Pfizer has been demonized a lot lately, especially by Bernie
Sanders since Pfizer is one of the big pharma companies that have obscene
profits. I want to look more closely at the target of those criticisms. If you
say “that football team is bad”, it’s worth considering whether your complaint
is with the owner, or the coach, or the players. Pfizer is criticized, but who
or what is Pfizer? Pfizer is a corporation, which means it is a legal entity
that is owned by its shareholders. The shareholders are the ones who benefit
from profits, obscene or not. When we talk about Pfizer’s money, we’re really
talking about the money the shareholders own, each in proportion to its share
holdings. When we’re criticizing Pfizer’s decisions, we’re really criticizing
the shareholders who control the directors and officers who make those
decisions.
So, who are these partakers of obscene profits?
It’s pretty easy to find out.
http://www.nasdaq.com/symbol/pfe/institutional-holdings lists the institutional
shareholders of Pfizer. Most of them are money management companies, the places
that manage your IRAs and 401ks. Consequently many of the obscene profit takers
are people evil enough to save money for retirement. Some of the others are
notorious 1%-er money grubbers like retired state employees in California,
Florida, New Jersey, Colorado, Alabama, Arizona, Ohio, and Canada (California
Public Employees Retirement System - $553 million, State Board of
Administration of Florida Retirement System - $256.4 million, State of New
Jersey Common Pension Fund - $241 million, Public Employees Retirement
Association of Colorado - $98.6 million. Retirement Systems of Alabama - $145.7
million, Arizona State Retirement System - $82.9 million, Public Employees
Retirement System of Ohio - $148.8 million, Canada Pension Plan Investment
Board - $56.9 million); retired teachers in NY, California, Texas, and Ontario
(New York State Teachers Retirement System - $393 million, California State
Teachers Retirement System - $388 million, Teacher Retirement System of Texas -
$198.8 million, Ontario Teachers Pension Plan Board - $63.9 million), State of Wisconsin Investment Board ($210
million); students in Texas (Texas Permanent School Fund - $71.7 million);
Lutherans buying life insurance and saving for retirement (Thrivent Financial
for Lutherans - $146 million); the state
governments of Michigan and South Dakota (State Treasurer State of Michigan -
$99.4 million, South Dakota Investment Council - $81.8 million); and non-profit
rural electric cooperatives (National Rural Electric Cooperative Association -
$135.5 million).
Pfizer’s a really big company (see my other note on that).
The profit numbers work out to about 4% return on investment. Let’s try
Bernie’s statement, with some real facts and names added:
You people who saved money for retirement, it’s wrong that
your savings appreciate because Pfizer makes profits.
When the Texas Permanent School Fund earns $3 million
dollars from a $72 million dollar investment, that’s obscene.
It’s obscene that the
New York State Teachers Retirement System earns 4% on its investment in a
company that makes drugs to prevent and treat disease.
It’s time to tell the pension plans of public employees in
BY, California, New Jersey, Alabama, Colorado, Arizona, and Canada that they
can no longer make 4% profit for their retirees, because Bernie doesn’t like
big numbers.
Do you Bernie supporters still agree with him when you take
away the misdirection? When you look behind the curtain and see who’s really
getting those profits?
But what about the fat cat executives that run Pfizer? They
really call the shots, and it’s really their exorbitant salaries that Bernie is
mad about.
May be a good point, but that’s not what he said. Let’s
assume it was, though. Pfizer’s executives are all subject to Pfizer’s board,
which is set by Pfizer’s shareholders. Pfizer’s shareholders elect directors,
who in turn hire executives, who in turn manage the company. Pfizer’s
shareholders have ultimate control of the whole company; they’ve just hired
people to make the daily decisions for them. Again, let’s put some names in the
complaint and see what we get:
How dare you, State Treasurer State of Michigan, hire
executives to manage the company you invested in.
National Rural Electric Cooperative Association, we think
you’re paying your employees too much.
State Board of Administration of Florida Retirement System,
you’ve invested $200 million in this company, but you cannot be trusted to set
the salaries of the people you trust to manage the company.
There may be all sorts of valid issues around Pfizer, about
FDA approval processes, about patents on drugs, about details of tax structures
(with at least two sides to every issue). Bernie’s complaints, however, reflect
such ignorance that they are just silly.
What do you think? Comment if you think I’ve missed
something. Share if you think this will help others to think and understand.
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