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5 Fatal Mistakes That Got Pfizer Ex-CEO Jeff Kindler Fired

Pfizer is the world’s largest pharmaceutical company. Its sterling profits are made from blockbuster drugs such as Lipitor and Viagra. Jeff Kindler, relatively new in the organization, was the man who was made CEO after fighting off stiff competition to the position from two other longtime Pfizer stars. He was given the top post with the responsibility to instil a new thinking culture at the pharmaceutical giant. His earlier stint at McDonald’s as the General Counsel had proved to be highly successful as he had been able to provide a strong sense of dynamism into an organization which lacked that sort of thing.

Anyone could see that Jeff Kindler was going to be successful. He was an honors graduate from Tufts University in 1977 and magna cum laude (not comparable) from Harvard Law School in 1980. He subsequently clerked for Supreme Court Justice William J. Brennan Jr. and worked at the law firm Williams & Connolly in Washington, D.C. He then moved to the corporate sector with a period as Vice President and Senior Counselor for General Electric Co. and later as Executive Vice President of Corporate Relations and General Counsel for McDonald’s.

Yet, when he was elevated to the position of CEO at Pfizer, he made expensive mistakes and lacked a sense of management. It is a decision that the Board of Directors at Pfizer will always regret. On December 4, 2010 when Jeff Kindler was summoned to the three stone faced Directors of Pfizer, it was a humiliating moment for him. He was called in to the meeting at the  airport conference hall with less than 24 hours of notice. There was just one objective of the meeting – to give Kindler a chance to plead for his job. Kindler did not succeed. He was made to resign

Under Kindler, Pfizer stock lost 36% of its value. In the decade that ended with Kindler’s departure, its stock price sagged from a high of $49 down to $17. Kindler reaped millions while losing millions of dollars for Pfizer’s investors over his 4 1/2 year tenure as CEO. Perhaps, the main fault lay with the Board who were unable to figure out that Kindler lacked the leadership and the temperament to lead the world’s largest pharmaceutical company.

Jeff Kindler

Jeff Kindler

There were many mistakes that Kindler made as a CEO, his career at Pfizer was a great learning for what a CEO must not do while at the helm.

Over-ambitious

He was then taken in as the General Counsel at Pfizer, where he got prominence because of his critical role in the Lipitor drug patent case – the company was about to lose its exclusive patent rights in 2011 and the wolves were ready to jump in. Considering the market size of the drug, it brought in a  staggering $12 billion a year, more than a quarter of Pfizer’s revenues. Kindler did not trust experienced subordinates and never heard them out. He was hardly known for tact and diplomacy, he would let his feelings be know bluntly and the company suffered in consequence.

And he was highly egoistic. After Kindler was named CEO of Pfizer, a CNBC reporter asked him on-air whether “a guy who sold chicken” (previous McDonald’s General Counsel) — Kindler was qualified to run a pharma company. He didn’t talk to CNBC again for more than a year.

Shaking the Top management

Jeff Kindler’s tenure at Pfizer can be best understood by the change that took at the highest executive level. His promise to instill new thinking ended up becoming installing new people. None or very few of the people who actually knew about running Pfizer remained. He replaced almost all key players who had years of experience working at the pharma giant with new faces.

Bruce Roth, the scientist known as “the father of Lipitor,” who lost his job when the Ann Arbor site was closed (one of Kindler’s decisions), now works for Genentech. A quarter of the company’s revenue comes from this cholesterol fighting drug.

Other company veterans – chief medical officer Dr. Joseph Feczko, and CFO Alan Levin left the organization. Frank D’Amelio, Kindler’s new CFO, arrived from Lucent (A communication tech company). Sally Susman, his new communications chief, had worked at Estée Lauder (a beauty products company). His new general counsel, Allen Waxman, resigned abruptly for “personal reasons” after just one year; replacing him was Amy Schulman, a high-profile litigator at DLA Piper.

This always brings in a lot of uncertainty and the new management style ended up distressing employees who were way below the corporate hierarchy.The following were the reasons why most executives decided to exit the company under Kindler’s leadership.

Control Freak

Jeff was aggressive in his approach to achieve objectives. His biggest problem was that he was a control freak. He would not trust most of the work that was done by his sub-ordinates and would always scrutinize them personally. This is not an effective way to lead anyone in any organizations. He generated a lot of ill favor by employees under him.

Jeff seemed to believe he was the only smart guy in the room,” says Kent Bernard, a Pfizer lawyer for 28 years.

Inability to trust colleagues

It may have been his legal prosecutor background, but he ran the company and made decisions on interrogations. He rarely trusted his colleagues, who were better positioned to make decisions regarding Pfizer due to their years in the industry. This is funny because, Kindler himself was quite new and uninformed about the complex pharmaceutical industry. Yet, Jeff Kindler preferred to hire outsiders, external consultants and prefer to consult his old colleagues when it came to making business decisions.

The long-time employees at Pfizer were plagued with a sense of insecurity, according to them, everything and everyone associated with the old Pfizer culture was under attack.

Chaotic Decision Maker

Jeff Kindler was a messy decision maker to say the least.  He was pathetic at making plans and worse at sticking to them. When he was offered the CEO position, one of the objectives slated to him was the reorganizing of Research and Development department. This objective ended up achieving counter-productive results. Under Kindler:

  • Three research chiefs were shuffled during his 4 1/2 years
  • Research operations were split in two needlessly — setting up a separate unit for biologic drugs (and launching an expensive new facility in San Francisco) — only to reverse the decision 30 months later
  • Six R&D facilities were closed and he halted research in 10 disease areas and at the same time set a goal to create four new  drugs a year by 2010

One of the facilities he closed down was the birth place of the Lipitor drug, and scientist Bruce Roth “Father of Lipitor” said, “you need some continuity to do science”. The constant indecisiveness about opening and closing new facilities of research ended up paralyzing the R&D division of Pfizer in the long run.

