PFIZER INC, PRE 14A, 1997-03-04

PFIZER INC
PRE 14A, 1997-03-04
PHARMACEUTICAL PREPARATIONS

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<PAGE>

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF
1934
(AMENDMENT NO. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [_]

Check the appropriate box:

[X]Preliminary Proxy Statement

[_]Confidential, for use of the
Commission only (as permitted by
Rule 14a-6(e)(2))

[_]Definitive Proxy Statement

[_]Definitive Additional Materials

[_]Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

PFIZER INC.
-----------------------------------------------------
(Name of Registrant as Specified In Its Charter)

-----------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X]No fee required.

[_]Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange ActRule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

[_]Fee paid previously with preliminary materials.

[_]Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:

<PAGE>

PRELIMINARY COPY

Pfizer Inc
235 East 42nd Street
New York, NY 10017-5755

----------------------------------
[LOGO OF PFIZER INC.]
WILLIAM C. STEERE, JR.
Chairman of the Board and
Chief Executive Officer

March 19, 1997

Dear Fellow Shareholder:

You are cordially invited to attend the Annual Meeting of Shareholders of
Pfizer Inc. which will be held on Thursday, April 24, 1997 at 10:00 a.m. in
the Empire State Ballroom of the Grand Hyatt Hotel, 42nd Street and Lexington
Avenue, New York, NY. Directions to the meeting site and a map of the meeting
site area can be found at the end of the attached Proxy Statement.
This booklet includes the Notice of the Annual Meeting of Shareholders and
the Proxy Statement. The Proxy Statement describes the business that will be
transacted at the Annual Meeting and also provides important information about
the Company and the items to be voted upon that you should consider when you
vote your shares.
At this year's meeting, among other things, you will be asked to consider
and to vote upon the election of four directors. All four nominees currently
are directors of the Company. Their diversified experience and backgrounds
have enabled them to contribute significantly to the success of the Company.
Accordingly, your Board of Directors recommends that you vote FOR all of the
nominees.
You also will be asked to approve the Board of Director's appointment of
KPMG Peat Marwick LLP as the Company's independent auditors for the 1997
fiscal year. Your Board of Directors considers the firm well qualified for
this position and therefore recommends that you vote FOR this proposal.
In addition, you will be asked to approve an amendment to the Company's
Restated Certificate of Incorporation to provide an increase in the number of
authorized shares of Pfizer Inc. Common Stock. Your Board of Directors has
announced that, barring unusual circumstances, it intends to vote on a two-
for-one split of the Common Stock in the form of a stock dividend if this
proposal is approved. Accordingly, the Board recommends that you vote FOR this
proposal.
You also will be asked to approve the Pfizer Inc. Executive Annual Incentive
Plan. If approved by shareholders, this Plan will enable the Company to
satisfy certain Internal Revenue Code requirements with respect to corporate
tax deductibility of compensation paid to certain executive officers. The
Board therefore recommends that you vote FOR this proposal.
EACH OF THE ITEMS UPON WHICH YOU WILL BE ASKED TO VOTE IS DISCUSSED MORE
FULLY IN THE ATTACHED PROXY STATEMENT. WE URGE YOU TO READ THE PROXY STATEMENT
COMPLETELY AND CAREFULLY SO THAT YOU CAN VOTE YOUR SHARES ON AN INFORMED
BASIS.
Your vote is important! We look forward to receiving your executed proxy
form and hope that you will be able to join us at the Annual Meeting.

Sincerely yours,

/s/ William C. Steere, Jr.
William C. Steere, Jr.

<PAGE>

PFIZER INC.

235 EAST 42ND STREET, NEW YORK, NY 10017-5755

NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS

APRIL 24, 1997

----------------

The Annual Meeting of Shareholders of Pfizer Inc., a Delaware corporation
(the "Company"), will be held in the Empire State Ballroom of the Grand Hyatt
Hotel, 42nd Street and Lexington Avenue, New York, NY. Directions to the
meeting site and a map of the meeting site area can be found at the end of the
attached Proxy Statement. The Annual Meeting of Shareholders will be held on
Thursday, April 24, 1997, at 10:00 a.m., to consider and take action upon the
following items:

(1) the election of four directors (page 2);

(2) a proposal to approve the appointment of KPMG Peat Marwick LLP as
independent auditors of the Company for the 1997 fiscal year (page 22);

(3) a proposal to amend the Company's Restated Certificate of Incorporation
to increase the number of authorized shares of the Company's common
stock (page 23);

(4) a proposal to approve the Pfizer Inc. Executive Annual Incentive Plan
(page 24); and

(5) such other business as may properly come before the Annual Meeting, or
any adjournment or postponement thereof.

Only shareholders of record as of the close of business on February 24, 1997
are entitled to notice of and to vote at the Annual Meeting of Shareholders.
Beneficial owners of Company common stock who are not shareholders of record,
but instead hold their shares in nominee names, must bring evidence of such
ownership (such as a brokerage account statement showing ownership of Company
common stock) to be admitted to the Annual Meeting of Shareholders.

By order of the Board of Directors,

/s/ C. L. Clemente
C. L. Clemente
Secretary

New York, NY
March 19, 1997

IMPORTANT

WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING OF SHAREHOLDERS IN
PERSON, PLEASE VOTE BY MEANS OF THE ENCLOSED PROXY FORM. WE ASK YOU TO
MARK YOUR CHOICES, SIGN, DATE AND RETURN THE PROXY FORM AS SOON AS
POSSIBLE IN THE ENCLOSED BUSINESS REPLY ENVELOPE. IF YOU RETURN A SIGNED
PROXY FORM WITHOUT MARKING IT, IT WILL BE VOTED IN ACCORDANCE WITH THE
RECOMMENDATIONS OF THE BOARD OF DIRECTORS. BY PROMPTLY SIGNING AND
RETURNING YOUR PROXY FORM YOU WILL ASSIST THE COMPANY BY REDUCING EXPENSES
RELATING TO ADDITIONAL PROXY SOLICITATIONS.
<PAGE>

PFIZER INC.
235 EAST 42ND STREET, NEW YORK, NY 10017-5755

PROXY STATEMENT

[LOGO OF PFIZER INC.]

March 19, 1997

This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Pfizer Inc. (the "Company") of proxies for use at the
Company's Annual Meeting of Shareholders to be held on April 24, 1997 ("Annual
Meeting"), or any adjournment or postponement thereof. Holders of record of
shares of Company common stock ("Common Stock") at the close of business on
February 24, 1997 (the "Record Date") are entitled to vote at the Annual
Meeting, and each shareholder will have one vote for each share of Common
Stock registered in his or her name. On the Record Date, there were issued and
outstanding and entitled to vote at the Annual Meeting 648,061,058 shares of
Common Stock. As of the Record Date, to the Company's knowledge, no person
owned beneficially five percent or more of the outstanding shares of Common
Stock.

This Proxy Statement and enclosed proxy form are first being mailed to the
Company's shareholders on or about March 19, 1997.

QUORUM AND TABULATION OF VOTES

The By-laws of the Company (the "By-laws") provide that a majority of the
shares of Common Stock issued and outstanding and entitled to vote, present in
person or by proxy, shall constitute a quorum at a meeting of shareholders of
the Company.

Votes at the Annual Meeting will be tabulated by two independent judges of
election appointed by the Company. Shares of Common Stock represented by a
properly signed and returned proxy are considered as present at the Annual
Meeting for purposes of determining a quorum and will be voted as specified by
the shareholder.

Pursuant to the By-laws, directors of the Company must be elected by a
plurality vote. In the event that more than two candidates run for the same
office, a plurality vote ensures that the person elected will be the one who
receives the greatest number of votes, even if that number does not constitute
a majority of the votes cast. Pursuant to the By-laws, all other questions
shall be determined by a majority of the votes cast thereon, except as may
otherwise be provided in the Restated Certificate of Incorporation of the
Company, by the rules of the New York Stock Exchange, or by law.

Brokers holding shares of Common Stock for beneficial owners must vote those
shares according to the specific instructions they receive from the owners. If
specific instructions are not received, however, brokers may vote those shares
at their discretion, depending on the type of proposal involved. The rules of
the New York Stock Exchange preclude brokers from exercising their voting
discretion on certain proposals. Absent specific instructions from the
beneficial owner in such a case, the broker may not vote on that proposal.
This results in what is known as a "broker non-vote" on such a proposal. When
a majority of the shares of Common Stock issued and outstanding is required
for approval of a proposal, a "broker non-vote" has the effect of a negative
vote. When a majority of the shares of Common Stock present and entitled to
vote or a majority of the votes cast is required for the approval of a
proposal, a "broker non-vote" has the effect of reducing the number of
required affirmative votes.

Directors will be elected by a favorable vote of a plurality of the shares
of Common Stock cast with respect to the election of directors (Item 1) at the
Annual Meeting. Votes "withheld" from director-nominee(s) will not count
against the election of such nominee(s). Brokers have discretionary authority
to vote on this proposal.
<PAGE>

Passage of the proposal to approve the appointment of KPMG Peat Marwick LLP
(Item 2) requires the approval of a majority of the votes cast on this
proposal. Abstentions as to this proposal will not count as votes cast "for"
or "against" this proposal and will not be included in calculating the number
of votes necessary for approval of this proposal. Brokers have discretionary
authority to vote on this proposal.

Passage of the proposal to approve an amendment to the Company's Restated
Certificate of Incorporation to provide for an increase in the number of
authorized shares of the Common Stock (Item 3) requires the approval of a
majority of the outstanding Common Stock. Abstentions and broker non-votes as
to this proposal will have the same effect as a vote cast "against" this
proposal. The New York Stock Exchange determines whether brokers have
discretionary authority to vote on a given proposal.

Passage of the proposal to approve the Pfizer Inc. Executive Annual
Incentive Plan (Item 4) requires the approval of a majority of the votes cast
on this proposal. Abstentions and broker non-votes as to this proposal will
not count as votes cast "for" or "against" this proposal and will not be
included in calculating the number of votes necessary for approval of this
proposal. The New York Stock Exchange determines whether brokers have
discretionary authority to vote on a given proposal.

If a properly signed proxy form is returned to the Company by a shareholder
of record and is not marked, it will be voted in accordance with the
recommendations of the Board of Directors on all proposals.

A shareholder of record may revoke a vote at any time before the Annual
Meeting by the submission of a written revocation of the proxy to the Company,
by the return of a subsequently-dated proxy form to the Company, or by the
shareholder's personal vote at the Annual Meeting.

ITEM 1 -- ELECTION OF FOUR DIRECTORS

During 1996, the Company's Board of Directors ("Board") met eleven times.
All of the Company's directors attended seventy-five percent or more of the
meetings of the Board and Board committees on which they served in 1996.

The Board is divided into three classes. One class is elected each year for
a three-year term. This year the Board has nominated four individuals, all of
whom are now directors of the Company, to serve for three-year terms.
Biographies of the nominees and the other members of the Board are set forth
below.

The Board expects that all of the nominees will be available for election.
In the event that any nominee should become unavailable, however, the Proxy
Committee (as noted on the proxy form) would vote for a nominee or nominees
who would be designated by the Board, unless the Board chooses to reduce the
number of directors serving on the Board.

THE BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE FOUR NOMINEES FOR
DIRECTORS.

SECURITY OWNERSHIP OF MANAGEMENT

As of February 27, 1997, the nominees, other directors, and certain
executive officers of the Company who are not directors of the Company, as
named in the following table, according to information confirmed by them,
owned beneficially, directly or indirectly, the number of shares of Common
Stock indicated; held options, exercisable within 60 days after that date, to
purchase the number of shares of Common Stock indicated pursuant to the
Company's Stock and Incentive Plan; and held the number of units indicated
pursuant to the Company's Nonfunded Deferred Compensation and Unit Award Plan
for Non-Employee Directors and the Company's Annual Retainer Unit Award Plan.
As of such date, no such person beneficially owned more than .03 percent of
the outstanding Common Stock; all directors and executive officers as a group
owned 1,078,159 shares of Common Stock, and options, exercisable within 60
days after that date, to purchase 1,979,610 shares of Common Stock, which
together amounted to less than one percent of the outstanding Common Stock.

