Novartis CEO Vas Narasimhan navigated through a tough and transitional year at the drugmaker, racking up almost $10 million in salary, incentive pay and equity awards for his efforts. But his 2018 take-home pay took a hit on longer-term shareholder returns that weren’t up to par.
The top executive’s pay didn’t suffer, however, from a painful political scandal stemming from a consulting agreement with President Trump’s personal lawyer Michael Cohen—even though Novartis’ societal trust accounts for 8% of his target bonus.
After officially taking the helm on Feb. 1, Novartis awarded Narasimhan 9.92 million Swiss francs ($9.89 million) in compensation at grant value in 2018, according to a company filing with the U.S. Securities and Exchange Commission. That’s quite a bit less than former CEO Joe Jimenez racked up in 2017 after eight years at the helm: CHF 13.10 million ($13.05 million) in total.
The new chief took home about one-third less than his 2018 package of salary plus equity awards, which includes longer-term incentive pay that won’t be up for assessment and payout for three years. Narasimhan’s “realized compensation”—a.k.a. take-home cash—came to CHF 6.7 million, which includes incentive pay awarded in previous years.
That cash payout might have been higher had Novartis shares performed better over the past few years. Narasimhan collected exactly 0% of that portion of long-term incentive pay, thanks to three-year returns that fell short of its peers, which for calculation purposes include Pfizer, Sanofi, Bristol-Myers and other Big Pharmas.
As for his equity awards for the year, Narsimhan earned good marks in all categories, particularly “innovation,” where the board gave their chief executive a “significantly above” evaluation, citing a robust pipeline—including some newly acquired projects—that ranked Novartis No. 1 on EvaluatePharma’s World Preview 2018 report in June. And the company’s planned Alcon spinoff and OTC divesture to GlaxoSmithKline, among other moves, earned Narasimhan an “above” score on the company’s operational objectives.
The CEO even met expectations in the “building trust with society” category despite the Cohen scandal and ongoing bribery investigations in Greece and South Korea, which the securities filing mentioned only obliquely. Narasimhan dealt with “[i]mportant reputational matters” during the year and is “addressing them,” the annual filing states.
The Cohen news broke in May, early into Narasimhan’s stint. Former CEO Jimenez took the blame for setting up the Cohen contract, and General Counsel Felix Ehret, who reviewed it, stepped down. Narasimhan “met” the board’s expectation in coping with that now-infamous contract signed under Jimenez’s reign.
It was left to Narasimhan to lead a damage-control effort, both internally and in public. In a letter to employees, Narasimhan called the payment a mistake and said he “was not involved with any aspect of this situation.”
Ehrat, who had served as Novartis’ top lawyer since 2011, also acknowledged the contract as an error and decided to retire to “take personal responsibility to bring the public debate on this matter to an end,” he said in a statement mid-May.
Taking his job was Shannon Thyme Klinger, who had just been promoted to the executive committee on Apr. 1 as chief ethics, risk and compliance officer. That promotion earned Narasimhan kudos in the filing as well.
Ehrat still got a handsome compensation package despite the disgraceful retirement, though. His total pay through the end of May reached CHF 3.99 million, boosted by a CHF 2.35 million chunk of other compensation that might be attributable to severance fees. In comparison, Klinger has received a total of CHF 2.02 million since April. In 2017, Ehrat’s pay package was worth CHF 4.34 million.
Promoting the chief ethics role is part of Narasimhan’s plan to regain public trust—one of his five top priorities.
“I never want Novartis to achieve our financial performance or objectives because we compromised on our ethical standards or our values—we must always choose our values,” he told investors.
By Angus Liu
Source: Fierce Pharma
The deal will enhance Merck’s expertise in developing and manufacturing mRNA for its customers for use in vaccines, treatments and diagnostics applicable in Covid-19 and various other diseases.
It’s the first significant visual redesign for Pfizer in 70 years since the company began using the blue oval background. The tagline outlining Pfizer’s purpose, “Breakthroughs that change patients’ lives,” remains the same.
The massive growth of gene therapy research and development over the last few years has boosted demand for viral vectors, the engineered viruses used to deliver therapeutic genes into patients’ bodies. Tokyo-based Fujifilm Diosynth Biotechnologies is stepping up to meet that demand.