Novartis AG (ADR) (NVS) and More: Are Big Pharma’s CEO Pay Packages Outrageous?

Page 1 of 2

Money for nothing. That’s basically what departing Novartis AG (ADR) (NYSE:NVS) chairman and former CEO Daniel Vasella would have gotten before an uproar in Switzerland nixed the deal. His non-compete agreement with the big pharma would have paid Vasella around $13 million for six years to not work for a competing firm — $72 million for doing nothing. That’s not merely a golden parachute. It’s a platinum parachute.

After the outrage erupted in the normally peace-loving Swiss public, Vasella and the Novartis board agreed to scrap the deal. However, the controversy made me curious about arrangements that other top pharma executives might have in place. Do shareholders in the U.S. have reason to be outraged over other platinum parachute deals?

Novartis AG (ADR) (NYSE:NVS)Exit in style
The good news is that there is no competition with Novartis when it comes to sky-high non-compete agreements for executives who leave for any reason, at least with U.S.-based pharmaceutical companies. However, quite a few CEOs would be able to exit in style under certain scenarios.

Most of the large pharmas specify that top executives would receive compensation in the event of a change in control of the company. A notable exception was Johnson & Johnson (NYSE:JNJ). J&J doesn’t provide any additional compensation to CEOs or other current top executives in the event of a change in control of the company. Four companies stood out, though, as providing lucrative platinum parachutes.

Source: Company SEC filings.

Amgen, Inc. (NASDAQ:AMGN) ranks at the top of the list. The company’s CEO, Kevin Sharer, would receive nearly $37 million as a going-away gift. Gilead Sciences, Inc. (NASDAQ:GILD) CEO John Martin isn’t far behind. Martin’s parting prize would be a little over $36 million.

Neither George Scangos, CEO of Biogen Idec Inc. (NASDAQ:BIIB) , nor Ian Read, CEO of Pfizer Inc. (NYSE:PFE) would be hurting much should their companies change control. Both men would stand to receive close to $33 million.

What about if the CEO is forced out without a change in control event? Pfizer’s Read still wouldn’t be clipping coupons. He gets more than $22 million for any termination “without cause,” which means there was no misconduct involved.

Source: Company SEC filings.

Gilead’s Martin and Biogen’s Scangos might have to defer any plans to buy a yacht, since both men would get less than $8 million. Poor Kevin Sharer of Amgen would be left to fend for himself.

Pay for performance?
Of course, I’m being just a wee bit facetious. None of these CEOs would be struggling if their employment were terminated. That won’t happen because each already receives hefty compensation. At least they’re getting paid for working rather than for not working. That actually raises other questions. How much are these CEOs getting paid now? And are they worth it?

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!