2
<PAGE>

<TABLE>
<CAPTION>
POSITION, PRINCIPAL AMOUNT OF BENEFICIAL
NAME AND AGE AS OF THE OCCUPATION, OWNERSHIP OF SHARES OF
APRIL 24, 1997 MEETING BUSINESS EXPERIENCE AND COMMON STOCK,(/1/)
DATE DIRECTORSHIPS OPTIONS AND UNITS(/2/)
-------------------------- -------------------------- ----------------------

NOMINEES FOR DIRECTORS WHOSE TERMS EXPIRE IN 2000

<C> <S> <C>
M. Anthony Burns........54 Chairman of the Board Shares: 3,400
[PHOTO] since 1985, Chief Execu- Units: 1,604
tive Officer since 1983,
President and Director
since 1979, of Ryder Sys-
tem, Inc., a provider of
transportation and logis-
tics services. Director of
The Chase Manhattan Bank,
The Chase Manhattan Corpo-
ration and J. C. Penney
Company, Inc. Member of
the Business Council, the
Business Roundtable and
the Business Roundtable's
Policy Committee and
Chairman of its Health,
Welfare and Retirement In-
come Task Force. Director
of the Company since 1988.
Chair of the Company's Ex-
ecutive Compensation Com-
mittee and Member of its
Executive Committee.

George B. Harvey........66 Former Chairman, Presi- Shares: 3,130
[PHOTO] dent, and Chief Executive Units: 5,029
Officer (from 1983 through
1996) and Director (from
1980 through 1996) of
Pitney Bowes Inc., a pro-
vider of mailing and of-
fice systems and manage-
ment and financial servic-
es. Director of the Massa-
chusetts Mutual Life In-
surance Company, McGraw-
Hill, Inc., and Merrill
Lynch & Co., Inc. Director
of the Company since 1994.
Member of the Company's
Executive Compensation
Committee.

Stanley O. Ikenberry....62 President since 1996 of Shares: 6,553
[PHOTO] the American Council on Units: 16,200
Education, an independent
nonprofit association ded-
icated to ensuring high
quality education at col-
leges and universities
throughout the United
States. President, from
1979 through July 1995, of
the University of Illi-
nois, a comprehensive pub-
lic research university
with campuses at Urbana-
Champaign and Chicago. Di-
rector of Harris Bank and
Utilicorp United Inc.
Chairman of the Board of
the Carnegie Foundation
for the Advancement of
Teaching. Director of the
Company since 1982. Chair
of the Company's Audit
Committee and Member of
its Executive Committee.
</TABLE>

- ---------------------
(/1/) This table does not include the following number of shares held in the
names of family members, as to which beneficial ownership is disclaimed:
Dr. Ikenberry -- 3,000.

(/2/) As of February 27, 1997, these units are held under the Pfizer Inc.
Nonfunded Deferred Compensation and Unit Award Plan for Non-Employee
Directors and the Pfizer Inc. Annual Retainer Unit Award Plan. The value
of a director's unit account is measured by the price of the Common
Stock. The Plans are further described in this Proxy Statement under the
sub-heading "Benefit Plans for Non-Employee Directors."
3
<PAGE>

<TABLE>
<CAPTION>
POSITION, PRINCIPAL AMOUNT OF BENEFICIAL
NAME AND AGE AS OF THE OCCUPATION, OWNERSHIP OF SHARES OF
APRIL 24, 1997 MEETING BUSINESS EXPERIENCE AND COMMON STOCK, OPTIONS
DATE DIRECTORSHIPS AND UNITS(/1/)
-------------------------- -------------------------- ----------------------

NOMINEES FOR DIRECTORS WHOSE TERMS EXPIRE IN 2000
(CONTINUED)

<C> <S> <C>
Harry P. Kamen..........63 Chairman of the Board and Shares: 300
[PHOTO] Chief Executive Officer Units: 1,160
since 1993, and President
since 1995, of Metropoli-
tan Life Insurance Compa-
ny. Director of Bethlehem
Steel Corporation, the New
England Investment Compa-
nies, the New England Life
Insurance Company and
Banco Santander (Spain).
Member of The Business
Council of New York State
and The Business Round-
table Policy Committee,
Treasurer of the New York
City Partnership and
Trustee of the Conference
Board and the Committee
for Economic Development.
Director of the Company
since 1996. Member of the
Company's Corporate Gover-
nance Committee.

DIRECTORS WHOSE TERMS EXPIRE IN 1998

W. Don Cornwell.........49 Chairman of the Board and Shares: 50
[PHOTO] Chief Executive Officer of Units: 600
Granite Broadcasting Cor-
poration since 1988. Di-
rector of the National As-
sociation of Broadcasters,
Hershey Trust Company and
Milton Hershey School and
CVS Corporation. Trustee
of Occidental College, the
Jacob Javits Foundation,
Big Brothers/Sisters of
New York, and the New York
University Medical Center.
Director of the Company
since February 1997. Mem-
ber of the Company's Audit
Committee.

Felix G. Rohatyn........68 Managing Director of La- Shares: 11,000
[PHOTO] zard Freres & Co. LLC, Units: 15,628
Investment Bankers, since
1960. Director of Crown
Cork & Seal Company, Inc.
and General Instrument
Corporation. Former Chair-
man of the Municipal As-
sistance Corporation for
the City of New York,
serving from 1975 to 1993.
Director of the Company
since 1971. Member of the
Company's Executive Com-
mittee and Audit Commit-
tee.
</TABLE>

- ---------------------
(/1/) As of February 27, 1997, these units are held under the Pfizer Inc.
Nonfunded Deferred Compensation and Unit Award Plan for Non-Employee
Directors and the Pfizer Inc. Annual Retainer Unit Award Plan. The value
of a director's unit account is measured by the price of the Common Stock.
The Plans are further described in this Proxy Statement under the sub-
heading "Benefit Plans for Non-Employee Directors."

4
<PAGE>

<C> <S> <C>
Ruth J. Simmons.........51 President of Smith Col- Shares: 0
[Photo] lege, since 1995, a pri- Units: 602
vate liberal arts college
for women located in
Northampton, Massachu-
setts. Vice Provost of
Princeton University from
1992 to 1995. Provost of
Spelman College from 1990
to 1991. Director of Met-
ropolitan Life Insurance
Company. Trustee of the
Institute for Advanced
Study and Member of The
Conference Board. Director
of the Company since Janu-
ary 1997. Member of the
Company's Audit Committee.

William C. Steere, Jr...60 Chairman of the Board of Shares: 217,016
[Photo] the Company since 1992. Options: 337,600
Chief Executive Officer of
the Company since April
1991. President of the
Company from 1991 to 1992.
Senior Vice President of
the Company from 1989 to
1991. Vice President of
the Company from 1983 to
1989, and President --
Pharmaceuticals Group from
1986 through January 1991.
Director of the Federal
Reserve Bank of New York,
Minerals Technologies Inc.
and Texaco Inc. Director
of Pharmaceutical Research
and Manufacturers of Amer-
ica (PhRMA), Memorial
Sloan-Kettering Cancer
Centers, and the New York
University Medical Center.
Member of the Business
Council and the Business
Roundtable. Director of
the Company since 1987.
Chair of the Company's Ex-
ecutive Committee.

DIRECTORS WHOSE TERMS EXPIRE IN 1999

Michael S. Brown........55 Distinguished Chair in Shares: 0
[Photo] Biomedical Sciences from Units: 606
1989 and Regental Profes-
sor from 1985 at the Uni-
versity of Texas South-
western Medical Center at
Dallas. Co-recipient of
the Nobel Prize in Physi-
ology or Medicine in 1985
and the National Medal of
Science in 1988. Member of
the National Academy of
Sciences. Director of
Regeneron Pharmaceuticals,
Inc. Director of the Com-
pany since 1996. Member of
the Company's Corporate
Goverance Committee.
</TABLE>

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(/1/) As of February 27, 1997, includes shares credited under the Savings and
Investment Plan to, or deferred under the Performance--Contingent Share
Award Program by, employees of the Company included in this table. The
Plan and the Program are further described in this Proxy Statement under
the heading "Employee Benefit and Long-Term Compensation Plans."

(/2/) As of February 27, 1997, these units are held under the Pfizer Inc.
Nonfunded Deferred Compensation and Unit Award Plan for Non-Employee
Directors and the Pfizer Inc. Annual Retainer Unit Award Plan. The value
of a director's unit account is measured by the price of the Common Stock.
The Plans are further described in this Proxy Statement under the sub-
heading "Benefit Plans for Non-Employee Directors."

5
<PAGE>

DIRECTORS WHOSE TERMS EXPIRE IN 1999
(CONTINUED)

<C> <S> <C>
Constance J. Horner.....55 Guest Scholar since 1993 Shares: 3,040
[PHOTO] at The Brookings Institu- Units: 1,604
tion, an organization de-
voted to nonpartisan re-
search, education and pub-
lication in economics,
government and foreign
policy and the social sci-
ences. Commissioner, U. S.
Commission on Civil Rights
since 1993. Served at the
White House as Assistant
to the President and as
Director of Presidential
Personnel from August 1991
to January 1993. Deputy
Secretary, U. S. Depart-
ment of Health and Human
Services from 1989 to
1991. Director of the U.
S. Office of Personnel
Management from 1985 to
1989. Director of Foster
Wheeler Corporation,
Ingersoll-Rand Company and
The Prudential Insurance
Co. of America. Director
of the Company since 1993.
Chair of the Company's
Corporate Governance Com-
mittee.

Thomas G. Labrecque.....58 President and Chief Oper- Shares: 3,400
[PHOTO] ating Officer and a Direc- Units: 1,604
tor of The Chase Manhattan
Corporation, a bank hold-
ing company, and The Chase
Manhattan Bank, since
April 1996. Chairman and
Chief Executive Officer of
The Chase Manhattan Corpo-
ration and The Chase Man-
hattan Bank, N.A. from
1990 through 1996. Presi-
dent of The Chase Manhat-
tan Corporation and The
Chase Manhattan Bank, N.A.
from 1981 to 1990. Member
of the Business Council,
the President's Export
Council, the Council on
Competitiveness and the
Trilateral Commission.
Member and Past President
of The Bankers Roundtable
and the International Mon-
etary Conference. Director
of the Company since 1993.
Member of the Company's
Executive Compensation
Committee.

Jean-Paul Valles........60 Chairman of Minerals Tech- Shares: 131,530
[PHOTO] nologies Inc. ("MTI"), a Options: 66,000
resource and technology- Units: 7,112
based company that devel-
ops, produces and markets
specialty mineral, miner-
al-based and synthetic
mineral products, since
1989. Chief Executive Of-
ficer of MTI since 1992.
Formerly Vice Chairman of
the Company from March to
October 1992. Executive
Vice President of the Com-
pany from 1991 to 1992.
Senior Vice President of
the Company from 1989
through 1991. Senior Vice
President -- Finance of
the Company from 1989 to
1990 and Vice President --
Finance of the Company
from 1980 to 1989. Direc-
tor of the Company since
1980. Director of the Na-
tional Association of Man-
ufacturers. Member of the
Company's Audit Committee.
</TABLE>
(/1/) This table does not include the following number of shares held in the
names of family members, as to which beneficial ownership is disclaimed:
Dr. Valles -- 23,720.

(/2/) As of February 27, 1997, these units are held under the Pfizer Inc.
Nonfunded Deferred Compensation and Unit Award Plan for Non-Employee
Directors and the Pfizer Inc. Annual Retainer Unit Award Plan. The value
of a director's unit account is measured by the price of the Common Stock.
The Plans are further described in this Proxy Statement under the sub-
heading "Benefit Plans for Non-Employee Directors."

