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PFIZER INC.
235 East 42nd Street
New York, NY 10017

__________________________________________________________________________

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
__________________________________________________________________________

TIME AND DATE	8:30 a.m., Eastern Daylight Time on Thursday, April 26, 2007.
PLACE	South Bend Marriott 123 N St. Joseph Street South Bend, Indiana 46601
WEBCAST	A Webcast of our Annual Meeting will be available on our Website at www.pfizer.com starting at 8:30 a.m., Eastern Daylight Time on April 26, 2007. An archived copy of the Webcast also will be available on our Website through the first week of May. Information included on our Website, other than our Proxy Statement and form of proxy, is not a part of the proxy soliciting material.
ITEMS OF BUSINESS		To elect 12 members of the Board of Directors, each for a term of one year.
		To ratify the appointment of KPMG LLP as our independent registered public accounting firm for the 2007 fiscal year.
		To consider 4 shareholder proposals, if presented at the Meeting. See Table of Contents for a list of the Shareholder Proposals.
		To transact such other business as may properly come before the Meeting and any adjournment or postponement.
RECORD DATE.	You can vote if you are a shareholder of record on March 1, 2007.
ANNUAL REPORT	Our annual report to shareholders consists of the 2006 Annual Review, the 2006 Financial Report and the Peer Group Performance Graph. The 2006 Annual Review is enclosed with these materials as a separate booklet. The 2006 Financial Report is contained in Appendix A to this Proxy Statement. The Peer Group Performance Graph is contained in Appendix B to this Proxy Statement. These documents are not a part of the proxy solicitation materials. They may also be accessed through our Website at www.pfizer.com.
PROXY VOTING	It is important that your shares be represented and voted at the Meeting. You can vote your shares by completing and returning your proxy card or by voting on the Internet or by telephone. See details under the heading How do I vote?. Margaret M. Foran Senior Vice President-Corporate Governance,
March 15, 2007	Associate General Counsel and Corporate Secretary

 

SEC Filing Excerpt For complete filing click here

The Compensation Committee

     The Compensation Committee, composed entirely of independent directors, administers the Companys executive compensation program. The role of the Committee is to oversee Pfizers compensation and benefit plans and policies, administer its stock plans (including reviewing and approving equity grants to elected officers) and review and approve annually all compensation decisions relating to elected officers including those for the Chairman and CEO and the other executive officers named in the Summary Compensation Table (the Named Executive Officers). The Committee submits its decisions regarding compensation for the Chairman and CEO to the independent Directors of the Board for ratification.

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     In addition to reviewing executive officers compensation against the peer groups, the Committee considers recommendations from the CEO regarding total compensation for those executives reporting directly to him as well as the other Company elected officers and approves compensation for such other executives and officers. Management provides to the Committee historical and prospective breakdowns of the total compensation components for each executive officer.

         Compensation Consultant

     The Executive Compensation group in Pfizers Corporate Human Resources Department supports the Committee in its work. In addition, the Committee has sole and absolute authority to engage the services of outside advisors, experts and others to assist the Committee.

     Since 2003, the Committee has engaged the services of George Paulin, Chief Executive Officer of Frederic W. Cook & Co., as independent outside compensation consultant to advise the Committee on all matters related to CEO and other executive compensation. The Compensation Committee has adopted the policy shown below for the selection of a compensation consultant, which stipulates that the degree of independence, both financial independencemeasured by dollar volume of other business conducted with Pfizer, and independent thinkingsubjectively assessed by the firms known work, is one of the principal criteria used in the selection process.

         PolicyCriteria For Selection Of Compensation Committee Consultant

     The Compensation Committee established the following criteria used to select a consultant to the Compensation Committee.

Degree of independence

 Financial independencemeasured by dollar volume of other business conducted with Pfizer

Independent thinking

subjectively assessed by their known work as well as information gathered in the screening interviews

Familiarity with the business environment

Knowledge of the pharmaceutical industry

Specific knowledge of Pfizer Inc, its senior management, and Board of Directors

Broad knowledge of general industry current practices and emerging trends

Public relations

Particular strengths and/or distinguishing characteristics including, but not limited to:

Creative thinking

Strong sense of corporate governance

Special areas of expertise

Ability to establish rapport or dynamic presence with groups

References from current clients where the consultant acts in an advisory role similar to the role desired by the Pfizer Compensation Committee

Potential issues

Conflict of interest with other clients

Degree of availability/accessibility

     Frederic W. Cook & Co. does not advise management of the Company. The total amount of fees paid to Frederic W. Cook & Co. for services to the Committee in 2006 was $184,555. In addition, the Company reimburses Mr. Paulin for all reasonable travel and business expenses. Frederic W. Cook & Co. receives no other fees or compensation from the Company, except a fee of less than $5,000 to provide an executive compensation survey. Mr. Paulin attended all of the Committee meetings in 2006.

     Company management does not engage a compensation consultant.

         Charter

     The Committees membership is determined by the Board. There were 16 meetings of the Committee in 2006, including ten executive sessions with the Committee members only. Under the terms of its Charter, which is reviewed annually by the Committee and the Board, the Compensation Committee is directly responsible for establishing annual and long-term performance goals and objectives for our elected corporate officers. This responsibility includes:

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• evaluating the performance of the CEO and other elected officers in light of approved performance goals and objectives;
• setting the compensation of the CEO and other elected officers in consultation with the Board based upon the evaluation of the performance of the CEO and the other elected officers, respectively;
• making recommendations to the Board of Directors with respect to new cash- based incentive compensation plans and equity-based compensation plans; and
• preparing an annual performance self- evaluation of the Compensation Committee.

     In addition, the Committee:

• administers the Companys stock plans;
• determines and certifies the shares awarded under corporate performance- based plans;
• grants options and awards under the Companys stock plans;
• advises on the setting of compensation for senior executives whose compensation is not otherwise set by the Committee;
• monitors compliance by officers with our program of required stock ownership;
• reviews and discusses with the Companys management, the Compensation Discussion & Analysis which is included in the Companys annual Proxy Statement; and
• prepares the report of the Compensation Committee for inclusion in the Proxy Statement.

     The Board of Directors has determined that each of the members of the Compensation Committee is independent, as defined by the rules of the New York Stock Exchange. In addition, each Committee member is a Non-Employee director as defined in the Securities Exchange Act of 1934, and is an outside director as defined in section 162(m) of the Internal Revenue Code.

     A copy of the Compensation Committee Charter is attached as Annex 4 to this Proxy Statement, and is also available on our Website at http://pfizer.com/pfizer/are/mn_investors_ corporate.jsp.

Compensation Committee Interlocks and Insider Participation

     None of the members of the Compensation Committee during fiscal 2006 or as of the date of this proxy statement is or has been an officer or employee of the Company and no executive officer of the Company served on the compensation committee or board of any company that employed any member of the Companys Compensation Committee or Board of Directors.

 

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2006 Compensation of Non-Employee Directors

     Annual compensation for non-employee Directors for 2006 was comprised of: cash compensation and equity compensation, consisting of Unit Awards. Each of these components is described in more detail below. The total 2006 compensation of our Non-Employee Directors is shown in the 2006 Director Compensation Table. Employee Directors do not receive any compensation in connection with their Director service.

