Board, Vasella slammed for handling of retirement prize
|Departing Chairman Daniel Vasella|
Like the naughty child that gets caught doing something wrong, Novartis ($NVS) keeps changing its story about just what it is up to. The Swiss company that succumbed to pressure this week and revoked a proposed $78 million non-compete to departing Chairman Daniel Vasella now says it will hire him as a consultant.
Vasella won't get paid for the gig but will get an office, administrative support and security, shareholders were told during the company's annual meeting in Basel, Switzerland, Bloomberg reports. In a backhanded way, Vasella acknowledged making mistakes, first by negotiating the non-compete and then by believing that agreeing to donate it to charity would appease shareholders. "The heated reactions and fierce reproaches against me for the much-discussed non-compete agreement have certainly left their mark on me," he said at the meeting.
The recriminations came after shareholders learned from a blog that Novartis would pay Vasella the $78 million over 6 years in agreement for not taking his talents and his knowledge of Novartis to the competition. The flare-up came at a particularly heated time, just ahead of a March 3 vote in Switzerland on whether shareholders should be given a binding vote on executive pay. When the news surfaced, public reaction was toxic and the board and Vasella quickly backpedaled.
One of the reproaches at the meeting today came from Dominique Biedermann, head of the foundation Ethos, which advises institutional investors on corporate governance issues. He pointed out that shareholders would not have known what the board was up to had the amount of the payout not been published by a blog. That left a bad taste in the mouth of investors, he said. "We had the impression none of you have the courage to stand up to" Vasella.
Vasella and Ethos have tangled before. Nearly 40% of Novartis shareholders voted last year against Vasella's 2010 compensation plan, which included a $12.2 million one-time retirement payment that Ethos deemed "scandalous" at the time.
- read the Bloomberg report
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