- ---------------------

6
<PAGE>

<TABLE>
<CAPTION>
POSITION, PRINCIPAL AMOUNT OF BENEFICIAL
NAME AND AGE AS OF THE OCCUPATION, OWNERSHIP OF SHARES OF
APRIL 24, 1997 MEETING BUSINESS EXPERIENCE AND COMMON STOCK,(/1/)
DATE DIRECTORSHIPS OPTIONS AND UNITS
-------------------------- -------------------------- ----------------------

NAMED EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS

<C> <S> <C>
Henry A. McKinnell, Jr..54 Executive Vice President Shares: 49,547
of the Company since 1992 Options: 163,360
and President -- Pfizer
Pharmaceuticals Group
since January 1, 1997. In
addition, Dr. McKinnell
has been responsible for
the Company's Consumer
Health Care Group and Cor-
porate Strategic Planning
and Policy since 1995. He
was also responsible for
the Company's Hospital
Products Group from 1992
to 1995 and the Company's
Corporate Finance Division
as the Company's Chief Fi-
nancial Officer from 1990
through 1996. Dr. McKin-
nell was elected an execu-
tive officer of the Com-
pany in 1986. Director of
Aviall, Inc. and John Wi-
ley & Sons, Inc.
Robert Neimeth..........61 Executive Vice President Shares: 114,245
of the Company from 1992 Options: 169,278
through 1996;(/2/) Presi-
dent of the Company's
International Pharmaceuti-
cals Group and responsible
for the Company's Animal
Health Group from 1992
through 1996. Also respon-
sible for the Hospital
Products Group from 1995
through 1996. Mr. Neimeth
served as an executive of-
ficer of the Company from
1983 through 1996.
John F. Niblack.........58 Executive Vice President Shares: 48,699
of the Company since 1993. Options: 94,094
Responsible for the
Company's Central Research
Division, Animal Health
Group, and Licensing and
Development and Quality
Control Divisions. Dr.
Niblack was elected an ex-
ecutive officer of the
Company in 1990 when he
became Vice President--
Central Research.
Paul S. Miller..........57 Senior Vice President; Shares: 48,925
General Counsel of the Options: 75,800
Company since 1992. Mr.
Miller was elected an ex-
ecutive officer of the
Company in 1986 when he
became Vice President;
General Counsel.
</TABLE>

- ---------------------
(/1/)As of February 27, 1997, includes shares credited under the Savings and
Investment Plan to, or deferred under the Performance--Contingent Share
Award Program by, employees of the Company included in this table. The Plan
and the Program are further described in this Proxy Statement under the
heading "Employee Benefit and Long-Term Compensation Plans."

(/2/)Mr. Neimeth retired as an employee and resigned as an officer of the
Company as of January 1, 1997.

7
<PAGE>

COMPENSATION OF EXECUTIVE OFFICERS

The following table sets forth information concerning the compensation
during the last three fiscal years of the Company's Chief Executive Officer
and its next four most highly compensated executive officers serving at the
end of 1996 (hereafter referred to collectively as the "Named Executive
Officers") for all services rendered by them to the Company.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
-------------------------------------- -------------------------------------
AWARDS PAYMENTS
---------------------- ------------
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND SALARY BONUS(/1/) COMPENSATION(/2/) AWARDS(/3/) OPTIONS(/4/)PAYOUTS(/5/) COMPENSATION(/6/)
PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($) ($)
- ------------------ ---- --------- ---------- ----------------- ----------- ---------- ------------ -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
W. C. Steere, 1996 1,190,000 2,300,700 20,747 0 150,000 3,815,000 131,053
Jr. ...........
Chairman/CEO
" " " ........ 1995 1,030,000 2,060,000 24,560 0 150,000 2,036,250 119,015
" " " ........ 1994 1,016,667 1,925,000 20,511 0 78,600 641,000 73,253

- ------------------------------------------------------------------------------------------------------------------------
H. McKinnell, Jr. 1996 704,000 802,600 24,144 0 60,000 1,430,625 57,294
Executive V.P.
" " " ........ 1995 608,000 720,000 17,350 0 60,000 733,050 45,373
H. McKinnell,
Jr. ............ 1994 528,333 521,000 23,749 0 26,630 230,760 32,865
Executive V.P.
& CFO; Presi-
dent--HPG

- ------------------------------------------------------------------------------------------------------------------------
R. Neimeth...... 1996 645,000 662,300 15,366 0 0 1,201,725 167,366
Executive V.P.;
President--
International
Pharmaceuticals
Group
" " " ........ 1995 574,917 626,000 14,970 0 50,000 610,875 41,120
" " " ........ 1994 497,500 449,000 14,141 0 21,490 192,300 29,803

- ------------------------------------------------------------------------------------------------------------------------
J. F. Niblack... 1996 640,000 645,500 4,935 0 50,000 1,201,725 50,457
Executive V.P.
J.F. Niblack.... 1995 569,833 615,000 4,123 0 50,000 610,875 40,204
Executive
V.P.--Research
and Development
" " " ........ 1994 515,000 432,000 3,701 0 21,450 192,300 29,673

- ------------------------------------------------------------------------------------------------------------------------
P. S. Miller.... 1996 540,000 464,100 17,912 0 40,000 858,375 35,834
Senior V.P.;
General
Counsel
" " " ........ 1995 456,250 350,000 12,821 0 35,000 407,250 30,427
" " " ........ 1994 454,167 300,000 4,749 81,250 16,350 128,200 27,240
</TABLE>
- --------
(/1/) The amounts shown in this column for 1996 constitute the Annual Incentive
Awards made to each officer based on the Board's evaluation of each
officer's performance. These awards are discussed in further detail in the
Executive Compensation Committee Report on page 11 of this Proxy
Statement.

(footnotes continued on next page)

<PAGE>

(footnotes continued from prior page)

(/2/) The amounts shown in this column represent tax payments made by the
Company on behalf of the Named Executive Officers relating to their use of
Company automobiles and for personal financial counseling. These payments
in 1996 were as follows: relating to use of the Company automobiles -- Mr.
Steere --$15,830; Dr. McKinnell -- $18,390; Mr. Neimeth -- $10,664; Dr.
Niblack --$0; and Mr. Miller-- $12,727; relating to receipt of personal
financial counseling -- Mr. Steere -- $4,917; Dr. McKinnell-- $5,754; Mr.
Neimeth--$4,702 Dr. Niblack -- $4,935; and Mr. Miller -- $5,185.

(/3/) The amount shown in this column represents the dollar value on the date of
grant (February 17, 1995) of 2,000 restricted shares of the Company's
Common Stock awarded as part of Mr. Miller's 1994 compensation. These
shares of restricted stock vested in equal portions on February 17, 1996
and February 17, 1997. The market value of the 1,000 shares that vested on
February 17, 1997, as of December 31, 1996 using a market value of $83 per
share, was $83,000. As part of 1993 compensation, restricted shares of the
Company's Common Stock were awarded to each of the Named Executive
Officers. All such shares of restricted stock have vested as follows: one-
third on February 17, 1995, one-third on February 17, 1996, and one-third
on February 17, 1997. The number of shares that vested on February 17,
1997, and the value of those shares as of December 31, 1996 using a market
value of $83 per share, were as follows: Mr. Steere-- 6,928 shares,
$575,024; Dr. McKinnell -- 1,560 shares, $129,480; Mr. Neimeth -- 1,214
shares, $100,762 (see note 6 below); Dr. Niblack -- 866 shares, $71,878;
and Mr. Miller -- 866 shares, $71,878. Dividends were paid during the
restricted period on all restricted shares.

(/4/) The 1994 amounts shown in this column have not been adjusted for the
Company's June 1995 two-for-one stock split.

(/5/) The 1996 amounts shown in this column represent the dollar market value of
shares of the Company's Common Stock on February 20, 1997 (the payment
date) earned by the Named Executive Officers pursuant to the Company's
Performance-Contingent Share Award Program using the closing sales price
of the Company's Common Stock ($95.375) on the New York Stock Exchange on
that date. The number of Performance-Contingent Shares awarded to each
executive officer was as follows: Mr. Steere -- 40,000; Dr. McKinnell --
15,000; Mr. Neimeth -- 12,600; Dr. Niblack -- 12,600; and Mr. Miller --
9,000. This Program is discussed in greater detail in the Executive
Compensation Committee Report on page 11 of this Proxy Statement and also
under the heading "Employee Benefit and Long-Term Compensation Plans,"
which begins on page 17. Receipt of these awards was deferred at each
executive's election in accordance with the deferral feature of the
Performance-Contingent Share Award Program, and such shares are held in
trust.

(/6/) The amounts shown in this column constitute Company matching funds under
the Company's Savings and Investment Plan (a retirement savings plan) and
related supplemental plan. These plans are described in this Proxy
Statement under the heading "Employee Benefit and Long-Term Compensation
Plans," which begins on page 17. In the case of Mr. Neimeth, the 1996
amount also includes $116,468 paid to Mr. Neimeth in consideration of the
forfeiture, upon his retirement on January 1, 1997, of 1,214 restricted
shares of the Company's Common Stock, awarded as part of his 1993
compensation. For purposes of this cash payment, Mr. Neimeth's restricted
shares were valued using the average of the high and low trading price of
the Company's Common Stock ($95.9375) on the New York Stock Exchange on
February 14, 1997.

OPTION GRANTS IN 1996

The following table shows all options to purchase the Company's Common Stock
granted to each of the Named Executive Officers of the Company in 1996 and the
potential value of such grants at stock price appreciation rates of 0%, 5% and
10%, compounded annually over the maximum ten-year term of the options. Also
shown is the potential gain of all outstanding shares of Common Stock held by
the Company's shareholders as of December 31, 1996 using the same base price
and appreciation rates and compounded over the same ten-year period. The 5%
and 10% rates of appreciation are required to be disclosed by the rules of the
Securities and Exchange Commission ("SEC") and are not intended to forecast
possible future actual appreciation, if any, in the Company's stock prices.
The Company did not use an alternative present value formula permitted by the
rules of the SEC because, in the Company's view, potential future unknown or
volatile factors result in there being no such formula that can determine with
reasonable accuracy the present value of such option grants.

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED
ANNUAL RATES OF STOCK PRICE
INDIVIDUAL GRANTS APPRECIATION FOR OPTION TERM ($)
-------------------------------------------------------------- ---------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
PERCENT OF
TOTAL OPTIONS
NUMBER OF SECURITIES GRANTED TO EXERCISE OR
NAME UNDERLYING OPTIONS EMPLOYEES IN BASE PRICE
- ---- GRANTED (#)(/1/) FISCAL YEAR ($/SH)(/2/) EXPIRATION DATE 0% 5% 10%
-------------------- ------------- ----------- --------------- --- -------------- --------------
W. C. Steere, Jr........ 150,000 1.59 74.50 8/21/06 0 7,027,897 17,810,072
H. McKinnell, Jr........ 60,000 0.64 74.50 8/21/06 0 2,811,159 7,124,029
R. Neimeth.............. N/A N/A N/A N/A N/A N/A N/A
J. F. Niblack........... 50,000 0.53 74.50 8/21/06 0 2,342,632 5,936,691
P. S. Miller............ 40,000 0.42 74.50 8/21/06 0 1,874,106 4,749,353
All Shareholders........ N/A N/A N/A N/A 0 30,233,745,773 76,618,247,820
</TABLE>
- --------
(/1/) Option grants for Named Executive Officers who received grants in 1996
consisted of Key-Employee Grants that are exercisable as follows: One-
fifth each on 8/22/97, 8/22/98, 8/22/99, 8/22/00 and 8/22/01.
(/2/) The exercise price for all stock option grants shown in this column is the
market price of the Company's Common Stock on the date of the grant.

