The much anticipated Novartis annual general meeting provided few fireworks as shareholders expressed their confidence in the pharmaceutical giant, despite recent criticism of a massive proposed payout for outgoing chairman Daniel Vasella.
Vasella admitted he had made recent mistakes in judging public opinion, but ended his 17-year association with the world’s second largest pharma group on good terms at the annual general meeting on Friday, February 22.
Shareholders voted overwhelmingly to accept the company’s new pay structure and the nomination of new chairman Jörg Reinhardt.
Apology accepted
Novartis had come under intense criticism in recent days for offering Vasella a so-called “golden gag” pay-off worth up to CHF72 million ($77 million) to prevent him from working for competitors in the next six years.
The deal created uproar once details of the accepted offer were leaked to the media. Vasella initially pledged to donate his windfall to charity, but intense media, political, shareholder and public pressure forced Novartis to scrap the payout on Tuesday.
“I made two avoidable errors,” Vasella told shareholders on Friday, referring to his acceptance of the golden gag offer and misjudging how the public would react to him donating the sum to charity. “I accept the criticism,” he added.
“Vasella has done well. He has clearly said that he has made a mistake. This helps to smooth the waves,” Rudolf Meyer, president of shareholder activist group Actares, told Swiss television.
New system for pay and bonuses
Shareholders approved a new remuneration system, simplifying executive bonuses and making pay more transparent, that will come into force from the beginning of 2014.
The shareholder activist group Ethos Foundation, which represents pension funds, called for the new system to be rejected, calculating that chief executive Joe Jimenez could earn up to CHF20 million based on the company’s 2012 performance.
However, 78.3 per cent of the voters (representing nearly 65 per cent of all Novartis shares) decided to accept the new remuneration system.
The calm nature of the Novartis AGM and the clear votes of confidence in the company’s executives may have helped calm the nerves of opponents of a popular initiative which threatens to impose severe restrictions on so-called “rip-off” payments for “fat cats”.