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Drug giant Pfizer offers early retirement ahead of layoffs

CNBC logo CNBC 10/17/2018

Pharmaceutical giant Pfizer is offering early retirement to U.S. workers ahead of layoffs early next year, it announced internally to employees Tuesday.

The company, which currently employs more than 90,000 workers, didn't say how many people it plans to cut. But it told employees that all business units and divisions will likely lay off non-union workers, according to materials outlining the workforce reduction program obtained by CNBC.

Incoming CEO Albert Bourla, who's succeeding Ian Read on Jan. 1, shuffled the company's senior management team last week and is leading the efforts to restructure the pharmaceutical giant into a more nimble company. It announced plans in July to reorganize into three units, separating its consumer health-care business that it had been trying to sell.

The headcount reduction plan is part of its restructuring, the company told employees in an email obtained by CNBC. "To achieve our full potential we will need to create a simpler and more efficient organization," it said.

"As we simplify the organization to avoid duplication, create single points of accountability and reduce the number of layers within teams, there will be an impact to some managerial roles and responsibilities across the organization," the company told employees in materials outlining the program.

Managers will assess their staff needs after they see how many people volunteer to retire and decide on "involuntary separations" after that, the company said.

It said "most, if not all, business units and divisions will separate non-union colleagues involuntarily during the Special Separation Program's terms."

Voluntary early retirement

The company is offering severance packages that pay a base salary of 12 weeks, plus three weeks of salary for every year of work, up to 104 weeks, according to the documents. Employees who volunteer for a buyout will also get to take any vested equity with them, health insurance and other benefits at current rates for up to three years, the company said. People who are 55 and have at least 10 years of service at the company may be eligible for early retirement under the program.

Employees have from Oct. 16 to Nov. 2 to opt into the early retirement program and will leave by Dec. 31 unless their manager asks them to stay a few months longer, according to the documents.

People who lose their jobs involuntarily will be eligible for largely the same benefits under the program, which is more generous than its typical layoff package, the company said.

"As we prepare for growth we are creating a simpler more efficient structure which will affect some managerial roles and responsibilities. We are offering enhancements to certain benefits to lessen this effect," Pfizer spokeswomen Sally Beatty said in an email.

Pfizer stock was marginally higher on Wednesday. Pfizer, which has a market cap of more than $250 billion, has seen its share rise more than 22 percent over the last 12 months.

Earlier this month, Pfizer announced Bourla was replacing longtime CEO Read. Bourla was appointed chief operating officer at the start of this year. He was seen as the leading candidate for the top job.

Based in New York City, the company announced plans in April to relocate its headquarters from 42nd Street to Hudson Yards starting in 2022.

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