9
<PAGE>

AGGREGATED OPTION EXERCISES IN 1996 AND
OPTION VALUES AT DECEMBER 31, 1996

The following table provides information as to options exercised by each of
the Named Executive Officers in 1996, and the value of the remaining options
held by each such executive officer at year-end, measured using the mean of
the high and the low trading price ($83.9375) of the Company's Common Stock on
December 31, 1996.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS HELD AT 12/31/96 AT 12/31/96
------------------------- -------------------------
VALUE
SHARES ACQUIRED REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME ON EXERCISE (#) ($) (#) (#) ($) ($)
- ---- --------------- --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
W. C. Steere, Jr........ 127,244 5,944,306 388,536 455,000 18,117,899 14,881,563
H. McKinnell, Jr........ 13,356 737,124 212,608 168,000 11,104,588 5,307,000
R. Neimeth.............. 55,746 3,330,859 169,278 71,500 8,523,461 2,983,281
J. F. Niblack........... 53,326 2,350,489 94,094 141,500 4,148,899 4,503,906
P. S. Miller............ 30,000 1,193,600 90,800 113,000 4,128,500 3,630,938
</TABLE>

LONG-TERM INCENTIVE PLAN -- AWARDS IN 1996

The following table provides information concerning the participation of the
Named Executive Officers in a long-term compensation plan called the
Performance-Contingent Share Award Program pursuant to which they were awarded
the right to earn shares of the Company's Common Stock ("Performance-
Contingent Shares"). Actual payouts of these Performance-Contingent Shares, if
any, will be determined in accordance with a non-discretionary formula which
measures the Company's performance over a five-year period using certain
performance goals that were determined by the Company's Executive Compensation
Committee and approved by the Board. The formula is comprised of two
performance criteria -- total shareholder return and growth in earnings per
share -- over the performance period relative to the industry peer group
("Peer Group") referred to in the Performance Graph shown on page 16 of this
Proxy Statement. To the extent that the Company's performance exceeds the low
end of the range of the Peer Group's performance for either or both of the
performance criteria, a varying amount of shares up to the maximum will be
earned. Details regarding these awards are discussed in the Executive
Compensation Committee Report beginning on page 11 of this Proxy Statement.

<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
UNDER NON-STOCK PRICE-BASED
PLANS
-----------------------------
PERFORMANCE PERIOD (OR
OTHER PERIOD UNTIL THRESHOLD(/2/) TARGET MAXIMUM
NAME NUMBER OF SHARES(/1/) MATURATION OR PAYOUT) (#) (#) (#)
- ---- --------------------- ---------------------- -------------- ------ -------
<S> <C> <C> <C> <C> <C>
W. C. Steere, Jr........ * 1/1/97-12/31/2001 5,000 30,000 50,000
H. McKinnell, Jr........ * 1/1/97-12/31/2001 2,500 15,000 25,000
R. Neimeth.............. None N/A N/A N/A N/A
J. F. Niblack........... * 1/1/97-12/31/2001 2,100 12,600 21,000
P. S. Miller............ * 1/1/97-12/31/2001 1,500 9,000 15,000
</TABLE>

- ----------------
(/1/) The actual number of Performance-Contingent Shares that will be paid out
at the end of the applicable period, if any, is not yet determinable
because the shares earned by the Named Executive Officers will be based
upon the Company's future performance compared to the future performance
of the Peer Group.

(/2/) If the minimum performance of the Company in both performance measures is
at the low end of the range relative to the Peer Group, then no
Performance-Contingent Shares will be earned by the Named Executive
Officers. To the extent that the Company's performance exceeds the low end
of the range of Peer Group performance, the minimum shares that will be
awarded is shown in the "Threshold" column.

10
<PAGE>

EXECUTIVE COMPENSATION COMMITTEE REPORT

The last section of this report is a glossary containing definitions of the
capitalized terms used in this report, unless such terms previously have been
defined in this Proxy Statement.

OVERVIEW OF COMPENSATION PHILOSOPHY AND PROGRAM

The Committee establishes the salaries and other compensation of the
executive officers of the Company, including its Chairman and CEO and other
Named Executive Officers. The Committee consists entirely of independent
directors who are not officers or employees of the Company.

The Company's executive compensation program is designed to:

. retain executive officers by paying them competitively, motivate them
to contribute to the Company's success, and reward them for their
performance;

. link a substantial part of each executive officer's compensation to
the performance of both the Company and the individual executive
officer; and

. encourage ownership of Company common stock by executive officers.

As discussed below, the program consists of, and is intended to balance,
three elements--base salaries, Annual Incentive Awards and long-term incentive
compensation.

Salaries are based on the Committee's evaluation of individual job
performance and an assessment of the salaries and total compensation mix paid
by the Company's Peer Group to executive officers holding equivalent
positions. Annual Incentive Awards are based on an evaluation of both
individual and Company performance against quantitative measures. Long-term
incentive awards, which consist of stock options and Performance-Contingent
Share Awards, are designed to insure that incentive compensation is linked to
the long-term performance of the Company and its Common Stock. In addition,
the Named Executive Officers and other members of senior management are
expected to own a minimum amount of Common Stock under the Company's stock
ownership program, which is intended to further tie the interests of
management to the interests of shareholders. The ownership requirements were
increased in 1996 and coverage under the program was expanded to include
additional executives.

EVALUATION OF EXECUTIVE PERFORMANCE

Except as is otherwise specifically noted in this report, the Committee does
not rely solely on predetermined formulae or a limited set of criteria when it
evaluates the performance of the Chairman and CEO and the Company's other
executive officers, including the Named Executive Officers. Instead, the
Committee considers management's overall accomplishments, as well as those of
the individual executives, the Company's financial performance, and other
criteria discussed below. In 1996 as in 1995, management continued to
effectively implement its long-term strategies, which included: improving
operating margins, continuing the implementation of reengineering projects and
restructuring programs, integrating key acquisitions into its business
segments, divesting non-core businesses, maintaining the flow of new product
candidates in the Company's research pipeline and augmenting the Company's
research and marketing abilities with key external collaborations. The
Committee believes that the success of these strategies is evidenced by the
Company's strong financial performance from ongoing operations in 1996, the
Company's operating margins, the breadth of the Company's current product
portfolio which resulted in considerable sales growth in 1996, the acceptance
of the Company's products in the current marketplace, and the number of
promising product candidates under development by the Company.

The Committee also considered management's responses to the changes
occurring within the U. S. marketplace for health care products and services.
The impact of the evolution to managed care in the health care market
continues to be of particular importance to the Company and its shareholders.
It is the Committee's opinion that, in this uncertain environment, management
continues to develop effectively and implement strategies that position the
Company to remain a leader in the health care industry. In addition, Mr.
Steere and his senior management team are undertaking significant actions to
communicate the Company's position on health care issues to its shareholders,
the public and the government. The success of these efforts and their

11
<PAGE>

benefits to the Company cannot, of course, be quantifiably measured, but the
Committee believes they are vital to the Company's continuing success.

TOTAL COMPENSATION

Target total compensation levels of Company executives are established with
consideration given to an analysis of competitive market total compensation.
The total compensation package for each executive is then broken down into the
three basic components indicated above and discussed in more detail below. In
recent years, the Committee has been directing a shift in the mix of the
Company's executive compensation towards incentive compensation, with
proportionately lesser emphasis on salaries. This strategy is intended to
increase the performance orientation of the Company's executive compensation.

Consequently, salary levels of the Company's executives have been increasing
more slowly than other elements of their total compensation. The Committee
intends to continue this emphasis in 1997. Based on available public data and
the analysis of its outside compensation advisors, the total compensation of
Mr. Steere and the other Named Executive Officers generally fell in the upper
quartile of total compensation paid by the Peer Group to their executives
holding equivalent positions, but the Committee believes that position was
consistent with the outstanding performance of the Company compared to the
Peer Group.

SALARY

In setting salaries, the Committee did not use a predetermined formula.
Instead, the 1996 salaries of the Chairman and CEO and the other executive
officers were based on the Committee's evaluation of each officer's individual
job performance, an assessment of the Company's performance, and a desire to
shift the mix of compensation towards performance-based categories, and took
into consideration salaries paid by the Peer Group to executive officers
holding equivalent positions. Mr. Steere's salary in 1996 totaled $1,190,000.
For 1997, it has been set at 1,316,500 which represents a 10.6% increase from
his 1996 salary. The 1996 salaries of the other Named Executive Officers are
shown in the "Salary" column of the Summary Compensation Table on page 8 of
this Proxy Statement.

ANNUAL INCENTIVE AWARDS

The second element of the executive compensation program is the Annual
Incentive Award Program. For Mr. Steere, the Annual Incentive Award can range
from 0 percent to 200 percent of his salary, depending upon the Board's
evaluation of Mr. Steere's performance. In evaluating his performance, the
Committee used the performance indicators referred to above under "Evaluation
of Executive Performance" and other confidential qualitative and quantitative
performance indicators that were recommended by Mr. Steere, adopted by the
Committee and confirmed by the Board in February 1996. After reviewing actual
results in 1996 against the performance indicators, the Committee approved,
and the Board confirmed, an Annual Incentive Award for 1996 to Mr. Steere of
$2,300,700.

The 1996 Annual Incentive Awards for other executive officers were based, in
part, on the same performance indicators used to determine Mr. Steere's annual
award. In addition, the executive officers were required to achieve certain
individual goals relating to their positions, plus confidential goals
contained in the operating plans of the businesses for which they are
responsible, as well as Company performance criteria. The Annual Incentive
Awards for 1996 paid to each of the Named Executive Officers are shown in the
"Bonus" column of the Summary Compensation Table on page 8 of this Proxy
Statement.

Included in this Proxy Statement is a proposal to approve a plan which would
establish objective criteria for determining the Annual Incentive Awards to
qualify them for a deduction under the Internal Revenue Code.

12
<PAGE>

LONG-TERM INCENTIVE AWARDS

In 1996, Mr. Steere and the other executive officers participated in the
Company's long-term incentive compensation program. As discussed below, the
program consisted of stock option grants made under the Company's Stock and
Incentive Plan, and awards made under the Company's Performance-Contingent
Share Award Program.

In 1996, in respect of Mr. Neimeth's retirement, the Committee determined to
make a cash payment to Mr. Neimeth equal to the value of 1,214 restricted
shares of the Company's Common Stock, awarded as part of his 1993
compensation, which he forfeited by reason of his retirement. By his
retirement, Mr. Neimeth also gave up additional Common Stock awards made to
him in past years under the Company's Performance-Contingent Share Award
Program. The number of shares he would have earned from those contingent
awards will not be determined until 1998, 1999 and 2000. In respect of his
retirement, the Committee has agreed to pay to Mr. Neimeth the pro-rated cash
value of those shares after their number has been determined.

(a) Stock Options

The Committee granted Key-Employee Stock Options to each executive officer
in 1996 under the Company's Stock and Incentive Plan. In selecting the size of
the Key-Employee Stock Option grants, the Committee reviewed competitive data
relating to similar grants made by the Peer Group to executive officers
holding comparable positions at those companies, the individual stock
ownership of the Company's executive officers and the interrelationship with
the 1996 Performance-Contingent Share Awards made to such officers. Based upon
this data, Mr. Steere was awarded Key-Employee Stock Options for 150,000
shares of Common Stock and the other Named Executive Officers were awarded the
number of Key-Employee Stock Options shown in the table headed "Option Grants
in 1996" on page 9 of this Proxy Statement. The Key-Employee Stock Options of
the Named Executive Officers and all other executive officers will vest over a
five-year period, with 20 percent of the options vesting each year.

Key-Employee Stock Options granted to Mr. Steere and the other Named
Executive Officers, when combined with the value of the Performance-Contingent
Shares that these officers may potentially earn, are targeted by the Committee
to fall at the median range of the value of long-term incentives granted by
the Peer Group to executive officers holding comparable positions at those
companies, assuming that the Company's performance also falls at the median of
the Peer Group's performance. If the Company's actual performance exceeds the
median performance of the Peer Group, however, the total value of long-term
incentive awards (which would include Performance-Contingent Share awards
discussed below) will be higher than the median awards made by the Peer Group.
Similarly, if the Company's performance falls below the median performance of
the Peer Group, the total value of the long-term incentive awards would fall
below the median awards of the Peer Group.

(b) Performance-Contingent Share Awards

The Committee also made awards to Mr. Steere and other executive officers in
1996, including the Named Executive Officers, under the Company's Performance-
Contingent Share Award Program (the "Program"). The potential size of each
award, including the maximum number of shares of Common Stock that may be
earned by each executive officer, was established by the Committee after
examining similar awards made by the Peer Group to executive officers holding
comparable positions at those companies. Payments pursuant to the awards are
determined by using a non-discretionary formula comprised of two performance
criteria measured over the applicable performance period: total shareholder
return and earnings per share growth over the performance period relative to
the performance of the Peer Group. The performance formula weighs each
criterion equally. To the extent that the Company's performance exceeds the
low end of the range of the performance of the Peer Group in either or both of
the performance criteria, a varying amount of shares of Common Stock up to the
maximum will be earned.