Non-Employee Director Compensation

     Our current Director compensation program became effective on March 1, 2006. Under this program, annual compensation for non-employee Directors consists of the following:

• an annual retainer of $75,000 (pro-rated if a Director attends less than 80% of Board and Committee meetings in a year); and
• an award of 5,000 Pfizer stock units under the Pfizer Inc. Nonfunded Deferred Compensation and Unit Award Plan (Unit Award Plan) (not payable until the Director ceases to be a member of the Board) to each Director upon joining the Board and to each Director upon election at each Annual Meeting of Shareholders, provided the Director continues to serve as a Director following the Meeting.

     The Chairs of Board Committees and the Lead Independent Director receive additional annual retainers as follows:

• Chairs of Compensation and Corporate Governance Committees: $15,000
• Chair of Audit Committee: $20,000
• Chair of Science and Technology Committee: $25,000
• Lead Independent Director: $25,000.

     On the day of the 2006 Annual Meeting of Shareholders, all of our Non-employee Directors who continued as Directors were awarded 5,000 units with a value at time of grant of $124,300 (calculated based on the closing stock price of Pfizer stock ($24.86) on the grant date).

     Upon joining the Board, Dr. Ausiello received his initial grant of 5,000 units with a total value at time of grant of $139,300 based on the closing stock price of $27.86 on the date of grant.

Former Non-Employee Director Compensation Plan

     Prior to March 1, 2006 the following non-employee Director compensation program was in effect:

An annual cash retainer of $26,000 per year;

Board Committees and the Lead Independent Director received annual retainers as follows:

Member of Compensation, Audit and and Corporate Governance Committees: $4,000;

Chair of Compensation, Audit and and Corporate Governance Committees: $6,000;

Member of Science and Technology Committee: $8,000;

Chair of Science and Technology Committee: $16,000;

The Lead Independent Director: $25,000.

a meeting fee of $1,500 for each Board meeting, Committee meeting, the Annual Meeting of Shareholders, and for each day of a visit to a plant or office and for any other business meeting to which the Director was invited as a representative of the Company;

an initial award of 3,600 Pfizer stock units upon joining the Board and an annual award of 3,600 units on the day of our Annual Meeting upon the Directors reelection;

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• an Annual Retainer Unit Award under the Pfizer Inc. Annual Retainer Unit Award Plan. equivalent to the value of his or her annual Board retainer fee in Pfizer stock units based upon the five- day average of the closing trading price of our common stock on the New York Stock Exchange for the first five trading days after April 1 of each year (rounded up to the nearest unit). No further awards were made under this Plan subsequent to March 1, 2006.

Deferred Compensation

     Non-employee Directors may defer all or a part of their annual cash retainers and meeting fees under the Unit Award Plan until they cease to be members of the Board. At a Directors election, the fees held in the Directors account may be credited either with interest at the rate of return of the Northern Trust Intermediate Treasury Index Fund, or with stock units. The average rate of return of the Intermediate Treasury Index Fund for 2006 was 3.5% . The numbers of stock units are calculated by dividing the amount of the deferred fee by the closing price of our common stock on the last business day of the fiscal quarter. If fees are deferred as stock units, the number of stock units in a Directors account is increased by stock units based on the value of any distributions on the common stock. When a Director ceases to be a member of the Board, the amount attributable to stock units held in the individuals account is paid in cash. The payment amount is determined by multiplying the number of stock units in the account by the closing price of our common stock on the last business day before the payment date.

Legacy Warner-Lambert Equity Compensation Plans.

     Under the Warner-Lambert 1996 Stock Plan, as a result of our merger with Warner-Lambert, all stock options and restricted stock awards outstanding as of June 19, 2000, became immediately exercisable or vested.

     Under this Plan, the Directors of Warner-Lambert could elect to defer any or all of the compensation they received for their services. These deferred amounts could have been credited to a Warner-Lambert Common Stock Equivalent Account (the Equivalent Account). That Equivalent Account was credited, as of the day the fees would have been payable, with stock credits equal to the number of shares of Warner-Lambert common stock that could have been purchased with the dollar amount of such deferred fees. The former Warner-Lambert DirectorsMessrs. Burt, Gray, Howell, and Lorchwho joined our Board after the merger, had deferred compensation and were entitled to Warner-Lambert stock credits in the Equivalent Account under this Plan. Dividends received under this Plan are reinvested. Upon the closing of the merger, these Warner-Lambert stock credits were converted into Pfizer stock equivalent units. These units will be payable in Pfizer common stock at various times in accordance with the Directors election. These units are described in footnote 2 to the table entitled Securities Ownership of Officers and Directors and Certain Beneficial Owners.

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2006 Director Compensation Table

     The following table shows 2006 compensation for our non-employee Directors.

					Change in					Aggregate
					Pension					Earnings on
					Value and					Deferred
	Fees Earned			Non-Equity	Non-Qualified					Compensation
	or Paid in	Stock	Option	Incentive Plan	Deferred		All Other			in Last
	Cash	Awards	Awards	Compensation	Compensation		Compensation		Total	Fiscal Year(3)
Name	($)	($)	($)	($)	Earnings		($)		($)	($)
(a)	(b)	(c)	(d)	(e)	(f)		(g)		(h)	(i)
Dr. Ausiello	6,250	139,300	0	0	0		0		145,550	(9,800
Dr. Brown*	99,167	124,300	0	0	0		0		223,467	178,627
Mr. Burns	72,001	124,300	0	0	0		0		196,301	202,918
Mr. Burt	75,001	124,300	0	0	0		0		199,301	168,000
Mr. Cornwell	73,501	124,300	0	0	0		0		197,801	212,427
Mr. Gray	73,501	124,300	0	0	1,542	(1)	0		199,343	264,162
Ms. Horner*	85,001	124,300	0	0	0		0		209,301	202,918
Mr. Howell*	91,167	124,300	0	0	0		0		215,467	229,754
Dr. Ikenberry	105,167	124,300	0	0	0		0		229,467	566,060
Mr. Lorch	75,001	124,300	0	0	0		0		199,301	176,731
Dr. Mead*	90,667	124,300	0	0	0		0		214,967	221,888
Dr. Simmons	75,501	124,300	0	0	0		0		199,801	159,019
Mr. Steere	69,834	124,300	0	0	0		50,000	(2)	244,134	103,152
* Committee Chair

 

(1)     This amount represents above-market interest on the deferred cash balance under a legacy Warner-Lambert equity compensation plan, paid at the prime rate plus 2%.

(2) This amount relates to Mr. Steeres consulting contract, discussed in more detail under the heading Transactions with Related Persons.

(3)  For additional transparency, we have added this column which shows the aggregate earnings in 2006 on the Directors deferred compensation balances, which includes both dividends, interest and change in value of the units.

