Swiss pharmaceutical firm Novartis has canceled its non-compete agreement with its departing chairman, Dr. Daniel Vasella, after an outcry over how much he would be paid, CNN Money reported.
Vasella, who is stepping down at the company's annual general meeting on Feb. 22, was to be paid $77.9 million over the next six years as part of an agreement to prevent him from sharing his expertise with competitors, the Wall Street Journal reported.
“I have understood that many people in Switzerland find the amount of the compensation linked to the non-compete 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 today, according to CNN Money. "That is why I have recommended to the Board that I forgo all payments linked to the non-compete agreement."
According to the Wall Street Journal:
The cancellation now appears to leave Dr. Vasella free to work where he chooses.
“We continue to believe in the value of a non-compete,” Vice Chairman Prof. Dr. Ulrich Lehner said in a statement, according to the Financial Times. “However, we believe the decision to cancel the agreement and all related compensation addresses the concerns of shareholders and other stakeholders. The board understands the importance of full transparency and will strengthen its efforts in this regard.”
“Swiss labor laws do not allow non-compete agreements of more than three years, so in that sense, Mr. Vasella’s pay-off was a disguised golden parachute,” Brigitta Moser-Harder, an activist Novartis shareholder, told the Financial Times.
Swiss citizens are going to the polls on Mar. 3 to vote in a referendum that proposes several changes to Swiss corporate laws, including introducing a binding shareholder vote on executive pay and banning lavish signing bonuses offered to executives at rival firms and golden parachutes, the Financial Times reported.
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