Except for the 1993 Program awards, which provide for shorter performance
periods, the performance period for all awards made under the Program is five
years. Based on the Company's performance during the

13
<PAGE>

1993-96 performance period, Mr. Steere and the other Named Executive Officers
earned 89,200 Performance-Contingent Shares under the 1993 Program award
formula previously approved by the Committee. The total number of such shares
earned by Mr. Steere was 40,000. The total number of shares earned by each of
the Named Executive Officers is shown on page 9 of this Proxy Statement in
footnote 5 to the "LTIP Payouts" column of the Summary Compensation Table.

In connection with the 1996 Program award for Mr. Steere, the number of
Performance-Contingent Shares that he may earn at the end of the five-year
performance period (1/1/97-12/31/2001) will range from 0 to 50,000. As for the
other Named Executive Officers, reflecting their current responsibilities, the
number of Performance-Contingent Shares that Dr. McKinnell may earn at the end
of the same five-year performance period will range from 0 to 25,000, the
number of such shares that Dr. Niblack may earn will range from 0 to 21,000
and the number of shares that Mr. Miller may earn will range from 0 to 15,000.
The maximum number of Performance-Contingent Shares that may be earned by Mr.
Steere and the other Named Executive Officers under the Program is shown in
the table headed "Long-Term Incentive Plan -- Awards in 1996" on page 10 of
this Proxy Statement.

TAX POLICY

In 1993, the Internal Revenue Code ("Code") was amended with respect to the
tax deductibility of executive compensation. Under the Code, publicly-held
companies such as the Company may not deduct compensation paid to certain
executive officers to the extent that such compensation exceeds $1 million in
any one year for each such officer. The law, however, includes an exception
for "performance-based" compensation, including stock options granted under a
stock option plan that has been previously approved by shareholders, provided
that such options are not issued below the fair market value of the stock on
the date of the grant. The Company's Stock and Incentive Plan meets these
requirements so stock options awarded to the Company's executive officers in
1996 are eligible for the performance-based compensation exception to the
deduction limitation. Compensation other than stock options, however, must
meet other requirements in order to qualify as tax deductible "performance-
based" compensation.

Under the Code, compensation is deemed "performance-based," and not subject
to the $1 million deduction limitation, if it meets the following
requirements: (1) it is paid solely on account of the attainment of one or
more preestablished objective performance goals; (2) the performance goals
under which the compensation is to be paid are established by a committee
comprised solely of two or more outside directors who satisfy certain
requirements; (3) the committee certifies in writing prior to payment of the
compensation that the performance goals and any other material terms of
payment were, in fact, satisfied; and (4) the material terms of the
performance goals under which the compensation is to be paid has been approved
by the affirmative vote of a majority of shares voting at a meeting of the
shareholders of the Company.

The Performance-Contingent Share Awards granted in 1996 to Mr. Steere and
the other executive officers qualify as "performance-based" compensation under
the requirements of the Code as set forth above. Accordingly, the eventual
payouts of these awards will be fully deductible by the Company.

The Annual Incentive Awards granted to the Company's executive officers in
1996 are not eligible for the performance-based exception under the Code
because they were awarded based, in part, on certain goals (such as responding
to changes occurring within the U. S. health care marketplace) and performance
evaluations that would not be deemed solely "objective" as required for
deductions by the tax law. As noted above, included in this Proxy Statement is
a proposal to approve a plan which would establish objective criteria for
determining the Annual Incentive Awards. If approved by shareholders, future
Annual Incentive Awards will be deductible.

STOCK OWNERSHIP PROGRAM

A stock ownership program was adopted by the Board upon this Committee's
recommendation in August 1993. Under the guidelines of this program, employee
directors (currently Mr. Steere) were expected to own by December 1998 Company
Common Stock equal in value to at least three times their annual salaries. The
program

14
<PAGE>

also extends to the other Named Executive Officers and certain other executive
officers who, as of the same time, were expected to own Company Common Stock
equal in value to at least two times their annual salaries. All other
executive officers were expected to own stock with a value equivalent to their
annual salaries. The Committee has determined that, as of the end of 1996,
full compliance had already been achieved by all executive officers, except
three officers who were recently elected to their positions. These three
officers are making good progress toward their goals and are on schedule.

The Committee decided to increase the existing guidelines, effective January
1, 1997, and to expand coverage under the program to additional executives who
are expected to own a specific amount of stock. Employee directors (Mr.
Steere) are now required to own shares equivalent in value to at least five
times their annual salary. The other Named Executive Officers and other
members of the Corporate Management Committee are expected to own Company
Common Stock equal in value to at least four times their annual salary. Other
elected officers are expected to own three times their annual salary, and all
other participants in the Performance-Contingent Share Award Program are
expected to own an amount equal in value to their annual salary.

Under the program, "stock ownership" is defined as stock owned by the
executive officer directly or through the Company's Savings and Investment
Plan or awarded pursuant to the Performance-Contingent Share Award program and
subsequently deferred. While the Named Executive Officers and other
participants in this program have been given five years to achieve compliance
with this program, the Committee monitors the participation of the executive
officers and expects that incremental progress will be made each year by each
officer during the five-year phase-in period.

GLOSSARY

Annual Incentive Awards. These awards are annual cash payments which may be
awarded by the Committee to executive officers on the basis of both Company
performance and individual performance over the prior year. Qualitative and
quantitative performance indicators used to serve as the basis for an
assessment of the performance of the executive officers are established by the
Committee (and approved by the Board in the case of the CEO) at the beginning
of the performance period.

Committee. The Executive Compensation Committee of the Board of Directors.

Key-Employee Stock Options. Stock options granted under the Company's Stock
and Incentive Plan to a select group of management employees in the U. S. and
overseas who are considered to have a substantial impact on the Company's
operations.

Named Executive Officers. This refers to the five most highly compensated
executive officers of the Company- Mr. Steere, Drs. McKinnell and Niblack, and
Messrs. Neimeth and Miller.

Peer Group. This group consists of the eleven health care companies referred
to in the Performance Graph that follows this report.

Performance-Contingent Shares. These are shares of Pfizer Inc. Common Stock
that may be awarded by the Committee to the Named Executive Officers and
certain other employees of the Company under the Performance-Contingent Share
Award Program. For shares to be issued to any such officer or employee,
however, certain preestablished Company performance criteria must be met over
a preestablished performance period. This program is described in further
detail on page 18 of this Proxy Statement.

Stock and Incentive Plan. This refers to the Pfizer Inc. Stock and Incentive
Plan which is described in further detail on page 19 of this Proxy Statement.

THE EXECUTIVE COMPENSATION COMMITTEE:
Mr. Burns (Chair)
Mr. Harvey
Mr. Labrecque

15
<PAGE>

PERFORMANCE GRAPH

Set forth below is a graph comparing the total shareholder returns (assuming
reinvestment of dividends) of the Company, the Standard & Poor's ("S&P") 500
Composite Stock Index ("S&P 500"), and an industry peer index compiled by the
Company that consists of the following companies: Abbott Laboratories,
American Home Products Corp., Baxter International Inc., Bristol-Myers Squibb
Company, Colgate-Palmolive Co., Johnson & Johnson, Eli Lilly and Company,
Merck and Co., Inc., Pharmacia & Upjohn Inc., Schering-Plough Corp., and
Warner-Lambert Company (together the "Peer Group"). The Peer Group
consolidation was done on a weighted average basis (market capitalization
basis, adjusted at the beginning of each year). The graph assumes $100
invested at the per share closing price of the Common Stock on the New York
Stock Exchange Composite Tape on December 31, 1991 in the Company and each of
the other indices.

Cumulative Total Returns*
1991 through 1996
[Line Graph]

1991 1992 1993 1994 1995 1996
- -----------------------------------------------------------------------
Pfizer 100 88.0 86.0 99.2 165.4 221.5

- -----------------------------------------------------------------------
Peer Group 100 84.5 79.1 89.5 140.7 175.5

- -----------------------------------------------------------------------
S&P 500 100 107.6 118.4 120.0 165.1 203.0

- -----------------------------------------------------------------------

* Based on Share Price Appreciation and Assuming Reinvestment of Dividends.

16
<PAGE>

EMPLOYEE BENEFIT AND LONG-TERM COMPENSATION PLANS

RETIREMENT ANNUITY PLAN

The Retirement Annuity Plan (the "Retirement Plan") is a funded, tax
qualified, noncontributory defined benefit pension plan that covers certain
employees, including the Named Executive Officers. Benefits under the
Retirement Plan are based upon the employee's earnings during service with the
Company and/or its "Associate Companies" and are payable after retirement
generally in the form of an annuity. Earnings covered by the Retirement Plan
are base pay, bonus, long-term incentive pay and vested shares of restricted
stock. The amount of annual earnings that may be considered in calculating
benefits under the Retirement Plan is limited by law. For 1997, the current
annual limitation is $160,000. The value of benefits, such as stock options,
is not considered earnings for the purposes of the Retirement Plan.

Benefits under the Company's Retirement Plan are calculated as an annuity
equal to the greater of (i) 1.4 percent of the average earnings for the five
highest consecutive calendar years prior to January 1, 1995 multiplied by
years of service, or (ii) 1.75 percent of such earnings less 1.5 percent of
Primary Social Security benefits multiplied by years of service. Actual
earnings are used in benefit calculations for the period after December 31,
1994 under both formulas. The total years of service under these formulas
cannot exceed 35 years. Contributions to the Retirement Plan are made entirely
by the Company and are paid into a trust fund from which the benefits of
participants will be paid.

In accordance with the requirements of the Code, the Retirement Plan
currently limits pensions paid under the Plan to an annual maximum of
$125,000, payable at age 65. The Company also has an unfunded supplemental
plan that provides that the Company will pay out of its general assets an
amount substantially equal to the difference between the amount that would
have been payable under the Retirement Plan, in the absence of legislation
limiting pension benefits and earnings that may be considered in calculating
pension benefits, and the amount actually payable under the Retirement Plan.
In certain circumstances, the Company is obligated to fund trusts established
to secure its obligations to make payments under the supplemental plan.

PENSION PLAN TABLE

The following table shows, for the final compensation and years of service
indicated, the annual pension benefit, payable commencing upon retirement at
age 65 under the present benefit formula of the Retirement Plan and its
related supplemental plan. The estimated retirement benefits have been
computed on the assumptions that (i) payments will be made in the form of a 50
percent joint and survivor annuity (and both the Plan member and spouse are
age 65), (ii) during the period of employment the employee received annual
compensation increases of six percent and (iii) the employee retired as of
December 31, 1996.

<TABLE>
<CAPTION>
YEARS OF SERVICE
-------------------------------------------------
REMUNERATION 15 20 25 30 35
- ------------ --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
$ 250,000.................... $ 44,477 $ 58,847 $ 73,217 $ 87,586 $ 101,956
400,000.................... 72,950 96,537 120,124 143,711 167,298
500,000.................... 91,931 121,663 151,395 181,127 210,859
700,000.................... 129,895 171,917 213,939 255,960 297,982
950,000.................... 177,349 234,733 292,117 349,501 406,885
1,000,000.................... 186,840 247,297 307,753 368,210 428,666
1,200,000.................... 224,804 297,550 370,296 443,042 515,789
1,800,000.................... 338,695 448,310 557,926 667,541 777,156
2,000,000.................... 376,658 498,563 620,469 742,374 864,279
2,100,000.................... 395,640 523,690 651,740 779,790 907,840
3,000,000.................... 566,476 749,830 933,184 1,116,538 1,299,892
3,500,000.................... 661,385 875,463 1,089,542 1,303,620 1,517,699
4,000,000.................... 756,294 1,001,097 1,245,899 1,490,702 1,735,505
5,000,000.................... 946,111 1,252,363 1,558,615 1,864,867 2,171,119
6,000,000.................... 1,135,929 1,503,630 1,871,330 2,239.031 2,606,732
6,500,000.................... 1,230,838 1,629,263 2,027,688 2,426,113 2,824,538
</TABLE>

17
<PAGE>

As of December 31, 1996, the period of service covered by the Retirement
Plan and the supplemental plan are, for Mr. Steere -- 35 years; Dr. McKinnell
- -- 25 years, 10 months; Mr. Neimeth -- 34 years, 4 months; Dr. Niblack -- 29
years, 1 month; and Mr. Miller -- 25 years, 11 months. Compensation covered by
the Retirement Plan and its related supplemental plan for the Named Executive
Officers equals the amounts set forth in the 1996 "Salary," "Bonus" and "LTIP
Payouts" columns of the Summary Compensation Table and the value of the
restricted stock that vested on February 17, 1996 as described in Footnote 3
to that table. The basis upon which benefits are calculated under the
Company's Retirement Plan is described in the "Retirement Annuity Plan"
section on page 17 of this Proxy Statement.

