January 23, 2013 / 12:46 PM / 7 years ago

UPDATE 1-Novartis cuts CEO salary ahead of "fat cat" pay vote

* Swiss to vote on measures to curb exec. pay on March 3

* Novartis has faced criticism in past over salaries

* Jimenez pay down 16 pct at 13.2 mln Sfr (Adds details, background)

ZURICH, Jan 23 (Reuters) - Novartis cut pay for Chief Executive Joe Jimenez by 16 percent last year ahead of a referendum which could force companies to accept any limits shareholders place on executive rewards.

The Swiss will vote on March 3 on whether to give shareholders the world’s first binding say on executive pay and ban practices like big payouts for new hires and departing managers.

The first blue-chip pay disclosure this year will prompt questions about pay at other Swiss companies as the issue comes to the fore in the run-up to the vote.

Ethos, an influential group that makes recommendations to shareholders, called earlier this week for CEOs’ variable pay to be limited to three times fixed pay, and for the variable pay of other executives to be no more than two times fixed pay.

Jimenez - who was the highest paid executive on the Swiss bourse in 2011, earning 15.7 million Swiss francs ($16.89 million) - has vocally opposed the measures, saying they could damage the drugmaker’s competitiveness.

“It would be very difficult for me (...) to hire an outside talent to come into Novartis to be an executive committee member because any offer I make would be contingent on shareholder approval,” Jimenez told reporters on a conference call on Wednesday.

“To me that would put Novartis or any Swiss company at a significant disadvantage to attract talent into this company.”

Novartis has long been a lightning rod for criticism of executive pay in Switzerland. Chairman and former CEO Daniel Vasella came under fire for his $20 million pay package in 2006.

The drugmaker will hold its annual general meeting on Feb. 22, just over a week before the Swiss head to the ballot box on the issue, which taps into public ire over lavish bonuses for managers despite flagging profits and share prices.

If voters reject the proposals, more limited measures to increase shareholder influence on pay which are backed by powerful business lobby Economiesuisse will come into force.

Novartis said in its fourth-quarter results statement that the board of directors would propose changes to the compensation system for the CEO and other members of the executive committee as of Jan. 1, 2014.

“This will be welcomed by shareholders as the company is often seen as paying disproportionately to performance,” said Berenberg analyst Alistair Campbell.

In its 2012 annual report, Novartis said Jimenez would take home a total of 13.2 million Swiss francs ($14.20 million) in 2012, including cash, bonus, pension and other benefits.

It also reduced the salary of departing chairman Daniel Vasella by 3 percent to 13.1 million francs for 2012 from 13.5 million francs the prior year. ($1=0.9296 Swiss francs) (Reporting By Caroline Copley and Katharina Bart; Editing by Helen Massy-Beresford)

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