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SEC Filing Excerpt For complete filing click here

Executive Compensation

COMPENSATION COMMITTEE REPORT

     The Compensation Committee has reviewed and discussed with management the following Compensation Discussion and Analysis section of the Companys 2007 Proxy Statement. Based on its review and discussions with management, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Companys Proxy Statement for 2007.

The Compensation Committee:

Mr. Burt
Mr. Ikenberry
Mr. Lorch
Dr. Mead (Chair)

COMPENSATION DISCUSSION & ANALYSIS

Principles and Objectives of Executive
Compensation Program

     As stated in its Charter, the Compensation Committee sets the overall compensation philosophy at Pfizer. The objective of the Executive Compensation Program is to ensure that compensation paid to executive officers is closely aligned with the performance of the Company on both a short-term and long-term basis, and that such compensation assists the Company in attracting, motivating and retaining key executives critical to its long-term success. Compensation is structured to ensure that a significant portion of compensation opportunity will be directly related to Company stock performance and other factors that directly and indirectly influence shareholder value.

     Both management and the Compensation Committee recognize the importance of maintaining sound principles for the development and administration of compensation and benefit programs. Our Compensation Committee has taken steps to significantly enhance its ability to effectively carry out its responsibilities, as well as to ensure that the Company maintains strong links between executive pay and performance.

Examples of actions that the Committee has taken in the past few years include:

  

Made significant changes in the executive compensation program, including:

  Aligned compensation structures based on median target pay (formerly 75th percentile for long-term incentives and actual pay for cash compensation);

  Established a pharmaceutical peer group for primary pay and performance comparisons that more closely aligns with our core business;

  Established a Fortune-100 comparator group for supplemental pay comparisons to assist in the alignment of target compensation with median competitive general industry data;

  Strengthened the link between the CEO pay and shareholder value through specific objectives and realignment of salary, target bonus and stock options (for example, the stock option award granted to Mr. Kindler on becoming CEO is directly tied to the performance of the Company and is only exercisable if the average price of Pfizer stock exceeds a specified threshold for a designated period of time);

  Established annual reviews of detailed compensation tally sheets for the Named Executive Officers;

  Initiated limitations on executive change-in-control severance and, prospectively on executive pensions;

  Established policies regarding recapture of compensation to executives if certain acts occur;

  Eliminated tax gross-up for imputed income relating to use of Company automobiles, effective January 1, 2007;

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 Reached separation agreement with former CEO and fully disclosed all payments to be made upon his departure, which were limited to those amounts we were contractually obligated to pay under his employment agreement; and

 No employment contract with new CEO (maintained employment-at-will relationship).

Increased the number of executive sessions of the Committee held without Company management present;

Retained an independent compensation consultant to advise on executive compensation issues.

     The Committee intends to continue its strategy of compensating executives through programs that emphasize performance-based incentive compensation. Executive compensation is tied directly to the performance of the Company and is structured to ensure that, due to the nature of the business, there is an appropriate balance between short and long-term performance of the Company, and also a balance between the Companys performance against its strategic plan, financial performance and shareholder return.

     For 2006, the actual total compensation of the continuing Named Executive Officers generally fell slightly below the median of total compensation paid to executives holding equivalent positions in the pharmaceutical peer group companies. The Committee believes that these compensation levels are reasonable in view of the fact that the new management team has been in place since August 2006 and needs adequate time to demonstrate performance.

     Compensation tally sheets for each of the Named Executive Officers were reviewed by the Committee in 2006. These tally sheets affixed dollar amounts to all components of the Named Executive Officers 2006 compensation, including current pay (salary and bonus), deferred compensation, outstanding equity awards, benefits, perquisites and potential change-in-control severance payments. The Committee will continue to review tally sheets at least on an annual basis.

Elements of Executive Compensation

     The compensation program for executive officers consists of the following elements:

Salaries

Annual cash incentive (bonus) awards

Long-term equity incentive awards, including:

 Stock Options

 Performance Shares

 Restricted Stock Units

In-Service and Post-Employment Benefits

Perquisites

     The Committee has chosen these elements of compensation to create a flexible package that reflects the long-term nature of the pharmaceutical business and can reward both short and long-term performance of the Company and individual.

Salaries

     Salaries are used to provide a fixed amount of compensation for the executives regular work. The salaries of the Named Executive Officers are reviewed on an annual basis, as well as at the time of a promotion or other change in responsibilities. Increases in salary are based on an evaluation of the individuals performance and level of pay compared to pharmaceutical and general industry comparator group pay levels for similar positions. Salaries, in conjunction with target bonuses, are targeted to the median competitive data for cash compensation.

     The effective date of merit increases typically is April 1st of each year. Increases in salaries are based on both individual performance and the Companys merit increase budget for the year. Salary increases can also occur upon promotion. Any salary increase for an elected corporate officer must be approved by our Compensation Committee.

Annual Cash Incentive Awards

     Executive Officers may be awarded annual cash bonuses under the Pfizer Inc. Executive Annual Incentive Plan (Annual Cash Incentive Plan), approved by the shareholders in 1997. Under the Annual Cash Incentive Plan,

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executives may earn bonuses based on Company and individual performance criteria, subject to the established maximum of 0.3% of the Companys Adjusted Net Income, as defined in the Plan.

     Annual cash incentive awards are designed to reward short-term performance and achievement of designated strategic results. The target bonus is established through an analysis of compensation for comparable positions in pharmaceutical and general industry peer group companies and is intended to provide a competitive level of compensation when the executives achieve their performance objectives. Combined salaries and target bonus levels are intended to approximate the competitive median. Bonus levels are determined as a percentage of each executives base salary. Performance objectives are approved by the Compensation Committee.

     The 2006 target and actual cash incentive awards paid to each of the Named Executive Officers are shown in the table below. The actual cash incentive awards are also shown in the Bonus column of the Summary Compensation Table in the Executive Compensation Tables section which follows this Compensation Discussion and Anaylsis.

2006 Annual Cash Incentive Awards

	Target(1)				Target			Actual
	Payout as		Payout		Bonus	Maximum		Cash	Actual
	a % of		Range as a		Award	Award		Award	Award as a
Name	Salary		% of Salary		($)	($)		($)	% of Salary
Mr. Kindler	150	%	0-300	%	$2,025,000	$4,050,000		$3,300,000	220
Mr. Shedlarz	77	%	0-154	%	773,500	1,547,000		1,263,400	125
Dr. LaMattina	62	%	0-124	%	538,700	1,077,400		718,300	82
Mr. Read	59	%	0-118	%	476,600	953,200		667,200	82
Mr. Levin	60	%	0-120	%	470,700	941,400		580,600	74
Ms. Katen	85	%	0-170	%	1,037,300	2,074,600		1,383,000	113

(1)     Target bonuses at Pfizer typically are based on actual salary earned during the year and are set as a percentage of the years salary. If an employee is promoted during the year, the target bonus percent may be increased. The actual bonus paid for the year would typically be calculated based on the portion of time that each target bonus percent applied. Mr. Kindlers bonus percent was adjusted to 150% of his year-end salary as a result of his promotion to CEO during the year.

