Novartis scraps chairman's $78m payout Novartis, the Swiss pharmaceutical group, has withdrawn plans to pay its outgoing chairman a "golden gag" of $78m for a consulting and non-compete agreement over the coming six years. The decision marked a rapid reversal after news of the original package last Friday to Daniel Vasella triggered sharp protest in Switzerland, just as the country is gearing up for a referendum on whether to impose stricter checks on executive pay. Ulrich Lehner, vice-chairman of Novartis, said in a statement on Tuesday: "The board and Dr Vasella agreed to cancel the non-compete agreement and to forgo all compensation linked to his non-compete. We continue to believe in the value of a non-compete. However, we believe the decision to cancel the agreement and all related compensation addresses the concerns of shareholders and other stakeholders. The board understands the importance of full transparency and will strengthen its efforts in this regard. Mr Vasella said: "I have understood that many people in Switzerland find the amount of the compensation linked to the non-compete agreement unreasonably high, despite the fact I had announced my intention to make the net amount available for philanthropic activities. That is why I have recommended to the board that I forgo all payments linked to the non-compete agreement. Ursula Fraefel, from the Swiss business lobby Economiesuisse, which is campaigning against the tighter curbs on executive pay on which Switzerland will vote on March 3 said she "welcomed" the decision. The pressure from shareholders, politicians and business was strong and has obviously made Mr Vasella revisit the topic. From our perspective though, it would have been better if he had never accepted the payment in the first place," she said. Brigitta Moser-Harder, an activist shareholder who, together with the entrepreneur Thomas Minder came up with the measures at issue in next week's referendum, said Novartis had "no other choice" but to cancel the payment with shareholder anger mounting ahead of its annual general meeting on Friday. The AGM would have been a catastrophe, and it looks like the board has finally realised that. However it is far too late, the whole thing is still a debacle," she said. The referendum proposes a series of changes to Swiss corporate laws including a binding shareholder vote on executive pay, as well as a ban on so-called "golden hellos" and "golden parachutes." Ms Moser-Harder said these proposals would have prevented Mr Vasella's payout. "Swiss labour laws do not allow non-compete agreements of more than three years, so in that sense, Mr Vasella's pay-off was a disguised golden parachute, and the Minder initiative would have prevented it," she said.