Following the confirmation by Mr. Vasella of the details regarding the non-compete clause in his contract with Novartis, via Swiss German TV, Ethos Foundation revised the proxy voting recommendations published on 5 February 2013 for the Novartis AGM to be held on Friday 22 February 2013.
Ethos is of the opinion that the board has direct responsibility for the preparation of Mr. Vasella's contract. Ethos therefore recommends voting against the discharge under item 2 of the agenda. In addition, Ethos also requests a voluntary cancellation of the contract and the return of any funds already received from the company.
In the transmission by Swiss TV SRF «Tagesschau» on Friday 15 February 2013, Mr. Vasella said he will receive an annual payment of 12 million francs each year for a period of six years if he respects the clauses of his contract banning him from working for a competitor. The contract comes into effect after Mr. Vasella's retirement from the board on 22 February 2013. The total remuneration can be up to CHF 72 million. Ethos calls for the cancellation of the contract and the reimbursement of any funds already received by Mr. Vasella. Ethos believes the funds belong to the company and shareholders.
At the same time, Ethos recommends to vote against the discharge of the board which is directly responsible for the preparation of the contract. In the announcement regarding the non-compete clause for Mr. Vasella, the board failed to fulfill their duty with the required due diligence, infringing the duty of care. This is contrary to the principles of good governance.
