Friday, April 6, 2012

An unkind cut

Thanks to an anonymous reader, I see that Pfizer is reducing the size of its severance packages:
Pfizer Inc. (PFE), the drugmaker that’s fired 26,000 workers in three years, is cutting its employee severance package after May 14, according to an internal memo. 
Chief Executive Officer Ian Read, who took over in December 2010, has pledged to cut $1 billion from operations in 2012. The memo says basic severance pay will be lowered to eight weeks from 12 for U.S. workers, and that health benefits will last eight weeks rather than a year. Employees get additional weeks of pay and health insurance the longer they’ve been with the company. The memo was supplied to Bloomberg by a Pfizer employee, and confirmed by Joan Campion, a spokeswoman. 
“Our benefits continue to be competitive when compared against those offered by our industry peers and other leading global companies,” the memo said. “We will continue to analyze all of our benefit programs to support our long-term competitiveness and the sustainability of benefits in today’s challenging business environment.”
There's really not much to be said here, other than the fact that the severance packages used to be fairly generous, especially with the health insurance. Not anymore, really.

It brings to mind (on this jobs report Friday) how the long-term unemployed are still hurting during this recovery. Assuming that it takes an optimistic (?) 6 months to find a position, that's 4 months without coverage. Ugh. 


  1. I think that this is the very minimum you get and does increase with service time. Not sure what that equates to, however. My shop is one week for every year of service, and when you are on severance you have full insurance. If your severance is 6 months, you have 6 months of coverage...

    Pfizer was giving 2 or 3 weeks per year of service at one point. Not sure what they are giving now.

  2. Is there an easy way to calculate what you'll pay for insurance through COBRA? I'm guessing 2-3x what your original fees were.


      5 years ago when it was presented to us it was around $200-300ish a month for a single individual. One person asked if that number was per month and the HR person just laughed.

      The higher the deductible, the lower the monthly payment, of course.

    2. That link doesn't seem to be the actual Cobra, but the prices are probably in the same ball-park.

    3. I believe your COBRA is just the total cost of your insurance, e.g. both your employer's portion and your portion. (At smaller companies, they're pretty clear upfront as to how much it costs.)

    4. COBRA for the last 2 small companies that laid me off would have been in the $900/month range for a single person just for medical (not dental or vision) coverage.

  3. Some interesting reading about Mr Read's compensation:

  4. They also cut severance last year.

    And retiree medical benefits.

    Still if the current severance is 8weeks + 1 or 2 weeks a year, that still should be enough for Pfizer to keep its employees from fleeing during uncertain times. Hope of a sizable severance package payout is a huge incentive to not look for different work in the time leading up to a massive layoff.

  5. What a bunch of bastards, throwing you out and then cutting severance.
    I wish all who loose their jobs all the best, I hope it works out somehow.

  6. You know, good riddance. This will certainly cut into the talent that Pfiezer is capable of acquiring. The best and brightest chemists, that are not indebted into the system might think twice than work for the conglomerate that doesn't value their skills so much. Why would you want to work for an organization that is in the decline? Why not work for a hot start up with a promising future? Or at least can build your resume for something more nimble and competitive in the new marketplace. And of course, with less than desirable severance, they can watch the good talent desert on their own terms.

  7. If you work in pharma, it is crucial that you have 6-12 months of living expenses sitting in cash in a savings account that you do not ever touch otherwise. Thats just the reality of the field we are in. Don't blame Pfizer for being jerks; that's what they do and its not going to stop.