Vasella considers his Novartis results worth $78M payout
Not many people supported the Novartis ($NVS) board's decision to hand former chair Daniel Vasella a $78 million parting deal. Public protests were immediate and impassioned--and Vasella quickly said he'd forgo the cash, if not cheerfully. The board scaled back the 6-year noncompete agreement to a comparatively modest $5.2 million exit package.
Now that he's departed Novartis, Vasella says his proposed payoff, rich as it was, would have been justified.
In an interview with the Financial Times, Vasella argued that the board's demands for a stringent noncompete clause amounted to "a prohibition to exert my profession." His departure package was "within the bracket" of those his counterparts elsewhere have received, he said. Besides, he said, good returns for the company render exec pay "negligible."
That's an attitude more at home in the U.S., where Vasella now lives. He has handed over his Swiss properties to his children and decamped for the States, where he spent the early part of his career, the FT reports. In Switzerland, the scandal of Vasella's exit package helped spur voters to approve new executive-pay restrictions. The U.S., on the other hand, routinely sees execs earn much more than their Swiss peers. Vasella also praised the American approach of combining the CEO and chairman's roles; though he held both positions at once, he said it defied an "unwritten rule" in Switzerland.
But Vasella is not exactly being turned away empty-handed. Last month, he netted a new package worth about $5.2 million to hang around through October to "support" new chairman Joerg Reinhardt. He'll also have the opportunity to earn more in the next few years by providing consulting services for the company at a guaranteed minimum of $250,000 per year. While it's a small fraction of the old package, some watchdogs are still up in arms, criticizing the need for a consultant.
But as Vasella made clear in the FT interview, he still has some suggestions Novartis management may--or should--be interested in. Reinhardt has begun a strategic review of Novartis' business, hinting that it may result in divestments. Vasella backed Reinhardt as his replacement--despite passing him over in 2010 for the CEO's role in favor of Joe Jimenez--but he's not as supportive of the sell-off idea. Though Pfizer's ($PFE) successful divestments and Abbott Laboratories' ($ABT) spinoff of AbbVie ($ABBV) have made breakups trendy in the pharma world, Vasella cautioned against taking a short view. "The fashion is to be focused," he told the FT. "I'm sure it pays in the short term, but fashions change. I have a longer horizon."
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