Swiss pharmaceutical group Novartis has backed down on plans to pay its outgoing chairman, Daniel Vasella, a ‘golden parachute’ amounting to 72m Swiss francs (CHF), equivalent to US$78m, in the face of fierce opposition from shareholders.
The proposed payment, which was also attacked by Swiss politicians and members of the country’s pro-business lobby, would have been in return for Vasella signing a six-year consulting and non-compete agreement to prevent him moving to a competitor. However, Geneva-based Ethos Fund led calls for the package to be rescinded ahead of an investor meeting this week.
In a statement issued by the group, Ulrich Lehner, vice-chairman of Novartis, commented: “The board and Dr Vasella agreed to cancel the non-compete agreement and to forgo all compensation linked to his non-compete.
“We continue to believe in the value of a non-compete. However, we believe the decision to cancel the agreement and all related compensation addresses the concerns of shareholders and other stakeholders. The board understands the importance of full transparency and will strengthen its efforts in this regard.”
Vasella also issued a statement, which read: “I have understood that many people in Switzerland find the amount of the compensation linked to the non-compete agreement unreasonably high, despite the fact I had announced my intention to make the net amount available for philanthropic activities.
“That is why I have recommended to the board that I forgo all payments linked to the non-compete agreement.”
The move reflects a growing readiness by European investors such as pension funds to block remuneration packages that they regard as excessively generous.
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