     The actual cash incentive award is determined according to each Named Executive Officers level of achievement against his or her individual financial and strategic performance objectives, and as a result, may be less than or greater than the target bonus amount. Prorated changes in the annual target bonus levels can occur during the year if there are changes in the officers salary grade level that warrant a target change (for example, a significant change in level of responsibility).

     In 2006, the performance objectives for the Named Executive Officers generally included the following, depending on each Officers role in the Company:

• Financial objectivesrevenues, adjusted earnings per share, cash flow from operations, productivity cost savings initiatives and certain divisional financial measures with a focus on increasing shareholder value.

• Strategic objectivesdeliver more new medicines more quickly to patients; progress the Companys Adapting to Scale initiative; promote new directions in health and wellness; shape a positive environment for better healthcare; develop people, talent and organization; and other operating responsibilities, as appropriate.

     In addition, as a result of the appointment of a new CEO at the end of July, the new leadership team developed additional objectives which focused heavily on initiatives and strategies designed to reorganize the Company, set a new direction for Pfizer and produce long-term shareholder value. The specific objectives for each continuing Named Executive Officer are weighted according to the extent to which the Officer will be responsible for delivering the results on the individual objectives.

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     For 2006, the financial objectives reflected a significant level of difficulty for the executives given the dynamic business environment and the challenges posed by the loss of exclusivity for certain key products. The strategic objectives required each executive to produce significant results and achieve challenging targets in order to qualify for target level incentive payments. Financial objectives were weighted at 25% for Mr. Kindler and in the range of 20% to 50% for the other continuing Named Executive Officers, and were determined with reference to total revenue of $48.4 billion, adjusted diluted earnings per share of $2.06, expense savings of $2.6 billion, as well as an operating cash flow metric. The Committee also evaluated the new leadership teams ability to deliver on the challenge of designing strategies and actions needed to reorganize and drive the Company forward.

     While these metrics were used as a guideline in determining the portion of the annual cash incentives attributable to financial measures, we only use strict formulaic achievement of financial metrics in the determination of performance share award payments. The Compensation Committee incorporates flexibility into our bonus program to better align with the evolving nature of our business. The Compensation Committee may adjust the portion of the bonus related to financial objectives upward or downward to better align with the overall total shareholder return.

     A payment of $2,158,300 in lieu of a bonus for 2006 was made to Dr. McKinnell pursuant to his Employment Agreement, which is described in detail in the section headed Departure of Former Chief Executive Officer.

Long-Term Equity Incentive Awards

     Equity-based compensation and ownership ensures that the Companys executive officers have a continuing stake in the long term success of the Company. Each year in February, the Company grants long-term equity awards to certain executives, based on an evaluation of their performance in the prior year. The awards granted in February 2007 are discussed in more detail in the section headed 2007 Compensation Actions.

     Mr. Kindler, the other Named Executive Officers and approximately 100 additional executives participate in the Companys long-term incentive program.

     Under its long-term incentive program, Pfizer currently grants stock options, restricted stock units and performance-based share awards to eligible employees under the Pfizer Inc. 2004 Stock Plan (2004 Stock Plan). The 2004 Stock Plan also permits the Company to grant equity-based awards to our non-employee Directors.

     The 2004 Stock Plan replaced the 2001 Performance-Contingent Share Award Plan, under which participating employees were awarded performance based shares, and the 2001 Stock and Incentive Plan, under which participating employees were granted stock options, stock awards (including restricted stock and restricted stock unit awards) and performance-based stock awards.

     For 2006, long-term incentive awards generally consisted of stock options, performance share awards and restricted stock units. The value of any award is divided so that half of the target value is delivered in stock options, one quarter in performance share awards and one quarter in restricted stock units. The target long-term incentive awards are set at the median of the Companys peer group data, according to the employees level of responsibility in the Company.

     All awards under our stock plans are subject to non-competition and gain recapture provisions.

      Stock Options

     Stock options provide a material incentive to employees by providing an opportunity for a larger stock ownership stake in the Company. The ten-year term of the options seeks to reflect the long-term nature of the discovery and development of new medicines.

     Stock options are awarded under the 2004 Stock Plan to the Named Executive Officers and certain other executives of the Company in February of each year. Prior to September 2006, stock options were issued with an exercise price equal to the average of the highest and lowest price on the date of the grant. The exercise price for option grants issued after September 2006 is based on the closing price of Pfizer common stock on the date of the grant. Stock options will have actual delivered compensation value only if the market price of the common stock increases after the grant date.

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     In determining the size of stock option grants to participating executives and other management employees, the Committee considers similar awards to individuals holding comparable positions in our peer groups, Company performance against the strategic plan, individual performance against the individuals objectives, as well as the allocation of overall share usage attributed to executives and the total number of shares issued in the grant relative to our outstanding shares. Actual stock option awards can range from zero to two times the target awards based on individual performance.

     Stock options were granted to participating executive officers in February, 2006. These options vest on the third anniversary of the grant. All stock option grants have a ten-year term. If an executive retires after having met the retirement eligibility criteria (typically age 55 with 10 years of service), and has options that were held for at least one full year prior to retirement, the stock options will generally become exercisable on schedule and remain exercisable for the full term of the grant. If the retirement criteria have not been met, vested exercisable stock options remain exercisable for up to three months from the recipients date of termination from service and unvested stock options are forfeited. Our stock plans strictly prohibit repricing of options.

      Stock Option Grant Policy

     It is the policy of the Company and the Board of Directors to issue the annual grant of stock options to eligible employees on the date of the February Board of Directors meeting each year without regard to the timing of the release of material information. The meeting is typically scheduled on the fourth Thursday in February. Special grants to newly hired individuals are granted on the last business day of the month of hire. Any other special grants to continuing employees are granted on the last business day of the month in which the grant was approved. Prior to September 2006, the grant price was established using the average of the highest and lowest stock price of Pfizer common stock traded on the New York Stock Exchange on the date of the grant. As of September 2006, the grant price is set at the closing price on the date of the grant.

      Restricted Stock and Restricted Stock Unit Awards

     Restricted stock units are a promise to pay to the recipients actual shares of Pfizer stock at the end of the vesting period when the restrictions lapse. The Named Executive Officers and certain other senior executives of the Company received restricted stock units as part of their long-term incentive award in 2006. The receipt of these awards typically cannot be deferred; however, if a recipient is subject to Internal Revenue Code Section 162(m), upon the vesting of the units, or if the recipient terminates employment with the Company, receipt of the restricted stock units will be deferred until the recipient is no longer subject to Section 162(m) or the January 31 of the year following termination, whichever is earlier. Deferred units can be invested either in Pfizer stock units or in a fund earning 120% of the Federal Long Term Rate. Dividends are reinvested during the vesting period as additional restricted stock units.

     Restricted stock units typically vest on the third anniversary of the grant. If the grants have been held for one year after the grant date and if a participating executive retires having met the retirement eligibility criteria described above, a portion of the restricted stock units, prorated for service during the vesting period, will be paid to the executive, subject to certain conditions.

