Mike McDermott

About Mike McDermott

Mike McDermott (age 59) is Pfizer’s Chief Global Supply and Quality Officer, Executive Vice President (EVP) since January 2025, having served as Chief Global Supply Officer, EVP (2022–2024), President of Pfizer Global Supply (2018–2021), and earlier leadership roles in PGS and Biotechnology (2012–2018) . His mandate spans global manufacturing, quality, and supply reliability—central to Pfizer’s 2024 cost realignment ($4.0B net savings delivered toward a ~$4.5B 2025 target) and the multi-year Manufacturing Optimization Program launched in Q2 2024 to reduce cost of goods sold . Context for incentive alignment: Pfizer reported 2024 revenues of $63.6B with non-GAAP financials hitting/above max targets for the annual bonus pool (funded at 195% for 2024), but TSR has been challenged (one-year -5.3%, three-year -48.5%) .

Past Roles

External Roles

• None disclosed in company filings reviewed .

Fixed Compensation

Performance Compensation

• Annual incentive (GPP) structure (2024): 40% Total Revenue, 40% Adjusted Diluted EPS, 20% Cash Flow from Operations; pipeline (+/–25 pp) and ESG (+/–5 pp) modifiers, capped at 200% . 2024 financial results were at or above maximum on all three metrics; pool funded at 195% (down from formulaic 200%) .

• Long-term incentives (enterprise design for executives/NEOs):
  • 2024 mix: 50% Performance Share Awards (PSAs), 25% 5‑year TSRUs, 25% 7‑year TSRUs .
  • 2025 change: 50% PSAs, 50% 5‑year TSRUs; PSAs use annual operational metric (Adjusted Diluted EPS), with relative TSR modifier vs DRG index; GPP shifts to use Adjusted Net Income (replacing EPS) for 2025 .
  • 2024 LTI modifications (Retention measure): Eligible employees (≈9,000, including NEOs) could elect to extend 2022/2023 TSRUs by two years (5→7 years) and extend PSA performance periods by two years (2022 vests/settles 2027; 2023 in 2028), maintaining a 0–200% cap (capped at target if TSR is negative) .

Implications for insider selling pressure: the two‑year vesting/settlement extensions increase retentive value and likely defer potential share delivery windows, reducing near-term supply from settlements if elected .

Equity Ownership & Alignment

• Stock ownership guidelines: CEO 8x salary; other NEOs 4x salary; progressive 5‑year milestones; sales restricted if below interim targets . None of the NEOs or other executive officers have pledged Pfizer stock; hedging/derivatives trading is prohibited by policy .
• Individual beneficial ownership: Not disclosed for McDermott (Securities Ownership table lists Directors and NEOs; executives as a group own <1% of shares outstanding) .

Employment Terms

• Non‑compete: In 2024/early 2025 Pfizer approved implementing non‑compete provisions via new agreements for senior management (including NEOs and other ELT members), effective 2025—raising switching costs and retention protection in critical roles like global supply .
• Executive Severance Plan (illustrative structure per NEO program):
  • Severance = greater of (a) one year’s pay (base + target bonus) or (b) 13 weeks + 3 weeks per full year of service (cap 104 weeks), plus up to 24 months of medical/dental/life at active rates .
  • Change‑in‑control (CIC): If terminated other than for cause within 24 months of a CIC, TSRUs continue to vest to original dates; PSAs continue and settle based on actual performance; RSUs continue vesting to original schedule (no single‑trigger) .
  • Clawback/recoupment: The Regulatory & Compliance Committee can recommend reduction/recoupment of incentive compensation for significant misconduct .

Performance & Track Record (context for role)

These outcomes underscore why supply, quality, and COGS execution—areas under McDermott’s remit—are central to margin expansion and pay-for-performance alignment (195% GPP pool driven by max financials in 2024) .

Related Party Transactions (red flags review)

• Pfizer paid ~$350,000 in FY 2024 to Inventive Floor Design, Inc. (industrial flooring contractor) owned by the brother‑in‑law of Mike McDermott. Relationship pre‑dates his executive officer status; services at arm’s length; McDermott had no supervision/retention role; Governance Committee reviewed/approved under related‑party policy .

Say‑on‑Pay & Shareholder Feedback (program risk sentiment)

• Historical support: 92.8% approval in 2023 advisory vote; Board describes consistent strong support over past years .
• 2024/2025 engagement: Management proactively engaged investors on the 2024 LTI modification tender (approx. 9,000 employees eligible); added robust proxy disclosure per investor requests .

Expertise & Qualifications

• Thirty‑plus years of operations/supply leadership at Pfizer (progressive roles since at least 2012), culminating in enterprise responsibility for global supply and quality—experience directly aligned to cost, reliability, and compliance levers that drive margins and cash flows .

Compensation Structure Analysis (signals)

• Mix skew: High at‑risk pay via PSAs/TSRUs remains; 2025 re‑weighting to 50% PSAs and 50% 5‑year TSRUs increases sensitivity to absolute TSR recovery and EPS delivery .
• Metric rigor: 2024 financial targets outperformed materially (max on all three); Committee still trimmed pool from 200% to 195%, suggesting governance discipline amid weak TSR optics .
• Retention mechanics: 2024 election‑based extension of 2022/2023 awards is a company‑wide retention tool that defers vesting/settlement and ties upside to longer‑term performance recovery—likely reducing short‑term selling pressure if executives elected in .

Investment Implications

• Alignment: McDermott’s mandate (global supply & quality) sits squarely on Pfizer’s margin‑expansion and COGS‑reduction priorities; incentive metrics (revenue, EPS, cash flow; PSAs with EPS/relative TSR) strengthen linkage between operational execution and pay .
• Retention risk: 2025 non‑compete adoption for senior management and 2024 LTI term extensions mitigate flight risk in a critical function; however, program modifications acknowledge stock underperformance and seek to sustain motivation over a longer runway .
• Governance: Related‑party vendor tie to McDermott’s brother‑in‑law was reviewed under policy; arm’s‑length and pre‑existing—monitor but low governance risk as structured .
• TSR overhang: Despite strong 2024 operating results and cost progress, multi‑year TSR remains weak; the 2025 LTI design (PSAs + 5‑year TSRUs) increases exposure to TSR/EPS, amplifying the signal value of supply‑driven margin gains under McDermott’s purview .

Note: Individual compensation amounts, grants, ownership, pledging status, and Form 4 trading history for Mike McDermott were not disclosed in the reviewed filings. Program features and company‑level outcomes are shown to assess alignment and incentives. **[78003_0000078003-25-000054_pfe-20241231.htm:82]** **[78003_0000078003-25-000062_pfe-20250313.htm:59]** **[78003_0000078003-25-000062_pfe-20250313.htm:70]** **[78003_0000078003-25-000062_pfe-20250313.htm:74]** **[78003_0000078003-25-000062_pfe-20250313.htm:75]**