Another shocking example of contradictory decisions that Jeff Kindler made were when his objective to shrink and stream line Pfizer were spiraling out of control. Desperate to shrink the company — which had just completed two giant mergers — Kindler announced plans for brutal layoffs that included axing 20% (10,000 jobs and shutting 5 plants) of the vaunted U.S. sales force.

There are no sacred cows” is what Jeffrey Kindler had said at the analyst meeting. The move was to bring the company’s total cost-saving effort to $5 billion. Then in January 2009, Kindler announced a $68 billion deal to buy Wyeth – a merger that would make Pfizer bigger than ever size-wise. The most confused decision ever taken.

 The HR Chief who killed it all

Jeff Kindler might still have saved grace if not his job, if it wasn’t for the HR chief he hired for Pfizer – Mary McLeod. Before you read any further, McLeod started her career as a dental hygienist. Pfizer can easily be identified for a case study where a bad HR chief can create havoc with your corporate resources. Under Mary McLeod, the company ended up dividing itself more rather than uniting.

Mary McLeod was a classic case where the Chief HR manipulated the CEO no end, and thrived under his support to  generate fear among the others. She alienated the staff from the top and herself remained unapproachable, preferring to communicate by e-mail and quarterly video casts.

She promoted division among executives and fed gossip that every HR tries every day to avoid: she would regularly feed nonsense to Jeffrey Kindler, that one senior executive was “a B player,” another too ambitious, someone else a “crybaby.”

Perhaps, she was most notorious for using the company choppers for her commute of the New York city to and from home or even for personal purposes. This looked extremely disturbing amidst layoffs that accounted to almost 10,000 employees losing jobs. Mary McLeod was truly a horrible HR. Even with all this, Kindler failed to acknowledge her manipulative and organization-destructing influence on the company. And by the time she was fired one can’t help but think that it was too late.

The first question that he was asked by the Board of Directors was why Mary McLeod was supported by him. An answer that Kindler can never justify for.

Apart from this, she ended up mopped up a lot of funds from the company’s pockets. She ended up becoming top 5 most compensated employees at Pfizer. Tallying nearly $1 million in payments excluding McLeod’s salary and regular bonus of $900,000 (INR 40 500 000). The package was personally approved by CEO Jeffrey Kindler.

Mary McLeod was also severed from Pfizer a few days ahead of Jeffrey Kindler and left under dark situations. Although both managed to receive handsome severance packages. Jeffrey Kindler was getting $16 million in cash and stock, another $6.9 million in retirement benefits, and various other forms of stock compensation. McLeod’s full compensation and severance package is still mysteriously kept away from disclosure.

Poor Temperament

Jeffrey Kindler lacked the most basic leadership trait a CEO should have – a patient and communicative temperament. Instead, Kindler was notorious for ignoring things people said and was against all sorts of suggestions. He rarely actually listened to anyone.

And then there was his probing, interrogating and ill temper – none of which might have helped Pfizer in anyway. Kindler’s tendency to grill people in public made other team members cringe. And he was also infamous for making lives of deputies miserable by bombarding questions or leave angry voice mails at any point of the day/night. Even conveniently ignoring executive holidays.

Kindler even once burst out on the ex-CEO of another chemical company during the retirement party of one of the Pfizer directors. The news of the incident spread around the organization. It was very natural for him to target people to unload upon. He lacked the temperament required for the CEO of Pfizer.

So this is one post where an entrepreneur can understand how a CEO should not be. It is completely the responsibility of the CEO to run a company and keep it ticking. Poor decision makers and ill tempered men do not make good CEOs. Jeff Kindler’s shameful ouster from the company should serve as an educating example to you all.

Further reading:

Fortune mag: Jeff Kindler Pfizer Shakeup

 

About Vivek Krishnan

I am the Founder-editor of Collegefallout.com. I started this blog in 2009, while in college with a lousy internet connection. Today this blog receives over 30,000 page views per month. As a person, I am a wanderer, dreamer and part-time pessimist.

4 comments

  1. The corporate shift is interesting. From a simplistic standpoint, it seems strangely ironic that a McDonald’s top insider would make a shift to the pharmaceutical industry in the first place. I’m sure the tops at McDonald’s know exactly why Pfizer is so successful, because of companies like McDonald’s. McDonald’s customers are highly more likely to be dependent upon pharma because of their garbage consumption. This is not the only “healthy business relationship” between junk food producers and corporate pharma either. Nice assessment here too, thanks.
    Edward´s last blog post ..The Exact Definition of "Mainstream Media"

  2. Wow, what a story…full of learnings.

    Related to CEOs, I’ve just found out that Steve Jobs died, God bless him. What a huge difference leadership and passion make….It’s completely the opposite of Kindler’s case…..
    Erica´s last blog post ..Baby Swings Features

  3. helpful…
    sai kiran´s last blog post ..You Can Save the Day….!!!

  4. One can learn a lot by these mistakes Kindler made and ended up fired from the Pfizer.

    Anyways I would like to thank you for the efforts you have put in composing this detailed article.

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