PERFORMANCE-CONTINGENT SHARE AWARD PROGRAM

Under the Performance-Contingent Share Award Program, participating
employees may be granted an opportunity by the Company's Executive
Compensation Committee to earn shares of Common Stock, provided certain
performance criteria are met. The performance formula is nondiscretionary and
is comprised of two performance criteria -- total shareholder return
(including reinvestment of dividends) and growth in earnings per share (as
reported) -- measured point-to-point over the applicable performance period
relative to the performance of the Peer Group as defined in the "Performance
Graph" section of this Proxy Statement. The 200 most highly compensated
employees of the Company are eligible to be granted the opportunity by the
Executive Compensation Committee to earn Performance-Contingent Shares. Except
for awards made in 1993, all awards granted under the Program are based upon a
five-year performance period. Awards earned by the Named Executive Officers
under this Program for the performance period ended December 31, 1996 are
shown in the "LTIP Payouts ($)" column of the Summary Compensation Table on
page 8 of this Proxy Statement.

SAVINGS AND INVESTMENT PLAN

Under the terms of the Savings and Investment Plan (the "Savings Plan"),
participating employees may contribute up to 15 percent of regular earnings
into their Savings Plan accounts. A participating employee may elect to make
after-tax contributions, before-tax contributions, or both after-tax and
before-tax contributions. In addition, under the Savings Plan, the Company
contributes an amount equal to one dollar for each dollar contributed by
participating employees up to the first two percent of their regular earnings
and fifty cents for each additional dollar contributed by employees on the
next four percent of their regular earnings. The Company's matching
contributions are invested solely in the Company's Common Stock.

In accordance with the requirements of the Code, the Savings Plan currently
limits the additions that can be made to a participating employee's account to
$30,000 per year. The term "additions" includes Company matching
contributions, before-tax contributions made by the Company at the request of
the participating employee under Section 401(k) of the Code, and employee
after-tax contributions.

Of those additions, the maximum before-tax contribution is limited, for
January 1, 1994 through December 31, 1995, to $9,240 per year. Effective
January 1, 1996, this limit increased to $9,500 per year. In addition, no more
than $160,000 of annual compensation may be taken into account in computing
benefits under the Savings Plan, in accordance with the Code. The Company has
a supplemental plan to pay out of general assets an amount substantially equal
to the difference between the amount that, in the absence of legislation
limiting such additions and the $160,000 limitation on earnings, would have
been allocated to a participating employee's account as employee before-tax
contributions, Company matching contributions and the amount actually
allocated under the Savings Plan. Employees affected by these limitations who
make limited deferrals of income under this supplemental plan receive credit
for such deferrals towards their retirement benefit under the Company's
retirement plans. In certain circumstances, the Company is obligated to fund
trusts established to secure its obligations to make payments under the
supplemental plan.

Amounts deferred, if any, under the Savings Plan and the related
supplemental plan in 1996 by the Company's Named Executive Officers are
included in the "Salary" and "Bonus" columns of the Summary

18
<PAGE>

Compensation Table shown on page 8 of this Proxy Statement. Company matching
contributions allocated to the Named Executive Officers under the Savings Plan
and the related supplemental plan are shown in the "All Other Compensation"
column of the Summary Compensation Table on page 8 of this Proxy Statement.

STOCK AND INCENTIVE PLAN

Pursuant to the Stock and Incentive Plan, Company employees may be granted
stock options, stock appreciation rights, stock awards (including restricted
stock awards and performance-based stock awards), or performance unit awards,
either as a result of a general grant or as a result of an award based on
having met certain performance criteria, as determined by the Employee
Compensation and Management Development Committee or the Executive
Compensation Committee, as applicable. Non-employee directors of the Company
are not eligible to participate in this Plan.

SEVERANCE AGREEMENTS

The Company has entered into severance agreements with certain executive
officers, including each of the Named Executive Officers. The agreements
continue through September 30, 1997 and provide that they are to be
automatically extended in one-year increments unless the Company has given
prior notice of termination.

These agreements are intended to provide for continuity of management in the
event of a change in control of the Company. The agreements provide that
covered executive officers could be entitled to certain severance benefits
following a change in control of the Company. If, following such a change in
control, the executive officer is terminated by the Company for any reason,
other than for disability or for cause, or if such executive officer
terminates his or her employment for good reason (as defined in the
agreements), then the executive officer is entitled to a severance payment
that will be 2.99 times the greater of (i) the executive officer's base
amount, as defined in the agreements or (ii) the sum of the executive
officer's (a) base salary in effect at the time of termination and (b) the
higher of the (x) last full-year annual incentive payment or (y) projected
annual incentive payment for the year in which termination occurs. The
severance payment generally would be made in the form of a lump sum.

In addition, in the event of such a termination following a change in
control, under the agreements each executive officer would receive a payout of
all outstanding Performance-Contingent Share Awards that had been granted
prior to the date of termination at the maximum amounts that could have been
earned pursuant to the awards, along with all shares earned but deferred in
accordance with the deferral feature of the Performance-Contingent Share Award
Program. The executive officer would also receive a benefit payable from the
Company's general funds calculated using the benefit calculation provisions of
the Company's Retirement Annuity Plan and the Company's unfunded Supplemental
Retirement Plan with the following additional features: the executive officer
would receive credit for an additional three years of service and compensation
for purposes of calculating such benefit; the benefit would commence at age 55
(or upon the date of termination, if the executive officer is then over age
55) and for this purpose, three years would be added to the executive
officer's age; such benefit would be further determined without any reduction
on account of its receipt prior to age 65; and, such benefit would be offset
by any amounts otherwise payable under the Company's Retirement Annuity Plan
and unfunded Supplemental Retirement Plan. The executive officer would also
become vested in all other benefits available to retirees of the Company
including, without limitation, retiree medical coverage. All restrictions on
restricted stock previously awarded to such executive officer would lapse and
all unvested options granted to such executive officer would vest and become
exercisable for the remainder of the term of the option.

If a change in control occurs, the agreements are effective for a period of
four years from the end of the then existing term. Under the severance
agreements, a change in control would include any of the following events: (i)
any "person", as defined in the Securities Exchange Act of 1934, as amended,
acquires 20 percent or more of the Company's voting securities; (ii) a
majority of the Company's directors are replaced during a two- year period; or
(iii) shareholders approve certain mergers, or a liquidation or sale of the
Company's assets. In

19
<PAGE>

the event that any payments made in connection with a change in control would
be subjected to the excise tax imposed by Section 4999 of the Code, the
Company will "gross-up" the executive officer's compensation for all federal,
state and local income and excise taxes and any penalties and interest
thereon.

In certain circumstances, the Company is obligated to fund trusts
established to secure its obligations to make payments under the severance
agreements in advance of the time payment is due.

COMPENSATION OF DIRECTORS AND OTHER MATTERS

The non-employee directors of the Company receive an annual cash retainer
fee of $26,000 per year. Non-employee directors who serve on one Board
committee or more (other than the Executive Committee) receive an additional
annual fee of $4,000 for such service. In addition, non-employee directors who
chair a Board committee receive an additional $2,000 per year, per committee.
Directors who are employees of the Company receive no retainers for Board-
related service.

The non-employee directors of the Company also receive a fee of $1,500 for
attending each Board meeting, committee meeting, the Annual Meeting of
Shareholders, for each day of a visit by the Board to a plant or office of the
Company or its subsidiaries, and for attending any other business meeting to
which the director is invited by the Board or the Executive Committee.
Directors who are employees of the Company receive no fees for attending any
such meeting.

In addition to the annual cash compensation discussed above, on the day of
the 1996 Annual Meeting of Shareholders, all non-employee directors of the
Company who continued as directors were awarded 600 units under the Pfizer
Inc. Nonfunded Deferred Compensation and Unit Award Plan for Non-Employee
Directors and an additional 367 such units under the Pfizer Inc. Annual
Retainer Unit Award Plan. Descriptions of both Plans are set forth below.

In October of 1995 the Company's Retirement Plan for Non-Employee Directors
was terminated. All benefits existing under the Plan at that time which were
vested are retained by the directors concerned.

BENEFIT PLANS FOR NON-EMPLOYEE DIRECTORS

Under the Pfizer Inc. Nonfunded Deferred Compensation and Unit Award Plan
for Non-Employee Directors (the "Unit Award Plan"), directors who are not
employees of the Company or any of its subsidiaries may defer all or a part of
their annual cash retainers and meeting fees until they cease to be directors.
At the director's election, the fees held in the director's account may be
credited either with interest at the rate of return of Fund A (the Fixed
Income Fund) of the Pfizer Inc. Savings and Investment Plan, or with units.
The units are calculated by dividing the amount of the fee by the closing
price of the Common Stock as of the last business day prior to the date that
the fee would otherwise be paid. The units in a director's account are
increased by the value of any distributions on the Common Stock, allocated in
accordance with the number of units in the account. When a director ceases to
hold office, the amount held in the director's account is then payable in
cash. The amount to be paid is determined by multiplying the number of units
in the account by the closing price of the Common Stock as of the last
business day prior to the payment date as determined in the Unit Award Plan.

Also under the Unit Award Plan, non-employee directors are granted an
initial award of 600 units upon first becoming a director. Thereafter, each
non-employee director is granted an annual award of 600 such units ("Annual
Unit Award") as of the date of the Company's Annual Meeting, provided the
director will continue to serve as a director following the meeting. The
awards under the Unit Award Plan are made in addition to the directors' annual
cash retainers and meeting attendance fees. Such units are not payable until
the recipients cease to be directors.

20
<PAGE>

Non-employee directors also receive, under the Pfizer Inc. Annual Retainer
Unit Award Plan, the share equivalent of their annual retainer fee in
similarly restricted units. These awards are in addition to the Annual Unit
Awards, the directors' annual cash retainers and meeting attendance fees, and
are made annually on the day of the Company's Annual Meeting. The appropriate
number of units to be awarded to the non-employee directors is based upon the
five-day average of the closing trading price of the Company's 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).

In certain circumstances, the Company is obligated to fund trusts
established to secure its obligations to make payments to its directors under
the above benefit plans, programs or agreements in advance of the time payment
is due.

RELATED TRANSACTIONS

During 1996, the Company engaged the services of Lazard Freres & Co. LLC, of
which Mr. Rohatyn is a Managing Director. Lazard Freres & Co. LLC acted as a
financial advisor in connection with potential acquisitions, divestitures and
general corporate matters and as a broker in connection with the purchase and
sale of securities. In 1997, the Company plans to retain this firm for such
services and similar services. In addition, the Pfizer Retirement Annuity Plan
is a limited partner in Corporate Partners, L.P., of which LFCP Corp., a
wholly-owned subsidiary of Lazard Freres & Co. LLC, is the general partner.

The Company also has other business arrangements with organizations with
which certain of the Company's directors are affiliated. However, none of
those arrangements are material to either the Company or any of those
organizations.

The transactions described in this section were entered into by the Company
pursuant to arm's length negotiations in the ordinary course of business and
on terms that the Company believes to be fair.

