Case | HBS Case Collection | July 2009 (Revised May 2010)

Pfizer: Letter from the Chairman (A)

by Robert L. Simons and Natalie Kindred


This case explores maximizing shareholder value as a goal in executive decision making. Over a period of nine years, three different Pfizer CEOs make critical decisions intended to increase shareholder value. But the results are disappointing. To allow students to examine these decisions, the case provides excerpts from four Chairman's letters to shareholders from Pfizer's annual reports, followed by a description of the circumstances behind each letter. In the 2000 annual report, then-CEO Bill Steere discusses Pfizer's rise to industry prominence with the acquisition of Warner-Lambert. In the 2003 report, new CEO Hank McKinnell discusses Pfizer's performance goals and its acquisition of Pharmacia, which gave it control of the anti-arthritis drug Celebrex. In the 2005 report, McKinnell discusses his decision to keep Celebrex on the market despite health risks. In the 2006 report, new CEO Jeff Kindler barely mentions McKinnell's (controversial) early retirement and describes efforts to reform the company. The case closes in February 2009, just after Pfizer announces plans to acquire competitor Wyeth. Since 2000, Pfizer's tremendous growth in assets through acquisitions has not translated into significant growth in net income or share price. In closing, students are asked what Kindler should write in the letter to shareholders to open Pfizer's 2008 annual report.

Keywords: Decision Choices and Conditions; Corporate Accountability; Corporate Governance; Annual Reports; Business and Shareholder Relations; Value Creation; Pharmaceutical Industry; United States;


Simons, Robert L., and Natalie Kindred. "Pfizer: Letter from the Chairman (A)." Harvard Business School Case 110-003, July 2009. (Revised May 2010.)