NEW YORK (TheStreet) - Those outraged by Pfizer's (PFE) plan to move to Britain as part of a $100 billion acquisition of AstraZeneca (AZN) may be better off calling their brokers than their Congressmen. After all, even the most passive retirement investors are subtly helping to make the proposed off-shoring of Pfizer possible.
Even if Pfizer moves to the U.K. as part of a strategy to lower its overall corporate tax rate, the company is likely to remain a component of both the S&P 500 Index and the Dow Jones Industrial Average (DJIA). Currently, the S&P 500 and DJIA appear to give U.S. companies the ability to move their domicile to lower-tax jurisdictions without losing their eligibility for either index.
If the average retirement investor in a S&P 500 or DJIA index is outraged by the flight of corporations from U.S. shores, they might be even more incensed to know their dollars are tacitly a part of the problem.
On the other hand, if the trillions of dollars that go to stock indices like the S&P 500 and DJIA had a voice in corporate governance and chose to exercise that voice against a trend of "re-domiciling" away from the U.S. for tax purposes, it could have a meaningful impact. Being a member of the S&P 500 and DJIA is likely of critical importance to Pfizer's management and Board of Directors given that both indices open the company to one of the biggest investor bases in the world.
Would it be worth it for a CEO to lose a wide spectrum of U.S. retirement and index investors just to drive a five percent reduction in annual corporate taxes? That might be a tough question for Pfizer Chairman and CEO Ian Read to consider. It might also complicate Read's pitch of the AstraZeneca acquisition and "re-domicile" of Pfizer.