      Performance Share Awards

     Performance shares provide a material incentive to executives by offering potential increased stock ownership in the Company tied directly to relative total shareholder return. The Named Executive Officers and certain other executives receive performance share grants as part of their long-term incentive award. The performance share program entitles the holder to earn shares of Pfizer common stock if certain relative levels of performance on shareholder return compared to our pharmaceutical peers are achieved. The three-year vesting period of the performance shares closely correlates with our mid-range sales and marketing business plan.

     In February 2006, the Committee awarded performance shares to the CEO, the Named Executive Officers and approximately 100 other executives, for the January 1, 2006 through December 31, 2008 performance period under the 2004 Stock Plan.

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     The receipt of performance share awards can be deferred as shares, at the election of the executive. Dividends on performance shares are reinvested in additional performance shares. Shares earned under these awards, if any, are determined by a non-discretionary formula, which measures our performance over a three-year period using total shareholder return, including reinvestment of dividends (TSR) measured over the performance period, relative to the pharmaceutical peer group. If our minimum TSR performance is below the threshold level relative to this peer group, then no shares will be earned. If our TSR over the performance period is above the threshold level relative to the peer group, but is negative in the absolute, then the maximum payout will be limited to the target amount. To the extent the Companys performance exceeds the threshold performance level relative to the peer group, varying amounts of shares of common stock up to the maximum may be earned as follows:

Performance Share Award Program
Relative Performance/Payout Matrix

Pfizers		Maximum
Relative		Payout as a %
Performance		of Target
1 (highest)		200	%
2		200	%
3		175	%
4		150	%
5		125	%
6		100	%
7		75	%
8		50	%
9 (threshold)		25	%
10		0	%
11 (lowest)		0	%

 

     In 2002, 2003, 2004 and 2005, the Committee awarded the right to earn shares (Performance-Contingent Shares) of Pfizer common stock to the Named Executive Officers and certain other executives, based on the relative performance of the Company. These awards were determined according to each participants salary level, based on competitive survey data, and were not based on individual performance. The number of actual shares earned under these awards, if any, will be determined by a non-discretionary formula, which measures our performance over a five-year period using both TSR and growth in diluted earnings per share (as reported) as metrics, measured over the performance period relative to the pharmaceutical peer group.

     The performance formula for these awards weighs these two criteria equally. If our performance in both measures is below the threshold level relative to the pharmaceutical peer group, then no Performance-Contingent Shares will be earned. To the extent that the Companys performance on either or both measures exceeds the threshold performance level relative to the peer group, a varying number of Performance-Contingent Shares up to the maximum will be earned.

     For the performance periods beginning in 2002, 2003 and 2004, the pharmaceutical peer group consisted of Abbott Laboratories, Baxter International Inc., Bristol-Myers Squibb Company, Colgate-Palmolive Company, Eli Lilly and Company, Johnson & Johnson, Merck and Co., Inc., Schering-Plough Corporation, and Wyeth. For the performance periods beginning in 2005 and thereafter, the pharmaceutical peer group consisted of Abbott Laboratories, Amgen, Bristol-Myers Squibb Company, AstraZeneca, GlaxoSmithKline, Eli Lilly and Company, Johnson & Johnson, Merck and Co., Inc., Schering-Plough Corporation, and Wyeth.

• Recently Completed Performance PeriodsPrevious Performance-Contingent Share Award Program

     In January 2002, the Committee awarded the right to earn shares of Pfizer common stock to the executive officers, including the Named Executive Officers, for the 2002-2006 performance period under the 2001 Performance-Contingent Share Award Plan. To the extent the Companys performance exceeded the threshold performance level relative to the peer group, a varying amount of shares of common stock up to the maximum were earned.

     The following table sets forth Pfizers performance ranking, based on total shareholder return and diluted earnings per share (as reported), relative to the performance of our pre-2005 pharmaceutical peer group, and the corresponding performance share payout.

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Performance Share Payout for 2002-2006 Performance Period

									Change in (As-
				Total Shareholder					Reported) Diluted
				Return					Earnings per Share*
																				Actual
							Ranking -					Ranking -		Payout						Award
							Pfizer out					Pfizer out		As a %				Actual		Value
		Performance		Percentile			of # of Peer		Percentile			of # of Peer		of		Target		Award		at $25.87
Name		Period		Ranking			Companies		Ranking			Companies		Target		Award		Shares		Per Share
Mr. Kindler		2002-2006		22	%		8 out of 10		100	%		1 out of 10		100		76,680		76,680	**	1,983,712
Mr. Shedlarz		2002-2006		22	%		8 out of 10		100	%		1 out of 10		100		73,440		73,440		1,899,893
Dr. LaMattina		2002-2006		22	%		8 out of 10		100	%		1 out of 10		100		56,040		56,040		1,449,755
Mr. Read		2002-2006		22	%		8 out of 10		100	%		1 out of 10		100		42,600		42,600		1,102,062
Mr. Levin		2002-2006		22	%		8 out of 10		100	%		1 out of 10		100		46,500		46,500		1,202,955
Dr. McKinnell		2002-2006		22	%		8 out of 10		100	%		1 out of 10		100		198,000		198,000		5,122,260
Ms. Katen		2002-2006		22	%		8 out of 10		100	%		1 out of 10		100		111,120		111,120		2,874,674

 

* For the 2006-2008 performance period total shareholder return will be the only performance measure applied to the Performance Share Program.

**     As a condition of Mr. Kindlers promotion to CEO, these shares will be settled in Restricted Stock Units that will only become payable if and when the Companys three year TSR exceeds the median for the pharmaceutical peer group. If otherwise unvested upon his retirement or other termination of employment (other than for death and disability), this

      Deferral Opportunities

     The Company also provides the opportunity to defer, as shares of Pfizer common stock, performance share awards that are earned and otherwise would be paid shortly after the performance period. Dividends are credited on those deferred shares and are reinvested in additional shares of common stock. Annual cash incentive awards, as shown in the Bonus column of the Summary Compensation Table, may also be deferred into either a Pfizer unit fund, or a cash fund earning interest at 120% of the Federal Long-Term rate (which fluctuated between 5.41% and 6.27% in 2006). The Pfizer unit fund is credited with reinvested dividend equivalent units. These deferral programs provide a tax planning opportunity to the executives and provide the opportunity for increased pre-tax shareholding.

In-Service and Post-Employment Benefits

     The Company provides a number of benefit plans including the Pfizer Retirement Annuity Plan, the Pfizer Savings Plan and related supplemental (restoration) plans to its executives and certain other U.S. based employees. These plans are described in the narrative accompanying the compensation tables that follow this section. The Company also provides other benefits such as medical, dental, life insurance (up to $250,000 coverage) and long-term disability coverage (up to $300,000) through our active employee flexible benefits plan, as well as vacation and other paid holidays. These benefits are available to all U.S. based employees, including each Named Executive Officer, and are comparable to those provided at other large companies. These programs are designed to provide certain basic quality of life benefits and protections to Pfizer employees and at the same time enhance Pfizers attractiveness as an employer of choice.