ADDITIONAL INFORMATION

Dr. Ikenberry and Messrs. Rohatyn, Steere and Valles and certain officers
and former directors and officers of the Company were named as defendants in a
civil suit brought purportedly on behalf of the Company as a shareholder
derivative action in the Superior Court of the State of California, County of
Orange. The complaint alleges breaches of fiduciary duty and other common law
violations in connection with the manufacture and distribution of Shiley heart
valves and seeks, among other things, unspecified money damages. Even though
it is believed that the suit is without merit, in order to avoid the monetary
and other costs of litigation, the Company has entered into an agreement to
settle this action by way of a $15 million payment by the Company's insurance
carrier to the Company with an attorneys' fee to be paid by the Company out of
the proceeds of the settlement to the shareholders' attorneys who brought the
case. The settlement is subject to court approval and a fairness hearing is
scheduled for April 11, 1997.

BOARD COMMITTEES

THE EXECUTIVE COMPENSATION COMMITTEE

The Executive Compensation Committee consists of Messrs. Burns (Chair),
Harvey and Labrecque. None of the directors on this Committee are employees of
the Company. The Committee met ten times in 1996.

The Executive Compensation Committee is responsible for establishing annual
and long-term performance goals for the Company's elected officers. This
responsibility includes establishing the compensation and evaluating the
performance of the Chairman and Chief Executive Officer and other elected
officers of the Company. The Committee's additional functions are to determine
and certify the shares awarded under the Performance-Contingent Share Award
Program; to grant options and awards under the Stock and Incentive Plan; to
advise on the setting of compensation for senior executives whose compensation
is not otherwise set by the

21
<PAGE>

Committee; to monitor compliance by officers with the Company's program of
required stock ownership; and to publish an annual Executive Compensation
Committee Report for the shareholders. The Executive Compensation Committee
Report is included beginning on page 11 of this Proxy Statement.

THE CORPORATE GOVERNANCE COMMITTEE

The Corporate Governance Committee consists of Ms. Horner (Chair), Dr. Brown
and Mr. Kamen. None of the directors on this Committee are employees of the
Company. The Committee met eight times in 1996.

The Corporate Governance Committee is responsible for considering and making
recommendations to the Board concerning the appropriate size, function, and
needs of the Board. This responsibility includes considering and recommending
candidates to fill new positions on the Board created by either expansion or
vacancies that occur by resignation, retirement, or for any other reason;
reviewing candidates recommended by shareholders; conducting inquiries into
the backgrounds and qualifications of possible candidates; and recommending
the director nominees for approval by the Board and the shareholders. The
Committee's additional functions are to consider questions of possible
conflicts of interest of Board members and of senior executives of the
Company; to monitor and recommend the functions of the various committees of
the Board; to recommend members of the committees; to advise on changes in
Board compensation; to make recommendations on the structure of Board
meetings; and to recommend matters for consideration by the Board. In
addition, the Committee considers and reviews the Company's Corporate
Governance Principles; establishes director retirement policies; reviews the
functions of the senior officers and makes recommendations with respect to any
changes; reviews the job performance of officers and other senior executives
with the Chairman and Chief Executive Officer; reviews the outside activities
of senior executives; and reviews with the Chief Executive Officer the
succession plans relating to officer positions.

THE AUDIT COMMITTEE

The Audit Committee consists of Dr. Ikenberry (Chair), Mr. Cornwell, Mr.
Rohatyn, Dr. Simmons and Dr. Valles, none of whom is an employee of the
Company. The Committee met six times in 1996.

The Audit Committee has the responsibility of recommending the annual
appointment of the public accounting firm to be outside auditors for the
Company, subject to approval by the Board and the shareholders. The Committee
reviews with the outside auditors the scope of the audit, the fees therefor
and related matters, receives copies of the annual comments from the outside
auditors on accounting procedures and systems of control, and reviews with
them any questions, comments or suggestions they may have relating to the
internal controls, accounting practices or procedures of the Company or its
subsidiaries. It also reviews with management and the outside auditors the
annual and quarterly financial statements of the Company and any material
changes in accounting principles or practices used in preparing the
statements. Additional responsibilities include reviewing the programs of the
Company's Internal Audit Department, including procedures for assuring
implementation of accepted recommendations made by the outside auditors, and
receiving summaries of all audit reports issued by the Internal Audit
Department. The Committee also reviews the status of compliance with laws,
regulations, and internal procedures, contingent liabilities and risks that
may be material to the Company.

ITEM 2 -- APPROVAL OF APPOINTMENT OF AUDITORS FOR 1997

The Board, upon the recommendation of its Audit Committee, has appointed
KPMG Peat Marwick LLP to serve as the Company's independent auditors for 1997,
subject to the approval of the Company's shareholders. The firm and its
predecessors have audited the financial records of the Company for many years
during which time the practice of rotating the engagement partner has been
followed. The Board considers the firm to be well qualified.

It is expected that representatives of KPMG Peat Marwick LLP will be present
at the Annual Meeting to answer questions. They also will have the opportunity
to make a statement if they desire to do so.

22
<PAGE>

Total audit fees incurred by the Company for all independent auditors for
1996 were approximately $5,209,000, of which approximately $5,050,000 was
attributable to KPMG Peat Marwick LLP.

The affirmative vote of a majority of votes cast on this proposal is
required for the approval of this proposal.

THE BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE APPROVAL OF KPMG PEAT
MARWICK LLP AS INDEPENDENT AUDITORS OF THE COMPANY FOR THE YEAR 1997.

ITEM 3 -- INCREASE IN AUTHORIZED COMMON STOCK

The Board has unanimously adopted a resolution, subject to shareholder
approval, amending the Company's Restated Certificate of Incorporation to
increase the number of shares of authorized Common Stock, par value $.05 per
share, by 1,500,000,000 shares. The Board submits that resolution, which
follows, to the shareholders:

"Resolved, that the first paragraph of Article FOURTH of the Restated
Certificate of Incorporation be amended to read as follows:

A. Authorized Shares and Classes of Stock.

The total number of shares and classes of stock that the Company shall have
authority to issue is three billion twelve million (3,012,000,000) shares,
which shall be divided into two classes, as follows: twelve million
(12,000,000) shares of Preferred Stock, without par value, and three billion
(3,000,000,000) shares of Common Stock of the par value of $.05 per share."

If the proposed amendment is adopted by the shareholders, the Company plans
to file a Certificate of Amendment to the Restated Certificate of
Incorporation to be effective as soon as practicable following the Annual
Meeting of Shareholders.

On December 31, 1996, of the 1,500,000,000 authorized shares of Common
Stock, a total of 645,294,257 shares was outstanding, 43,680,701 shares were
held in the Company's treasury, 1,727,882 shares were reserved for issuance on
conversion of the Company's 4% Convertible Subordinated Debentures Due 1997,
4,129,479 shares were reserved for issuance under the Shareholder Investment
Program, 193,540 shares were reserved for issuance under the Performance-
Contingent Share Award Program, 7,000,000 shares were reserved for issuance
under the Company's Savings and Investment Plan, 600,000 shares were reserved
for issuance under the Company's Pfizer Seiyaku Employee Stock Ownership Plan,
65,400 shares were reserved for issuance under the Company's Restricted Stock
Plan for Non-Employee Directors (replaced by the Unit Award Plan) and
60,720,666 shares were reserved for issuance under the Company's Stock and
Incentive Plan. The remainder of shares of authorized Common Stock was not
issued or subject to reservation.

It is the intention of the Board, barring unusual circumstances, to vote on
a two-for-one stock split in the form of a stock dividend at its meeting which
follows the Annual Meeting of Shareholders if the increase in authorized
shares is approved. The additional shares will also be available for future
acquisitions of property and of securities of other companies and for other
corporate purposes. The additional shares will be available for issuance from
time to time without further action by the shareholders and without first
offering such shares to the shareholders. Shareholders do not have preemptive
rights with respect to the Common Stock. The issuance of Common Stock, or
securities convertible into Common Stock, on other than a pro-rata basis would
result in the dilution of a present shareholder's interest in the Company.

The affirmative vote of the holders of a majority of the outstanding shares
of Common Stock entitled to vote thereon is required for the adoption of the
proposed amendment.

THE BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSAL TO AMEND THE
RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE AUTHORIZED NUMBER OF
SHARES OF COMMON STOCK.

23
<PAGE>

ITEM 4 -- APPROVAL OF THE PFIZER INC. EXECUTIVE ANNUAL INCENTIVE PLAN

The Omnibus Budget Reconciliation Act of 1993 (OBRA) imposed a limit on
corporate tax deductions for executive compensation in excess of $1 million
per year paid by a public company to its CEO or any of the next four highest
paid executive officers as listed in the proxy statement. An exception is
provided for performance-based compensation, as described in Section 162(m) of
the Internal Revenue Code of 1986, as amended (the "Code").

The Section 162(m) provisions generally require that affected executives'
compensation satisfy certain conditions to qualify for the performance-based
exclusion from the $1 million deduction cap. The Pfizer Inc. Executive Annual
Incentive Plan (the "Plan") is intended to meet these conditions and therefore
qualify under Section 162(m) of the Code.

The Plan would establish a performance goal providing for the payment of
annual incentives to Eligible Employees under the Plan when there is positive
"Adjusted Net Income" (as defined in the Plan) for the year for which the
incentives are paid. The maximum award payable to an individual is .30% (three
tenths of one percent) of Adjusted Net Income for such year. As proposed, the
Plan defines "Adjusted Net Income" to mean income before cumulative effect of
accounting changes as shown on the audited Consolidated Statement of Income of
the Company. However, if income before cumulative effect of accounting changes
is not shown on the Statement, then Adjusted Net Income will mean net income
as shown on the Statement.

The Executive Compensation Committee of the Board of Directors (the
"Committee") would have the authority to exercise discretion within the above
maximum in determining the amount of individual awards. This limit has been
set higher than the level at which awards have been made under the Company's
Annual Incentive Plan in the past, and the Committee does not currently expect
to significantly increase the level of awards made under this Plan in the
future. However, the limit is designed to permit larger awards in the future
in the event the Committee should determine that such awards are necessary to
appropriately reward significant accomplishments, or to attract or retain the
highest quality executives.

The primary features of the Plan are summarized below. The summary is
qualified in its entirety by reference to the specific provisions of the Plan,
the full text of which is set forth as Exhibit 1 to this Proxy Statement.

SUMMARY OF THE PLAN

The Plan will be administered by the Committee, which is composed of
"outside directors" as defined under the Code. The Plan defines an Eligible
Employee as a member of the Company's Corporate Management Committee.

No awards will be made for any year unless there is positive Adjusted Net
Income (as described above) for that year.

Following receipt of a report from the Company's independent auditors of
such Adjusted Net Income for the year, the Committee shall determine the
maximum amount available for individual awards under the Plan for such year
and shall certify that all awards granted under the Plan are within the amount
limitations described below.

The Eligible Employees to whom awards will be made and the amount of their
individual awards will be determined by the Committee, taking into
consideration the recommendations of the Chairman (for all Eligible Employees
other than the Chairman), the employee's contribution to the achievement of
the Company's objectives and such other matters as the Committee deems
relevant.

The maximum award payable to an individual is .30% (three tenths of one
percent) of Adjusted Net Income for such year.

24
<PAGE>

Awards may be made to Eligible Employees who retired or whose employment
terminated during such year or to the designee or estate of any such Eligible
Employee who died during such year.

All awards will be determined by the Committee and will be paid in cash. The
Committee shall have the right to amend the Plan. Any amendment that would (i)
change the maximum award that might be determined payable to any Eligible
Employee or (ii) materially change the definition of Adjusted Net Income will
be subject to shareholder approval. The Committee may also repeal the Plan or
discontinue awards on a temporary or permanent basis.

Based on the Company's interpretation of existing federal tax law, including
the regulations under Section 162(m) of the Code, all awards paid pursuant to
the Plan will be deductible by the Company. In each instance, the award will
be taxable to the employee in the year received.

There are currently ten Eligible Employees who would be eligible for awards
under the Plan for 1997. However, no determination has been made as to the
amounts of awards that will be granted to specific individuals in the future.
(See the Summary Compensation Table for information relating to prior annual
incentive awards to Named Executive Officers.)

The affirmative vote of a majority of the votes cast on this proposal is
required for approval of the Pfizer Inc. Executive Annual Incentive Plan.

