Novartis scraps $78m payout to departing chairman
Novartis has announced it has agreed to scrap plans to provide Dr Daniel Vasella with a US $78 million payout over the next six years when he steps down from his role as Chairman of the Board.
This decision was made between the Novartis Board of Directors and Dr Vasella himself, following the outrage that last week’s news caused amongst the Swiss pharmaceutical group’s shareholders and other stakeholders.
Together they agreed to cancel Dr Vasella’s non-compete agreement with Novartis and all related conditional compensation, which will be effective once he steps down from his role at the Novartis Annual General Meeting on February 22nd, 2013.
“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.”
Current Vice Chairman Prof. Dr. Ulrich Lehner, who is serving as Chairman ad interim until the designated Chairman is elected and assumes office on August 1, 2013.
The payment was intended to protect the company, as the non-compete required Dr Vasella to refrain from making his knowledge and know-how available to competitors who may take advantage of his 17 years experience with the company. Dr Vasella was chief executive of Novartis from 1996 until 2010, and has also been chairman since 1999.
Novartis scraps chairman’s $78m payout (Financial Times)
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