Novartis CEO's 2023 pay rises 21% as Roche's helmsman nets $11M in his first year

After leading Novartis and Roche through pivotal years in 2023, the CEOs of the Swiss drug giants each netted multimillion-dollar compensation packages.

Novartis handed its CEO Vas Narasimhan 13.3 million Swiss francs ($15.3 million) in total compensation for 2023, according to the company’s annual report (PDF). At grant value, the pay is 21% more than what he earned the year before.

By comparison, Roche paid (PDF) its helmsman, Thomas Schinecker, a total of 9.6 million Swiss francs ($11 million). The former Roche Diagnostics chief took over from current Chairman Severin Schwan to become the group’s CEO last year.

At Roche, the CEO transition—and the loss of its pharma division leader Bill Anderson to Bayer—marked the dawn of a new era. As for Novartis, the company recently became a pure-play innovative medicines company after spinning off the generic maker Sandoz in October.

In his sixth year as Novartis’ CEO, Narasimhan saw his base salary climb 2% year over year to 1.82 million Swiss francs. The largest increase in his compensation package came from his annual incentive, which is calculated based on Novartis’ performance.

For 2023, Novartis’ board decided to grant Narasimhan 5.08 million Swiss francs in annual incentive pay, compared with 2.68 million Swiss francs in 2022. 

Novartis’ financial performance, which carries a 60% weight in evaluating Narasimhan’s annual bonus, came in “significantly above” the board’s targets across sales, operating profits and free cash flow.

As for strategic objectives, Narasimhan again earned a shining review as the board determined that he outperformed on five metrics.

Besides the successful separation of Sandoz, Novartis inked 15 business development and M&A deals last year. Key brands such as Entresto, Kesimpta, Kisqali, Leqvio and Pluvicto together delivered sales ahead of Novartis targets as well.

On the R&D side, Novartis won 22 approvals in the U.S., Europe, China and Japan, including an FDA nod for the factor B inhibitor Fabhalta as the first oral monotherapy for paroxysmal nocturnal hemoglobinuria in December. Eighteen regulatory submissions were filed, and nine phase 3 trials read out positively, the company said in its annual report.

One noticeable item that could have played a part in Narasimhan only getting an “above” score on the R&D review was Pluvicto’s PSMAfore data. Although the phase 3 trial hit its goal testing Pluvicto as a pre-chemo treatment for prostate cancer, Novartis has repeatedly delayed an FDA filing to wait for longer-term overall survival data.

Meanwhile, Narasimhan also delivered on Novartis’ operational productivity goal in part thanks to a major organizational overhaul, launched in 2022, that’s on track to deliver $1.5 billion in savings. On the social front, Novartis’ innovative therapies reached 1.6 million patients in low- and middle-income countries, and the company invested nearly $100 million in R&D for neglected tropical diseases.

While 13.3 million Swiss francs represents the total compensation package for Narasimhan last year, the CEO can’t cash out a big chunk of the figure that's tied to the company’s long-term business. His realized pay—pay that he can take home—reached 16.2 million Swiss francs when counting in matured compensation awards from prior years.

Moving on to Roche, Schinecker’s 9.6 million Swiss franc compensation package in his first year as CEO was lower than the 11.5 million Swiss francs his predecessor Schwan got in his last—and 15th year—as the group’s leader. But Schinecker only officially took the helm March 15. Before the management change, Schwan earned nearly 1.25 million Swiss francs in base salary and bonus payments for 2023 as the group CEO.

Schinecker took the baton at a difficult time at Roche. When the appointment was announced toward the end of 2022, the company had suffered a few late-stage trial setbacks and faced increased market competition.

Last year, Roche lost 4.3 billion Swiss francs in COVID-related revenue but still managed to deliver a 1% sales increase at constant exchange rates. Its core operating profit was down 1% at unchanged currencies. The company counted 19 major approvals in the U.S., Europe, Japan and China as well as 71 new partnerships, including a $2.7 billion upfront deal to purchase GLP-1 drug developer Carmot Therapeutics in December.