     The Companys portion of the cost of health and welfare benefits provided in 2006 for the Named Executive Officers was as follows:

		Company Provided
		Cost of Active
Officer		Benefits
Mr. Kindler		$19,202
Mr. Shedlarz		14,034
Dr. LaMattina		19,530
Mr. Read		19,202
Mr. Levin		14,457
Dr. McKinnell		15,087
Ms. Katen		14,706

 

     In addition to active employee benefits, the Company provides post-retirement medical, dental and life insurance coverage to retirees in accordance with each legacy company plan under which the eligible employees are

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covered. Legacy company refers to the employees original employer, prior to Pfizers mergers with Warner-Lambert and Pharmacia. The Named Executive Officers are all covered under the legacy-Pfizer plans, which provide up to $12,000 of annual medical coverage prior to age 65, $3,000 of annual medical coverage after age 65, and up to $250,000 of life insurance coverage which reduces ratably to $2,500 ten years after retirement.

Perquisites

     The Company provides certain perquisites to its executives. These perquisites provide flexibility to the executives and increase travel efficiencies, allowing more productive use of executive time, in turn allowing greater focus on Pfizer-related activities. More detail on the Companys perquisites may be found in the narrative following the Summary Compensation Table.

Stock Ownership Requirements

     The Company maintains stock ownership requirements for its Named Executive Officers and other executives. Stock ownership is defined to include stock owned by the officer directly, stock owned indirectly through the Companys Savings Plan, restricted stock and restricted stock units, units with respect to the deferral of annual incentive awards or the supplemental saving plan and stock awarded under any performance-contingent share award grant and subsequently deferred. Under the current guidelines of the stock ownership program established by the Committee, employee Directors (currently, Mr. Kindler) are required to own Company common stock equal in value to at least five times their annual salaries. This program also extends to the other Named Executive Officers and other elected Corporate Officers, who are ultimately required to own Company common stock equal in value to at least four times their annual salaries. All other participants in the Executive Long-Term Incentive Program are required to own an amount equal in value to three times their annual salaries. The Committee has also established milestone guidelines that are used to monitor progress toward meeting the targets as described above, over a five-year period. Under these milestone guidelines, Mr. Kindlers ownership requirement is currently four times his salary.

     The Committee has determined that, as of December 31, 2006, all Named Executive Officers have met their ownership milestones (as shown below) and all other employees covered by the stock ownership program have met or are making significant progress toward meeting their milestones.

Stock Ownership Requirements

		Direct					$25.90	Ownership	Meets
		Owner-	Shares	Restricted	Savings		Value at	Require-	Require-
Officer		ship	Deferred	Shares	Plan	Total	12/31/2006	ment	ment
Mr. Kindler		20,561	79,283	130,282	12,929	243,055	$ 6,295,163	$ 5,400,000
Mr. Shedlarz		74,881	541,336	91,930	109,814	817,961	$21,185,190	$ 4,066,400
Dr. LaMattina		124,099	281,852	71,190	101,619	578,760	$14,989,884	$ 3,540,800
Mr. Read		48,278	137,897	44,527	32,262	262,964	$ 6,810,768	$ 2,625,000
Mr. Levin		185,674	182,945	50,644	74,511	493,774	$12,788,747	$ 2,388,300

 

     The values shown in the above table include the shares earned under the 2002-2006 performance contingent share award performance period, adjusted for estimated tax withholding. The value is determined based on the closing stock price ($25.90) on December 29, 2006.

      Trading in Pfizer Stock Derivatives

     It is the policy of the Company that all employees, including Officers, and our Directors may not purchase or sell options on Pfizer stock, nor engage in short sales with respect to Pfizer common stock. Also, trading by Officers and Directors in puts, calls, straddles, equity swaps or other derivative securities that are directly linked to Pfizer stock is prohibited.

Financial Restatement

     It is the Board of Directors Policy that the Committee will, to the extent permitted by

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governing law, have the sole and absolute authority to make retroactive adjustments to any cash or equity based incentive compensation paid to executive officers and certain other officers where the payment was predicated upon the achievement of certain financial results that were subsequently the subject of a restatement. Where applicable, the Company will seek to recover any amount determined to have been inappropriately received by the individual executive.

Tax Deductibility of Pay

     Section 162(m) of the Internal Revenue Code of 1986, as amended (the Tax Code), places a limit of $1,000,000 on the amount of compensation that Pfizer may deduct in any one year with respect to each of its five most highly paid executive officers. There is an exception to the $1,000,000 limitation for performance-based compensation meeting certain requirements. Annual cash incentive compensation, stock option awards, Performance Share Awards and Performance-Contingent Share Awards generally are performance-based compensation meeting those requirements and, as such, are fully deductible. To maintain flexibility in compensating executive officers in a manner designed to promote varying corporate goals, the Committee has not adopted a policy requiring all compensation to be deductible. Since Dr. McKinnells, Ms. Katens, Mr. Shedlarzs and Mr. Kindlers 2006 salaries are above the $1,000,000 threshold, a portion of their salaries and the Internal Revenue Service (IRS) value of their perquisites are not deductible by the Company.

     Restricted stock and restricted stock units are not considered performance-based under Section 162(m) of the Tax Code and, as such, are generally not deductible by the Company. However, any restricted stock unit which is subject to IRS Section 162(m) upon payment will be mandatorily deferred either as shares or into a fund earning 120% of the Federal Long-Term rate. All other annual incentives and long-term incentive amounts will be deductible when they are paid to the executive officers.

     The Company makes corporate aircraft available to provide flexibility to its executives and to allow more efficient use of executive time for Company matters. The aircraft deduction disallowance for the Named Executive Officers results in an out-of-pocket cost to the Company of $1,050,000.

Benchmarking

     The Committee sets midpoint salaries, target bonus levels and target annual long-term incentive award values at the median of a peer group of pharmaceutical companies and a general industry comparator group of Fortune 100 companies, based on available survey data. Where appropriate, the target position is adjusted to reflect Pfizers scale and scope. For salary and cash bonus levels, these adjustments, if any, are generally based on differences in revenues and relative market capitalization.

     The companies that comprised our pharmaceutical peer group in 2006 are Abbott Laboratories, Amgen, AstraZeneca, Bristol-Myers Squibb Company, Eli Lilly and Company, GlaxoSmithKline, Johnson & Johnson, Merck and Co., Inc., Schering-Plough Corporation and Wyeth.

     Comparative financial measures for this group in 2006 along with Pfizers and those of the General Industry Comparator Group are shown in the table below.

General Industry				Pharmaceutical
Comparator Group*				Peer Group*	Pfizer
	Median Revenue	$47.8 billion		$21.4 billion	Revenue		$48.4 billion
	Median Net Income	$5.0 billion		$3.6 billion	Net Income		$19.3 billion
	Median Market				Market
	Capitalization	$80.8 billion		$76.1 billion	Capitalization		$184.5 billion

*Based on available information as of March 1, 2007.

     As noted above, the Committee also uses a general industry comparator group consisting of about one half of the Fortune-100 companies that best align with our sales volume, cash flow and market capitalization, as well as with the nature of our business and workforce, in determining the competitive positioning of pay. The general industry peer group can change from time to time based on the criteria stated above.

