Novartis Chief Defends Combined CEO, Chairman Roles
Novartis’s chief Dan Vasella took a moment today to explain to shareholders why he should remain as both chairman and CEO.
At the company’s annual meeting, Vasella argued that splitting the roles between two people not only raises payroll costs, but also leads to “inefficiency and conflict” between the two top dogs, Dow Jones Newswires reports. Vasella cited one recent study that found 11% of CEOs leave their jobs because of conflicts with the chairman.
Novartis’s crosstown rival Roche will split the roles later this year, when Franz Humer steps down as CEO but stays on as chairman. When Roche announced that shift last year, the FT reported that Swiss corporate governance mavens have been pushing the separation of power between CEO and chairman. (Novartis and Roche are both based in Basel.)
Vasella’s comments come as he and Novartis have lost some of their luster. The stock has been lagging lately, and the company no longer seems immune from the problems plaguing Big Pharma. Last year, Vasella took a pay cut on poorer performance for the drug maker. And some high-level execs from the company have been leaving. Last year marketing maven Kurt Graves decamped for Vertex Pharmaceuticals, and earlier this month Alex Gorsky, head of Novartis’s pharma business in North America, packed his bags for a return to Johnson & Johnson.
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Kurt Graves is not a marketing maven. Far from it. He must be out of his element at Vertex since they do not have any mass market drugs. Get your facts straight.
Not only Novartis has this situation. UBS AG, one of the largest investment banks in the world has Marcel Ospel acting as CEO and chairman. Look at their stock price !
The Ego has landed
Not surprised that high level execs are leaving Novartis. Not a fun place to work for most, regardless of one’s position within the Novartis corporate hierarchy.
Kurt Graves a marketing maven ? The author must either be related to him or reading Kurt’s blog about himself. Anyone that has worked with him knows that is certainly not true and see him as egotistical, arrogant, and mean. Alex Gorsky, however, is a good guy and a real loss for Novartis. Novartis has lost a lot of talent over the past few years.
To Dr Vasella - increases payroll costs for a corporation that has revenues in the tens of billions each year! Come on - get real. You say that splitting the role of Chairman and CEO leads to inefficiencies and conflict! I think most would say that it provides much needed checks and balances!
On a final note, you are supposed to represent R&D pharma companies. How is it that your Sandoz division (generics) is trying to break the legitimate patent covering Astra Zeneca’s Crestor well before its’ time. The concept of a brand name manufacturer owning a generic outfit doesn’t sit well with many!
Regarding Kurt Graves - unfortunately, few get to his level without being egotistical, arrogant and mean. It goes with the territory!
Being egotistical, arrogant and mean my cut mustard if you are good at your job. Kurt Graves was not good at his job. He just knows how to posture.
Kurt Graves…meet the Peter Principal. Vertex has a history of bad hires in their PR/Marketing departments.
And, yes, it seems a bit strange that Vertex is spending big money for a “marketing maven” (hah) at a time when they’re having to dilute the stock at depressed levels just to keep the company going, and when they’re at least two years from bringing anything of substance to market.
I’ve not found Kurt Graves to be that different from many high-level industry execs. If he “just knows how to posture” why would he go to a smaller co like Vertex? I would think those “skills” would serve him better in a larger organization.
as a current novartis employee I can honestly say I would not buy any novartis shares. The company is a complete (and I mean) complete shambles. No proper management, underresourced in every department. Stuck in the past, 20 years behind everyone, a train wreck waiting to happen
Track records speak for themselves for Graves and Gorsky. The only thing that is clear is Novartis seems to have lost all its innovation and the reputation it once had as a leading marketing organization in the industry. Over the past 12-18 months the US performance/leadership and a couple bad breaks in patents and drug development have crippled the company…those are the facts.
As a former Novartis employee, I completely agree with the comments by annon. They struck me as a company that deperately wants to be number 1 but is satisfied with being 3rd, 4th, 5th in the respective therapeutic areas in which they operate. Its really too bad but I think, as others do, that Novartis is going to blow a decent pipeline of drugs. Sad!
Having worked with Novartis I can only say its hard to argue Graves’ track record. The company turned from a niche / non-player into the fastest growing US pharma company for 5+ years while they built multiple blockbuster brands -something the company had never done before even once. The mindset and culture has been slipping away though and lately its been all about politics and what looks like an internal popularity contest- the results shouldn’t be a surprise and the talent drain ongoing isn’t going to make it any easier. Who is going to fix it now…certainly isn’t obvious!
Interesting! When performance and culture continue to suffer, and if rumors are true that even more key talents are leaving, it will soon become more and more clear where the real problem is.
I wish they wouldn’t allow anonymous posts here. They could just be “shorts” or disgruntled former employees. Novartis will have a good second half this year and the dividend just keeps getting bigger. All the stock buybacks are a good thing too. Patience is a virtue and Rome wasn’t built in a day. Daniel Vassella has the science and medical background that make him an excellent CEO. I also like the latest female Board appoinitee.
Further evidence of Novartis decline - the newly named Head of Rest of World group has almost no relevant experience but is the son of Board member Bill George
The last post is a perfect example of the conflicts noted in title of this story! How can the BOD let Vasella or George get away with George’s son working for the company in a very senior position??? No wonder Vasella holds both seats…
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MAXIDEX WARNING
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Two days later I was BLIND
Use Google and enter EPOCRATES MAXIDEX REACTION to verify
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