Novartis chairman’s golden payoff slammed

A golden handshake extended to Daniel Vasella, the departing chairman of Basel-based pharmaceutical company Novartis, is striking a raw nerve in Swiss political and business circles.

Novartis chairman’s golden payoff slammed
Departing Novartis chairman Daniel Vasella to receive 72 million francs. Photo: Remy Steinegger

Vasella’s 72-million-franc payout, revealed on Friday, elicited sharp criticism from politicians on the left and right and from business groups over the weekend.

“I understand that everyone is revolted by it and so am I,” Rudolf Wehrli, chairman of business lobby group Economiesuisse was quoted as saying from Mexico on Saturday by the ATS news agency.

“Such payouts and salaries amount to a real provocation even for opponents of the Minder initiative.”

The initiative, to be voted on in a national vote on March 3rd, would give shareholders of Swiss companies a binding vote on the pay of top managers, while ending such perks as compensation in advance and golden parachutes.

The publicity of Vasella’s farewell pay comes at an awkward time for the government — and business groups — which are backing a less restrictive counter proposal which aims to combat “abusive” executive pay without hurting Switzerland’s appeal as a place to do business.

“It’s a difficult situation,” Johann Schneider-Ammann, economy minister and member of the centre-right Liberal party (FDP), told SRF, the German-language broadcaster.

“The people all the same, should not throw the baby with the bathwater on March 3rd,” Schneider-Ammann said.

His cabinet colleague, Simonetta Sommaruga, was less charitable.

Vasella’s huge pay packet “is very harmful for social cohesion on our country,” the socialist party member and minister of justice and police, told Sonntagsblick in an interview.

This “mentality of self-service” shakes the confidence in the entire economy, Sommaruga said.

But she added that she was not sure that a “yes” in the upcoming referendum would eliminate the kind of pay issued to Vasella.

The large sums are aimed in part at ensuring that the 59-year-old executive will not work for another company.

Neither the Minder initiative nor the government’s counter-proposal would prevent such kinds of pay deals in the future, she said.

In an interview with SRF, Vasella said he would receive up to 12 million francs a year for six years, provided he fulfilled certain conditions set by Novartis.

Among these is a ban on working for a competing company or passing on information he has gained at Novartis.

Vasella, who is formally quitting at the end of this week, also said that he intended to use the money to donate to public interest organizations and other institutions.

Born in Fribourg and a doctor by training, Vasella in 1978 married the niece of Marc Moret, former chairman of Sandoz.

Vasella was recruited by Sandoz, which later merged with Ciba-Geigy to form Novartis in 1996, when he became CEO.

Three years later he became chairman of the company while retaining the title of chief executive until he relinquished the CEO post in 2010.

Last year he earned a reported 13.1 million francs.

Negative publicity about his retirement pay is not helping opponents of the Minder initiative, named after the small businessman and senator Thomas Minder, who spearheaded the proposal.

A poll published by Sonntagsblick on Sunday showed that 57 percent of Swiss citizens backed the initiative, up from 54 percent in a survey taken in mid-January.

The share of those opposed rose to 37 percent from 30 percent while those undecided dropped to six percent from 16 percent.

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Swiss salaries: How much do people earn in Switzerland?

Workers in Switzerland are among the best paid in the world, but the cost of living here is one of the highest as well. The Local looks at how much people in various professions earn in this wealthy but expensive country.

Swiss salaries: How much do people earn in Switzerland?
Workers in Zurich, here in the city's business district, are among the highest earners in Switzerland. Photo by AFP

Swiss wages published by the Federal Statistical Office (OFS) shed light on some interesting facts, including on how much foreign workers earn compared to their Swiss counterparts.

According to FSO’s Swiss Earnings Structure Survey of 2018, the last year for which official statistics are available, the median monthly wage in Switzerland is 6,538 francs.

The salaries have not dramatically changed since then.

The study shows that the lowest-paid 10 percent of employees earned less than 4,302 francs per month, while the highest-paid 10 percent earned nearly 11,700 a month.

Gender-based wage disparities

Not surprisingly, the survey shows wage disparities between men and women across all professions, levels of education, age groups, and private and public sectors.

On average, women earn 11.5 percent less than men working in the same positions, though the gap has steadily decreased in the past decade.

Another disparity: Swiss versus foreign workers

FSO figures also show the divergence in wages between the Swiss and foreigners with different work permits.

As the chart below indicates, while a Swiss man earns 7,500 francs a month, a Swiss woman is paid just over 6,000 for the same job.

EXPLAINED: How much do foreign workers in Switzerland earn?

Now let’s look at the foreign workforce.

A man with a short-term L permit earns about 5,000 francs, while a woman holding the same permit will make a little over 4,000.

The pay is a bit higher for B permit holders: 5,700 francs for men and 5,000 for women.

Cross-border men workers with the G permit earn roughly the same as C permit holders — about 6,200 a month. The women in those groups, however, don’t have the same salaries: about 5,800 for border workers and 5,000 for permanent residents.

This could be because the former category has the skills specifically needed by Switzerland’s labour market.

So what are the average Swiss salaries for various professions?

First, keep in mind that wages vary from one canton to another. Generally speaking, people earn more in Geneva and Zurich than in Ticino, but the cost of living in these regions is correspondingly higher or lower.

READ MORE: Geneva voters approve ‘world’s highest’ minimum wage

Typically, professionals like doctors, lawyers, or engineers, as well as people working in information technology, the pharmaceutical industry, and bank and insurance sectors have the highest salaries.

On the other hand, unskilled workers are ones who are lowest paid, often referred to as ‘working poor’. 

Lohncomputer, a platform for European citizens who want to or already work in Switzerland, lists median monthly wage estimates culled from various salary surveys.

Here are just a few examples:

  • Lawyer: 9,300 francs
  • Accountant: 8,125 francs
  • Teacher: 7,292 francs
  • Bank employee: 6,750
  • Architect: 6,250 francs
  • Nurse : 5,667 francs
  • Carpenter: 5,150 francs
  • Hairdresser: 4,375 francs

Other salary estimates can be found here.

If you’d like to find the expected average wage in your industry, check this link.

How does Swiss income compare with wages in other European countries?

With a median salary exceeding 96,000 francs annually, Switzerland’s workers have highest wages in Europe, according to a survey by an international consultancy firm Willis Towers Watson. 

The second-highest is Denmark, with just over 63,000, followed by Norway (almost 60,000).

Out of 18 countries surveyed, Portuguese and Greek workers fared the worst, with average yearly salaries of 22,630 and 25,132, respectively.