BERLIN -- Swiss drugmaker Novartis AG has agreed with its outgoing chairman to scrap plans for a farewell noncompete deal that could have netted him up to $78 million.
The announcement followed criticism from some of the Basel-based company's shareholders and Swiss politicians. Novartis is the parent of Fort Worth-based Alcon Laboratories.Daniel Vasella, 59, who is retiring later this month, said Tuesday that he and the company had agreed to forgo a "noncompete" payout that many people found "unreasonably high.""I have understood that many people in Switzerland find the amount of the compensation linked to the noncompete agreement unreasonably high, despite the fact I had announced my intention to make the net amount available for philanthropic activities," Vasella said in a statement.News of the deal, under which Vasella would have earned up to 12 million francs a year for six years for not advising Novartis' competitors over the coming years, emerged last week.It was immediately met with a scathing response in Switzerland, where executive pay has become a sensitive issue.The country is holding a referendum March 3 on a proposal to give shareholders a greater say on how much companies pay top executives. It would also ban "golden parachutes" -- an agreement between a company and senior executive which gives the manager certain benefits if their employment ends.According to Novartis' 2012 annual report, Vasella's contract as chairman gave him a fixed salary of 12.4 million francs, a figure that it said reflects his "exceptional experience" and contribution to building the company. Granting the payout to Vasella, its chairman since 1999, was intended to protect the company, Novartis said, since he knows its business "intimately," built its research and development organization and personally recruited most of the top executivesAmong the critics of Vasella's deal were the company's shareholders and Justice Minister Simonetta Sommaruga, the head of the Swiss Bishops' Conference, and even the most business-friendly of Switzerland's governing parties, the Free Democrats.Have more to add? News tip? Tell us
