Zurich - Pharma group Novartis' decision to pay up to 72m Swiss francs ($77.94m) to outgoing chairperson Daniel Vasella has unleashed a wave of indignation among activist shareholders and politicians.
Vasella will receive the "golden handshake" in tranches of 12m francs over six years if he respects the non-competition clauses of his contract, triggering criticism across political camps.
"This self-serve mentality undermines confidence in the economy as a whole. It causes enormous damage to the social cohesion in our country," socialist justice minister Simonetta Sommaruga told Swiss Sunday newspaper Sonntagsblick.
Vasella, who has been chairperson of Novartis since 1999, serving as both chairperson and CEO for 11 years from 1999 to 2010, gave details on the amount he is entitled to on Friday, following reports on website insideparadeplatz.ch.
He said in a statement Novartis would pay him a maximum of 72m francs "according to fair market value" if he refrained from making his knowledge and know-how available to competitors, adding he intended to donate the whole amount, net of taxes, to charity.
Novartis spokesperson Eric Althoff said Vasella did not wish to comment further before Friday's annual general meeting in Basel, at which he is not going to stand for re-election as chairperson.
Vasella faces stiff criticism from activist shareholder groups. "This is scandalous," Roby Tschopp, head of shareholder group Actares, told Reuters. "All we can do is try to motivate as many shareholders as possible to refuse to discharge the board of directors on Friday."
He said, however, it was unlikely a majority of shareholders would refuse to grant discharge of liability to the board because information on Vasella's golden handshake had come too late to be taken into account by some bigger shareholder groups.
"It only came out because it was leaked. That is not a transparent way of communicating," Tschopp said.
Swiss newspaper NZZ am Sonntag reported another small shareholder group, Ethos, would also refuse to grant discharge.
The news on Vasella's million-franc package is likely to boost support for a March 3 referendum to give shareholders a veto over excessive manager pay. Polls published on Sunday showed almost two thirds of Swiss voters favour the initiative, the brainchild of businessman Thomas Minder.
Hans Hess, chairperson of industry lobby Swissmem, told newspaper SonntagsZeitung that Vasella's contract was "embarrassing", while Pascal Gentinetta, head of business lobby economiesuisse, said it was a tough setback for the lobby's campaign against the referendum.
Economiesuisse has said the proposals would be a major blow for Switzerland's economy, pushing companies to move parts of their business abroad and prompting layoffs.
Follow Fin24 on Twitter, Facebook, Google+ and Pinterest.