Once again, the pay package given Novartis chairman Dan Vasella is causing a ruckus. At the annual meeting yesterday in Basel, Switzerland, only 61 percent of shareholders backed the compensation plan, the first time remuneration was put to a vote. This is not considered a very good showing, however, and in fact, Dan and Novartis ceo Joe Jimenez were criticized for their salaries and because a chunk of their pay is not tied to long-term performance,The Wall Street Journal writes.
So what did Dan receive? According to the Novartis annual report, he earned about $8.5 million last year, including cash and stock. Separately, Dan also received a one-time retirement benefit worth $12.8 million. But Ethos, a shareholder activist organization, calculates he earned around $27 million. And Rudolf Meyer, who heads the Actares activist group, called Vasella's retirement package "scandalous." The ISS proxy advisory firm also rejected the compensation plan.
How did Dan respond? He pointed out that a majority of shareholders did support the compensation plan and noted that high salaries are the norm in the pharmaceuticals industry. Of course, two wrongs do not make a right... In the future, however, the shareholder meeting will vote on significant changes to compensation, at least every three years, according to the paper. But not everyone is impressed.
"The strong opposition to Novartis' remuneration system shows that many shareholders don't agree with the amounts and the structure of remuneration," Ethoc executive director Dominique Biedermann tells the paper. "We urge the board of directors to review the remuneration system and to submit it again to the vote at the 2012 annual general meeting of shareholders." Ethos also noted that more than 80 percent of variable remuneration performance targets were measured only over a single year (see their statement).
Dan, you may recall, has been criticized before over his pay. A year ago, he came under fire because his 2009 bonus was close to three times the amount he would have been due based on relative earnings growth among large cap peers (back story). In 2008, for instance, he received about 20 million francs, which are worth about $21 million now. And for some time, he resisted leaving the ceo job, saying it was more efficient for shareholders that he retain both positions (look here). In other words, he was the equivalent of a cheap date.