At their first meeting since both Novartis and Swiss voters adopted new limits on executive salaries, shareholders at the pharmaceutical giant overwhelmingly approved the board’s remuneration proposals with little criticism.This content was published on February 25, 2014 - 18:29
Last year, just before the Swiss adopted the so-called “Minder initiative” limiting executive pay, former Novartis CEO Daniel Vasella came under fire for a payout worth CHF72 million as he left the company. Although the Minder initiative does not enter into force until next year, Novartis announced earlier this month it was proposing salary cuts of more than 20% for its board of directors so that each member of the board – except the president – would receive an average of CHF406,000 instead of the previous CHF516,000.
Under the salary revisions, Vasella’s successor Jörg Reinhardt is to earn about CHF4 million. Vasella had earned more than CHF13 million in his last full year at the company.
On Tuesday, Novartis shareholders endorsed both the new approach and Reinhardt’s leadership by approving the revised remuneration packages for directors, senior management and the board of directors with a clear majority.
Reinhardt himself earned 98.1% of shareholders’ approval votes, and all other members of the board were similarly confirmed in their positions.
Job losses and clinical trials
The Novartis shareholder meeting was not without criticism surrounding other issues, however. Brigitte Martig, a human resources employee at the company, questioned the loss of 500 positions at its Basel headquarters announced earlier this year. Although the positions will be replaced elsewhere, she said the cuts had had serious fallout for those affected and were not justified given the company’s significant profits and bonuses.
And Patrick Durisch, a health expert at the Berne Declaration, criticised the ethics of Novartis clinical trials being carried out in developing countries. Durisch argued pharmaceutical countries were taking advantage of people in poor countries who would do anything to receive medical care, even if there was little oversight of the process or they suffered health damage as a result.
Reinhardt responded that companies like Novartis adhere to global standards related to clinical trials and that the whole industry was responsible to sticking to them.
“Can we always guarantee that? No. Can we do our best to succeed? I believe we’re already doing that.”
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