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General Industry Comparator Group

Alcoa		Dell		Lockheed Martin
Allstate		Dow Chemical		Merrill Lynch
Altria Group		DuPont		MetLife
American Express		ExxonMobil		Microsoft
AIG		Fannie Mae		Motorola
Bank of America		FedEx		PepsiCo
Boeing		Ford Motor		Procter & Gamble
Cardinal Health		General Electric		TimeWarner
Caterpillar		General Motors		United Parcel Service
ChevronTexaco		Hewlett-Packard		United Technologies
Cisco		Honeywell		UnitedHealth Group
Citigroup		Intel		Verizon
Coca-Cola		International Paper		Viacom
Comcast		IBM		Wachovia
ConocoPhillips		J.P. Morgan Chase		Walt Disney
				Wells Fargo

 

CEO Compensation and Evaluation of Executive Performance in 2006

     Mr. Jeffrey B. Kindler became Chief Executive Officer effective July 31, 2006. As a result of his promotion, the Compensation Committee approved new compensation arrangements for Mr. Kindler including an increase to base salary from $947,500 to $1,350,000 and to his target annual bonus under the Companys Annual Cash Incentive Plan from 65% to 150% of his new base salary. The Compensation Committee also approved the grant to Mr. Kindler of an option to purchase 500,000 shares of Pfizer common stock under Pfizers 2004 Stock Plan at an exercise price of $26.29 per share, the fair market value of Pfizer common stock on July 31, 2006. The exercise price was set at the average of the highest and lowest trading price on the date of grant. The option will become exercisable upon the fifth anniversary of the date of grant only if the average closing price of Pfizer common stock for 20 consecutive trading days exceeds 150% of the exercise price. In addition, the Compensation Committee determined that, in order to more closely align pay with performance, any amount earned under any currently outstanding Performance-Contingent Share Awards and Performance-Share Awards held by Mr. Kindler would be settled through an award of restricted stock units if the Companys actual total shareholder return achieved with respect to such award is less than the median total shareholder return of the Companys pharmaceutical peer group. The restricted stock units will vest and become payable in shares of Pfizer common stock if and when the Companys three-year total shareholder return based on the rolling average over a three calendar year period exceeds the median for the pharmaceutical peer group. Upon Mr. Kindlers retirement or other termination (other than for death or disability) of employment, any of these restricted stock units that remain unvested will be forfeited. If Mr. Kindler dies or becomes disabled while in active service, these shares will vest.

     The Compensation Committee is responsible for evaluation of CEO performance, in consultation with the Board. The Compensation Committee, working with the CEO, evaluates the performance of the other Named Executive Officers and elected officers. The Committee does not rely solely on predetermined formulas or a limited set of criteria when it evaluates the performance of these officers, but rather focuses on their individual objectives which typically reflect short-term and certain strategic goals.

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     In 2006, the Committee considered managements continuing achievement of its short and long-term goals. It also focused on Mr. Kindlers objectives and strategies designed to build shareholder value:

• Achieve financial goalsincrease shareholder value and maximize revenue, along with attaining certain earnings per share, operating cash flow, and cost savings goals

• Reorganize and rebuild the corporate leadership group and strengthen senior leadership teams

• Improve relationships with internal and external constituencies and effectively communicate strategy and financial results to increase shareholder value

• Set new direction for Pfizer including internal reorganization and enhancing the focus on patients, doctors, customers and business partners

     The Committee based its compensation decisions for Mr. Kindler on its assessment of the Companys performance and his performance based on the objectives and strategies listed above.

The following information reflects Mr. Kindlers performance evaluation, resulting from the process described above, as agreed to by the Compensation Committee.

     In the face of many challenges in 2006, the Company substantially achieved a number of financial targets that were set early in the year. The Company took decisive action and delivered solid performance despite challenges, including the significant revenue impact due to the loss of exclusivity of several key products. The Company achieved revenue growth of 2 percent for the year and delivered an adjusted diluted earnings per share of $2.06, in excess of Wall Street expectations. In 2006 the Company had total revenues of $48.37 billion and adjusted earnings of $14.98 billion.

     During the fourth quarter of 2006, the Company strengthened its commitment to enhancing total return to shareholders by completing the divestiture of the Consumer Healthcare business, receiving approximately $16.6 billion in proceeds. In December 2006, the Board of Directors of Pfizer approved a 21 percent increase in its first quarter 2007 dividend to 29 cents per share. This significant increase builds on a 26-percent dividend increase in 2006. The Company also continued its substantial share purchase program by buying $7 billion of its common stock during 2006.

     Pfizers common stock price went from $23.32 on December 31, 2005 to $25.90 on December 31, 2006. Including dividends, the total shareholder return for 2006 was 15.2% as compared to the average pharmaceutical peer group total shareholder return of 11%.

     In 2006, restructuring initiatives resulted in savings of approximately $2.6 billion, $600 million ahead of the goal for 2006. In addition, under Mr. Kindlers leadership, significant improvements were made to streamline the decision-making process by removing multiple layers of management and eliminating various committees.

     Mr. Kindler established a new Executive Leadership Team and overall management structure. Significant strides were made in improving relationships with both internal and external constituencies, including shareholders, customers, colleagues, and government officials through increased transparency, clarity, responsiveness and speed of strategy development and execution.

     The Committee and the Board believe that Mr. Kindler has taken decisive action to set a new direction for Pfizer through both internal reorganizations and external strategic focus.

     Based on its overall assessment, the Committee decided to set Mr. Kindlers base salary at $1.5 million for 2007, and award an annual incentive of $3.3 million for 2006 performance, which also reflects his promotion to CEO. The Committee awarded Mr. Kindler options to purchase up to 760,000 shares of common stock, and a range of 0 to 310,400 performance shares for the three-year performance period 1/1/2007 through 12/31/2009, to be earned entirely based on Pfizers total shareholder return relative to its pharmaceutical peers.

     These awards were approved by the Committee and ratified by the Board.

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2007 Compensation Actions

     Compensation received in fiscal year 2006 is presented in the tables following this Compensation Discussion and Analysis. For further transparency, we are including this discussion of compensation actions that were taken after fiscal year 2006 in consideration of 2006 fiscal year performance by the Named Executive Officers and other senior executives.

     The Company granted long term incentive compensation awards to the Named Executive Officers and certain other executives in February of 2007 in consideration of their 2006 performance. The table below, 2006 Compensation (including 2007 Compensation Actions), shows the full value of these grants made in February 2007, as well as the cash compensation paid to these executives in 2006, and includes:

• 2006 annual salary;

• 2006 annual cash incentive compensation (bonus paid in 2007 in consideration of 2006 performance);

• Fair value of target performance shares and restricted stock units awarded in February 2007 based on current level and in consideration of 2006 performance;

• Fair value of the stock options awarded in February 2007 based on current level and in consideration of 2006 performance; and

• Other compensation as of December 31, 2006, including pension accrual, savings plan matching payments, active employee benefits and the value of perquisites (based on the aggregate incremental cost to the Company).

