Novartis chairman Daniel Vasella said that the drugmaker’s board agreed to a six-year package with a maximum value of 72 million Swiss francs ($78 million). Vasella announced he would step down  as chairman of Novartis last month after serving 25 years with the company.
The payment, which will be done in equal annual installments, is contingent on Vasella respecting a non-compete agreement that prevents him from working for Novartis' rivals. "It has been very important to Novartis that I refrain from making my knowledge and know-how available to competitors and to take advantage of my experience with the company," the chairman noted. Novartis indicated that Vasella will continue to advise the company during the severance period.
The non-compete agreement package for Vasella is expected to fuel debate on an upcoming national referendum that would give shareholders of Swiss companies veto power over executive compensation plans. A less stringent proposal put forward by the Swiss government that gives shareholders a non-binding say-on-pay vote will also be considered. However, critics warn that Switzerland risks losing its ranking as one of the world's most competitive economies if the proposal is passed.