Zurich: The outgoing head of Swiss pharmaceuticals giant Novartis, Daniel Vasella, has agreed to give up a massive pay-off, he said on Tuesday, after a nationwide storm of protest.
“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,” Vasella said in a statement released by Novartis.
“That is why I have recommended to the Board that I forgo all payments linked to the non-compete agreement,” he added.
Vasella, who has been at the helm since 1996, is due to step down as chairman of the Novartis board on Friday.
Under a recently-disclosed deal barring the 59-year-old from working for Novartis’ competitors, he was to receive an annual payout of 12 million Swiss francs ($13 million) over the next six years.
Provided he met all the conditions, that would have made him a total of 72 million Swiss francs.
The sum caused outrage among politicians across Switzerland’s spectrum, while the tabloid Blick summed it up as “insane”, and campaigners for shareholders’ rights filed a lawsuit.
The announcement of the amount came ahead of a 3 March referendum — the bedrock of Switzerland’s direct democracy — in which the country will decide whether to give company shareholders more power to rein in executive pay.
Polls have shown that two-thirds of voters are likely to support the move.
Despite Vasella’s renouncing the pay-off, Novartis insisted that such deals where essential in the business world.
“Intended to protect the company, the non-compete required that Dr. Vasella refrain from making his knowledge and know-how available to competitors who may take advantage of his experience with the company,” it said.
“Dr. Vasella knows the company’s business intimately, having built the leading R&D organization and personally recruited most of the top executives,” it added.