     In February 2007, the Compensation Committee issued stock based grants under the 2004 Stock Plan to the participating officers. Under this grant, Mr. Kindler received both stock options and performance shares. Mr. Kindlers long-term incentive target value was divided evenly, so that half of the value was delivered in stock options and half was delivered in performance share awards. The other participating officers received grants in February 2007 consisting of stock options, performance shares and restricted stock units. For these officers, the long-term incentive target value was divided so that half of the value was delivered in stock options, one quarter in performance share awards, and one quarter in restricted stock units.

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2006 Compensation (including 2007 Compensation Actions)

			Grant		Change in
			Value of		Pension
			2007 Stock		Value and
			Awards(1)	Grant Value	Non-Qualified
		Annual	(target	of 2007	Deferred	All Other
		Cash	performance	Option	Compensation	Compen-
Name and	Salary	Bonus	shares)	Awards(2)	Earnings(3)	sation(4)	Total
Principal Position	($)	($)	($)	($)	($)	($)	($)
Mr. Kindler	1,103,883	3,300,000	4,469,760	3,123,600	422,091	265,318	12,684,653
Mr. Shedlarz	1,008,225	1,263,400	1,539,507	1,340,271	1,381,064	185,843	6,718,310
Dr. LaMattina	873,275	718,300	969,299	729,525	652,683	88,058	4,031,140
Mr. Read	813,450	667,200	969,299	1,027,500	455,792	86,159	4,019,399
Mr. Levin	784,575	580,600	855,039	657,600	212,143	70,345	3,160,302
Dr. McKinnell	2,270,500					383,517	2,654,017
Ms. Katen	1,220,300	1,383,000			17,426,208	287,311	20,316,820

 

(1)     Fair value, as determined under FAS 123R, of target performance shares, for the performance period January 1, 2007 through December 31, 2009, and restricted stock unit awards. These have been valued based on the grant date fair value estimated by the Company for financial reporting purposes on February 22, 2007 ($28.80 per share for the performance shares and $25.87 per share for the restricted stock units) and may not reflect the value of the award upon payment. Actual performance shares earned under these awards will be determined in accordance with the Relative Performance/Payout Matrix in the section headed Performance Share Awards above.

(2) Fair value, as determined under FAS 123R, of the stock option award granted on February 22, 2007 based on the grant date fair value estimated by the Company for financial reporting purposes ($4.11 per share). The Company cautions that the actual amount ultimately realized by a Named Executive Officer from the disclosed equity awards will likely vary based on a number of factors, including the Companys actual operating performance, stock price fluctuations, differences from the valuation assumptions used and the timing of exercise or applicable vesting.

(3) The Company does not pay above market interest on non-qualified deferred compensation, therefore, this column reflects pension accruals only. The pension accrual amounts represent the difference between the December 31, 2005 and December 31, 2006 present value of the age 65 accrued pension, or the current benefit if eligible for an unreduced pension, under the Retirement Plan and Supplemental Retirement Plan, based on the pension plan assumptions for each year as shown in the discussion following the Pension Benefits table. The amount shown for Ms. Katen reflects the change in her status from early retirement under the Retirement Plan (initially deferred to age 65, as required), which carries a reduction of 4% per year (prorated for partial years) on the age 65 annuity, to the 90-combination of age plus years of service, which makes her eligible to retire without an early retirement reduction. For Dr. McKinnell and Ms. Katen the values are shown based on the currently payable benefits.

(4) The All Other Compensation column represents the value of perquisites and tax gross-ups for use of Company cars; and the Company matching funds under the Pfizer Savings Plan and related Supplemental Savings Plan (as discussed in detail in the discussion following the Non-Qualified Deferred Compensation Table) as of December 31, 2006.

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      2007 Executive Long-Term Incentive Grant

     For 2007, executive long-term incentives consisted of stock options, restricted stock units and performance shares. Mr. Kindler received only stock options and performance shares. The following table sets forth information concerning the number of stock options and restricted stock units granted in February 2007, as well as information about participation of the Named Executive Officers in the performance share program for the performance period January 1, 2007 to December 31, 2009.

2007 Executive Long-Term Incentive Grant

			Estimated Future
		Performance	Payouts Under the
		Period (or	Performance-Share Program(1)
		Other Period						Stock	Restricted
		Until Maturation	Threshold		Target		Maximum	Option	Stock Unit
Name		or Payment)	(#)(2)		(#)		(#)	Grant(3)	Grant(4)
Mr. Kindler		1/1/07 - 12/31/09	38,800		155,200		310,400	760,000	0
Mr. Shedlarz		1/1/07 - 12/31/09	7,040		28,160		56,320	326,100	28,160
Dr. LaMattina		1/1/07 - 12/31/09	4,433		17,730		35,460	177,500	17,730
Mr. Read		1/1/07 - 12/31/09	4,433		17,730		35,460	250,000	17,730
Mr. Levin		1/1/07 - 12/31/09	3,910		15,640		31,280	160,000	15,640

 

(1) The actual number of shares that will be paid out at the end of the performance period, if any, cannot be determined because the shares earned by the Named Executive Officers will be based upon our future performance compared to the future performance of the peer group. Dividend equivalents will be reinvested during the performance period.

(2) If our performance is below the threshold level relative to the pharmaceutical peer group, then no shares will be earned. To the extent the Companys performance exceeds the threshold performance level relative to the pharmaceutical peer group, a varying amount of shares of common stock up to the maximum will be earned.

(3) These options vest (become exercisable) on the third anniversary of the option grant date beginning on February 22, 2010. The exercise price for these stock option grants is the fair market value (closing price) of our common stock ($25.87) on the date of the grant, February 22, 2007.

(4) These grants vest on February 22, 2010. Dividend equivalents are reinvested during the restricted period. Mr. Kindler received 76,680 restricted stock units in lieu of payment of the same number of shares under the Performance-Contingent Share Award Program. These shares will only be paid to Mr. Kindler when the Pfizer three-year total shareholder return exceeds the median of the pharmaceutical peer group. If otherwise unvested upon his retirement or termination from service (other than for death or disability) this grant will be forfeited.

     In 2007, the Named Executive Officers were awarded the right to earn performance shares of our common stock for the 2007 to 2009 performance period. To the extent the Companys performance exceeds the threshold performance level relative to the peer group, a varying amount of shares of common stock up to the maximum will be earned as set forth in the Performance Share Award Program Relative Performance/Payout Matrix in the section headed Performance Share Awards, above.

      2007 Cash Compensation

     The following table sets forth the annual 2007 cash compensation, consisting of base salaries and bonus. The amounts shown are base salaries as of January 1, 2007 and April 1, 2007 (which reflects an annual increase based on performance and the Companys merit increase budget) and the percent and dollar target cash bonus for 2007. The target cash bonus amounts are shown without regard to possible changes in responsibilities during 2007. The actual bonus (which is typically paid in early 2008) can range from 0 to 200% of the target bonus amount.

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2007 Salaries and Target Annual Cash Incentive (Bonus) Amounts