Pharmaceutical firm Novartis has reached a final pay-off accord with former CEO Daniel Vasella worth CHF4.9 million ($5.2 million). This follows a controversial CHF72 million golden gag – later withdrawn in February – to keep him away from rivals.
According to the board of directors of the Basel-based pharma giant, Vasella will receive $5.2 million in cash and unrestricted shares for eight months’ work this year assisting with the transition to his successor.
He will also get a guaranteed minimum fee of $250,000 a year from 2014 through 2016 just to be available for consulting and coaching. In addition he will be paid a consulting rate of $25,000 a day.
This replaces a previous plan to pay Vasella CHF72 million to keep him from working for rivals after he stepped down as chairman on February 22.
When details of the pay-out emerged, they helped galvanize support for a Swiss ballot on limiting high executive pay and boosting shareholder’s rights. In the face of stiff opposition from the business community, voters approved the initiative in March.
Vasella, who now reportedly lives in the United States and is on the boards of PepsiCo and American Express, declined to accept the huge severance package because of the Swiss public’s outcry.
During his 17-year reign as chief executive and chairman he received an estimated CHF300 million in pay and bonuses. He held the top Swiss CEO earner spot between 2005 and 2009, and bagged SFr13.5 million in 2011.
On Wednesday Novartis announced that it had raised its sales outlook for the full year, despite a five per cent net income drop in the second quarter.
The firm said that quarterly net income fell to $2.55 billion, down from $2.68 billion in the comparable period a year ago. The company said the loss of patents, pricing pressure and the weakening Japanese yen were factors.