THE BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSAL TO APPROVE THE
PFIZER INC. EXECUTIVE ANNUAL INCENTIVE PLAN.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16 of the Securities Exchange Act of 1934 ("Section 16") requires
that reports of beneficial ownership of Common Stock and changes in such
ownership be filed with the SEC by the Company's directors and executive
officers. The Company is required to conduct a review and to identify in its
proxy statement each director or officer who failed to file any required
report under Section 16 on a timely basis. Based upon that review, the Company
has determined that all required reports were filed on a timely basis for the
1996 fiscal year.

REQUIREMENTS, INCLUDING DEADLINES, FOR SUBMISSION OF PROXY PROPOSALS,
NOMINATION OF DIRECTORS AND OTHER BUSINESS OF SHAREHOLDERS

Under the Company's By-laws, certain procedures are provided which a
shareholder must follow to nominate persons for election as directors or to
introduce an item of business at an annual meeting of shareholders. These
procedures provide that nominations for director nominees and/or an item of
business to be introduced at an annual meeting of shareholders must be
submitted in writing to the Secretary of the Company at 235 East 42nd Street,
New York, NY 10017-5755. The nomination or proposed item of business must be
received no later than: (1) 60 days in advance of an annual meeting if it is
being held within 30 days preceding the anniversary date of the previous
year's meeting, or (2) 90 days in advance of such meeting if it is being held
on or after the anniversary date of the previous year's meeting. With respect
to any other annual or special meeting, the nomination or item of business
must be received by the 10th day following the date of public disclosure of
the date of such meeting. The nomination must contain the following
information about the nominee: name, age, business and residence addresses;
principal occupation or employment; the number of shares of Common Stock held
by the nominee; the information that would be required under the rules of the
SEC in a proxy statement soliciting proxies for the election of such nominee
as a director; and a signed consent of the nominee to serve as a director of
the Company, if elected. Notice of a proposed item of business must include a
brief description of the substance of, and the reasons for, conducting such
business at the annual meeting, the shareholder's name and address, the number
of shares of Common Stock held by the shareholder (with supporting
documentation where appropriate) and any material interest of the shareholder
in such business.

25
<PAGE>

The Board is not aware of any matters that are expected to come before the
Annual Meeting other than those referred to in this Proxy Statement. If any
other matter should come before the Annual Meeting, the persons named in the
accompanying proxy intend to vote such proxies in accordance with their best
judgment.

The chairman of the meeting may refuse to allow the transaction of any
business not presented, or to acknowledge the nomination of any person not
made, in compliance with the foregoing procedures.

Under the rules of the SEC, shareholder proposals intended to be presented
at the Company's 1998 Annual Meeting of Shareholders must be received by the
Company at its principal executive offices by November 18, 1997 for inclusion
in the proxy statement and form of proxy relating to that meeting.

MISCELLANEOUS

The cost of soliciting proxies will be borne by the Company. In addition to
the solicitation of proxies by the use of the mails, the Company may use
telephone, telegraph and personal contact. Such solicitation will be made by
regular employees of the Company without additional compensation for such
services. The Company has also engaged Morrow & Co., Inc. to assist in the
proxy solicitation, and has agreed to pay $25,000 plus expenses for such
soliciting services.

By order of the Board of Directors,

/s/ C. L. Clemente
C. L. Clemente
Secretary

26
<PAGE>

EXHIBIT 1

PFIZER INC.
EXECUTIVE ANNUAL INCENTIVE PLAN

I PURPOSE

The purpose of the Pfizer Inc. Executive Annual Incentive Plan (the "Plan")
is to attract and retain highly qualified individuals; to obtain from each the
best possible performance; to establish performance goals based on objective
criteria; to further underscore the importance of achieving business
objectives for the short and long term; and to include in such individual's
compensation package an annual incentive component which is tied directly to
the achievement of those objectives. Such component is intended to qualify as
performance-based compensation under Section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code"), and would be deductible by the Company.

II DEFINITIONS

For the purposes of the Plan, the following terms shall have the following
meanings:

ADJUSTED NET INCOME: Income before cumulative effect of accounting changes
as shown on the audited Consolidated Statement of Income of the Company;
provided, however, that if income before cumulative effect of accounting
changes is not shown on such Statement, then Adjusted Net Income shall mean
net income as shown on such Statement.

AWARDS: The annual incentive awards made pursuant to the Plan.

BOARD OF DIRECTORS: The Board of Directors of Pfizer Inc.

COMMITTEE: The Executive Compensation Committee of the Board of Directors or
any successor thereto. The Committee shall consist solely of two or more
"outside directors" within the meaning of Section 162(m) of the Code.

COMPANY: Pfizer Inc. and its subsidiary Companies.

ELIGIBLE EMPLOYEE: An employee who is a member of the Company's Corporate
Management Committee.

III EFFECTIVE DATE; TERM

The Plan is effective as of January 1, 1997, subject to approval by the
affirmative vote of a majority of shares voting at the Company's 1997 Annual
Meeting of Shareholders, and shall remain in effect until such time as it
shall be terminated by the Committee.

IV AMOUNTS AVAILABLE FOR AWARDS

Awards with respect to any taxable year of the Company shall not exceed the
limitations specified in Section VI of the Plan.

V ELIGIBILITY FOR AWARDS

The Committee may grant an award to an Eligible Employee if there is
positive Adjusted Net Income.

The Committee shall give consideration to the contribution made by the
Eligible Employee to achievement of the Company's established objectives and
such other matters as it shall deem relevant.

In the discretion of the Committee, Awards may be made to Eligible Employees
who have retired or whose employment has terminated after the beginning of the
year for which an Award is made, or to the designee or estate of an Eligible
Employee who died during such period.

VI DETERMINATION OF AMOUNTS OF AWARDS

The Committee has sole authority to determine the amount of any Award. The
maximum Award payable to an individual is .30% (three tenths of one percent)
of Adjusted Net Income for such year. The Committee has authority to exercise
discretion within the above maximum in determining the amount of individual
Awards.

27
<PAGE>

VII FORM OF AWARDS

Awards under the Plan shall be made in cash subject to the limitations set
forth in Section VI.

VIII PAYMENT OF AWARDS

Awards may be made at any time following the end of the Company's taxable
year; provided, however, that no Awards shall be made until the Committee
receives a report from the Company's independent auditors stating the amount
of Adjusted Net Income for the year. The Committee shall certify, in writing,
that the amount of any such Award does not exceed the limitation under Section
VI.

IX SPECIAL AWARDS AND OTHER PLANS

Nothing contained in the Plan shall prohibit the Company from establishing
other special awards or incentive compensation plans providing for the payment
of incentive compensation to employees (including Eligible Employees).

X ADMINISTRATION, AMENDMENT AND INTERPRETATION OF THE PLAN

The Committee shall administer the Plan. The Committee shall have full power
to construe and interpret the Plan, establish and amend rules and regulations
for its administration, and perform all other acts relating to the Plan,
including the delegation of administrative responsibilities, that it believes
reasonable and proper and in conformity with the purposes of the Plan.

The Committee shall have the right to amend the Plan from time to time or to
repeal it entirely or to direct the discontinuance of Awards either
temporarily or permanently; provided, however, that (i) no amendment of the
Plan shall operate to annul, without the consent of the Eligible Employee, an
Award already made hereunder, and (ii) no amendment of the Plan that changes
the maximum Award determined payable to any Eligible Employee, as set forth in
Section VI, or materially amends the definition of Adjusted Net Income shall
be effective before approval by the affirmative vote of a majority of shares
voting at a meeting of the shareholders of the Company.

Any decision made, or action taken, by the Committee arising out of or in
connection with the interpretation and/or administration of the Plan shall be
final, conclusive and binding on all persons affected thereby.

XI RIGHTS OF ELIGIBLE EMPLOYEES

Neither the Plan, nor the adoption or operation of the Plan, nor any
documents describing or referring to the Plan (or any part hereof) shall
confer upon any employee any right to continue in the employ of the Company.

No individual to whom an Award has been made or any other party shall have
any interest in the cash or any other asset of the Company prior to such
amount being paid.

No right or interest of any Eligible Employee in the Plan shall be
assignable or transferable, or subject to any claims of any creditor or
subject to any lien.

XII MISCELLANEOUS

All Awards under the Plan are subject to withholding, where applicable, for
federal, state and local taxes.

Any provision of the Plan that is prohibited or unenforceable shall be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of the Plan.

The Plan and the rights and obligations of the parties to the Plan shall be
governed by, and construed and interpreted in accordance with, the law of the
State of Delaware (without regard to principles of conflicts of law).

28
<PAGE>

[MAP DETAILING MEETING SITE AREA]

[Pfizer Logo]
ANNUAL MEETING OF
SHAREHOLDERS
APRIL 24, 1997
10:00 A.M.

MEETING SITE AREA

The Grant Hyatt Hotel is serviced by Metro North
and by the following subway lines going to
Grand Central Terminal:

East Side: IRT (Lexington Avenue) Nos. 4, 5 & 6

West Side: IRT (7th Avenue Line) No. 1, 2 & 3
to 42nd Street, then transfer to the No. 7 Flushing
Line or the Shuttle (S).

[LOGO] RECYLCLED PAPER WITH A MINIMUM
OF 10% POST CONSUMER WASTE

<PAGE>

PFIZER INC.

PROXY
SOLICITED BY THE BOARD OF DIRECTORS The undersigned hereby appoints Wil-
FOR THE ANNUAL MEETING OF liam C. Steere, Jr., Henry A. McKin-
SHAREHOLDERS nell, Jr., and C.L. Clemente, and
APRIL 24, 1997, 10:00 A.M. each of them, as proxies, each with
AT THE GRAND HYATT HOTEL full power of substitution, and
42ND STREET AND LEXINGTON AVENUE hereby authorizes them to represent
NEW YORK, NY and to vote, as designated on the re-
verse side of this form, all the
shares of Common Stock of Pfizer Inc.
held of record by the undersigned on
February 24, 1997, at the Annual
Meeting of Shareholders to be held on
April 24, 1997 at 10:00 a.m. at the
Grand Hyatt Hotel, 42nd Street and
Lexington Avenue, New York, NY, or
any adjournment or postponement
thereof.

IF NO OTHER INDICATION IS MADE ON THE
REVERSE SIDE OF THIS FORM, THE PROX-
IES SHALL VOTE FOR ITEMS 1, 2, 3 AND
4 AND, IN THEIR DISCRETION, UPON SUCH
OTHER BUSINESS AS MAY PROPERLY COME
BEFORE THE MEETING.

(CONTINUED ON REVERSE SIDE)
<PAGE>

(CONTINUED FROM OTHER SIDE)

PFIZER INC.
- --------------------------------------------------------------------------------

The Board of Directors recommends 3. A proposal to approve an
a vote "FOR" Items 1, 2, 3 and 4 amendment to the Pfizer Inc.
Restated Certificate of
Incorporation to increase the
number of authorized shares of
Common Stock. (Mark ONE box
only.)

1. Election of Directors. (Mark [_]FOR [_]AGAINST [_]ABSTAIN
ONE box only.)
Nominees: M. Anthony Burns, 4. A proposal to approve the
George B. Harvey, Pfizer Inc. Executive Annual
Stanley O. Ikenberry, and Harry Incentive Plan. (Mark ONE box
P. Kamen. only.)

[_]FOR [_]AGAINST [_]ABSTAIN

IF ACTING AS ATTORNEY, EXECUTOR,
[_]FOR all [_]Vote TRUSTEE, OR IN OTHER REPRESENTATIVE
nominees, WITHHELD CAPACITY, PLEASE SIGN NAME AND TITLE.
except vote from all
withheld nominees / /97
from the ________________________________________
following (Signature of Shareholder) Date
nominees
(if any): / /97
________________________________________
(Signature, if held jointly) Date

________________________________ Please sign, date, and return this
________________________________ proxy form in the enclosed return
envelope. Thank you.
2. A proposal to approve the
appointment of KPMG Peat Marwick
LLP as independent auditors for
1997. (Mark ONE box only.)

[_]FOR [_]AGAINST [_]ABSTAIN