR GROUPS Our peer group for 2019 consisted of the companies listed in the charts below.
2019 Pharmaceutical Peer Group (12) AbbVie Bristol-Myers Squibb GlaxoSmithKline Novartis* Amgen Eli Lilly Johnson & Johnson Roche* AstraZeneca Gilead Sciences Merck Sanofi* * The Committee recognizes that while data are available on the performance of some of our non-U.S.-based peer companies, the compensation data in some cases are limited in terms of comparable benchmarks and may use different pay models as compared to Pfizer’s pay model.
2019 General Industry Comparator Group (19) 3M Coca-Cola IBM United Parcel Service AT&T Comcast Lockheed Martin United Technologies Boeing ConocoPhillips Mondelez UnitedHealth Group Caterpillar General Electric PepsiCo Verizon Chevron Honeywell Procter & Gamble
72 Pfizer 2020 PROxY STATEMENT