Even as Novartis CEO Vas Narasimhan, M.D., works through a companywide restructuring, the chief exec saw his pay decline substantially in 2022 thanks to demerits on the company’s shareholder return scorecard.
After handing Narasimhan $9 million in performance-based pay in 2021, the company’s compensation committee slashed the CEO’s award in that category by a whopping 61% last year. The pay cut, spurred by turbulent performance between 2020 and 2022, contrasts sharply with Novartis’ execution during the first three-year stretch under Narasimhan’s lead.
All told, Narasimhan collected 8.4 million Swiss francs ($8.98 million) in 2022 pay, a 25% decline from the 11.2 million Swiss francs ($12.18 million) he nabbed the year prior. In both cases, Narasimhan’s compensation was heavily weighted toward long-term goals around sales, operating income, innovation and shareholder returns.
2022 marked the end of Novartis’ second three-year performance cycle under Narasimhan, who ascended from chief medical officer at the company to CEO in 2018. Novartis’ most recent performance period ran from 2020 to 2022.
Breaking down the numbers, Narasimhan’s base salary accounted for around $1.9 million of the latest pay package, Novartis said in its annual report. The CEO took home another $2.8 million in cash and equity awards for Novartis’ performance in 2022 alone, which the company described as “solid.”
Narasimhan also collected close to $750,000 in pension benefits and “other compensation.”
Finally, Narasimhan netted some $3.5 million for helping Novartis execute on its long-term goals. While that sum is nothing to sneeze at, it’s considerably less than the $9 million he scored in the same category for 2021.
For the period between 2020 and 2022, Novartis fell short of targets for net sales growth and shareholder returns, the company said.
The performance-payout plunge was “heavily affected” by share price woes last year, which were even worse when accounting for the broader 2020 to 2022 period, Novartis said in its annual report. The company weathered a COVID-19-fueled sales slump in 2020 and 2021, and it grappled with safety concerns around the once-hyped eye med Beovu.
Meanwhile, Novartis recently rolled out a sweeping restructuring plan in a bid to save at least $1 billion a year by 2024. The move toward a “leaner and simpler” company will come at the cost of about 8,000 jobs, a company spokesperson said last year. Novartis has been charting layoffs at a steady clip these past months.
Under the plan, Novartis intends to wed its global pharmaceutical and oncology business units. It’s also integrating technical and customer support functions into a singular operations department.