Wednesday, February 20, 2013

The Great Novartis / Vasella Discussion....

Just looking at the chart below, it becomes pretty obvious that from an investors (i.e. company owners) view, Mr. Vasellas pay was absolutely outsized and - especially - unnecessary.

Mr. Vasella became CEO in 1996, and combined President and CEO in 1999. Ever since, his companies share price has bascially tracked the Europe Pharmaceuticals Index, and over the last 3 years, it has underperformed it strongly.

It becomes clearly visible that Novartis' Operating Margin (as an admittedly simplified way to measure an organization's "excellence") has been below its peers since at least 5 years and has massively deteriorated over the last 3 years. 

Mr Vasella's net effect for the owners was zero; apart from a small dividend, you just had return-free risks (a lot of volatility in the stock, but no major return).

How Mr. Vasella could possibly truly believe that he is "worth" his aggregate compensation (with or without Golden Parachute) is hard to understand...

Shareholders of all countries, unite....!

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