That Teva workers are striking to protest job cuts isn't all that unusual in the pharma business these days. That they're protesting executive pay is somewhat more unusual. That a prominent shareholder advises an accompanying pay cut for top executives and directors? That's definitely unusual.
Former Teva ($TEVA) chairman Meir Heth has criticized the company's pay policies before. The way he sees it now, top management bungled the recent job-cutting announcement, which partly blamed the layoffs on taxes. "This was a public relations failure," Heth told Globes, the Israeli news service. "It's a shame that the announcement of the layoffs was not accompanied by an announcement of a 10% pay cut for directors and executives."
Heth's comments follow a series of volleys from labor leaders, who chafe at Teva's executive compensation. "We heard what large amounts the executives get ... and when the moment of truth comes to pay taxes, they announce layoffs," one labor leader said, saying "many educated others" agreed with him.
We've heard of employees taking a pay cut to keep their offices open; Novartis ($NVS) workers in Nyon, Switzerland, went on strike to protest the company's plans to shut down their plant. A broader group of Novartis employees participated in street protests in Novartis' hometown, Basel, and demonstrators did point out that ex-Chairman Daniel Vasella and CEO Joe Jimenez collected many millions in compensation.
But when the company announced last year that the Nyon facility would stay open, it was workers who agreed to forgo salary increases and work more hours for the same pay. Earlier this year, the company decided to expand a Swiss plant that had been set for closure, after workers there agreed to the same no-raise, more-hours deal.
Though Teva's executives collect pay packets much smaller than Novartis managers do--CEO Jeremy Levin's 2012 pay, disclosed in a lawsuit, was just over $4 million, compared with around $14 million for Jimenez--Heth figures that he, his team, and the board of directors could easily suffer a 10% cut. "Had they been smart, they would have done that, and believe me, they could be reduced," he told Globes.
Other Teva pay discrepancies have also become an issue. When workers at a plant in Neot Hovav, Israel, went on strike Sunday, they were complaining about a yawning gap between their pay levels and those at other plants in Israel. According to labor leaders, workers at that plant earn about one-third the pay given to workers in central Israel.
- see the Globes story
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